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Structuring Your Offer

Review the standard Colorado real estate contract form to get a feel for some of the decisions regarding structuring your offer. Generally, the issues you need to think through concern dollars, dates, and conditions. The goal is to protect yourself while making the offer as attractive as possible to the seller. If looking at an excellent property that has just hit the market, you may need to give up some security for the seller to accept your offer.  In this instance, you should understand what you are giving up and how important this is to the seller.


Information on market value obviously influences how you structure your offer.  It is also greatly influenced by the situations of the buyer and the seller.  If the property is new to the market and at a reasonable market value, it is unlikely a seller would compromise on price.  There is likely to be more room for negotiation, if the property has been on the market for six months. And even more if  the seller has already dropped the price three times. If the buyer has to enroll kids in school soon and has been looking for the magic property for six months, make the best offer possible.  Most buyers would be foolish to risk losing the right house over a few thousand dollars. If a buyer is seeing many acceptable properties and has no time restrictions, they risk less by trying to bargain hard. Try to be realistic in evaluating your situation and that of the seller.


A purchase contract has many dates and deadlines, which are often as important as price when structuring your offer. The dates for closing and possession can create difficult negotiation issues. If the seller is waiting for a new home to be built, this can extend the closing date longer than you want.  It may also force you to accept risks of substantial interest rate changes. If the seller needs to have the sale completed within two weeks, you may lose money on your lease. Or if you haven't started the loan process, you may not be able to close that quickly. Most of the other dates in the contract put time limits on your right to evaluate the property. Typically, the seller will want this done quickly, while you need to make sure you have the time to gather and evaluate critical information.


You may need to verify that the property isn’t built over a coal mine or that the school system is good.  Or you may need money from your parents or from a retirement fund to complete the purchase.  In any of these scenarios, you need to make your offer contingent on these things happening in a satisfactory manner. You also need to understand that these contingencies will generally make the offer less attractive to the seller. In a hot market, or with an outstanding property, contingencies can kill your offer. To the extent you can address these issues prior to making an offer, or very quickly after the seller accepts the offer, you will increase your chances of getting the property at a price and terms you’re comfortable with.


In our market, sales typically include window coverings and some kitchen appliances.  Sometimes they also include refrigerators, washer/dryers and hot tubs.  It almost never includes furniture and other personal property, in part because lenders will generally not provide a loan if it includes large amounts of personal property. I have seen buyers lose a good property over the refrigerator — and then pay $5,000 more for a lesser property 2 months later. Stay focused on the big picture and on what is truly important.