“Ask Your Attorney” Column
How Do I Protect Myself When Making An Offer To Purchase?
Dear Counselor: My wife and I want to make an offer to purchase a home that is being sold by its owner. We talked with the owner and have verbally agreed on a price. The Seller wants us to give him $5,000 to bind the deal, and said he’s willing to wait until we sell our home to close. We want the home, and are willing to give him the $5,000 — but can’t afford to lose that money. How do we protect ourselves?
Dear Client: The first rule here is that Wisconsin law requires that contracts relating to real estate MUST BE IN WRITING to be enforceable. Your verbal agreement needs to be reduced to a written form, and then signed by all parties. If you do not have it in writing, and the Seller finds someone who is willing to pay more, the Seller might return your $5,000 with a note that says: “Thanks, but no thanks!” And you would likely find out that your “deal” is not legally binding. So, when you write up your “Offer to Purchase” you and the Seller will specify the price, the amount of “earnest money” to be put down to hold the deal, and all of the other terms and conditions for your transaction. Part of these terms will include “contingencies” that you, as Buyer, will specify must be met for you to close. One typical contingency is that you, as Buyer, have to be able to get an acceptable mortgage. Another typical contingency is that you, as Buyer, have to be able to sell your current home. If these contingencies are not met, and you are not willing to waive them and close anyway, you are protected and cannot be forced to close — in which event, you would be entitled to a return of your $5,000 earnest money payment. Come on into the office, and we can help you write up your deal so that you can sleep easy.
John L. Maier, Jr.