So you've found the property you want to purchase. Now you will need to work with your agent to put together your offer and negotiate the agreement.
The purchase agreement is exactly what it sounds like. When you are ready to "write" an offer, it is the purchase agreement that is completed with all of the relevant details of the prospective sale. The property isn't marked "pending" until both parties agree in writing to all of the terms of the sale, which include price, concessions, closing date, occupancy, etc. With the convenience of modern technology, this entire process can be completely paperless, including signatures. There is quite a bit of strategy involved with writing an offer, and your agent should provide you with advice on how to proceed.
In the past, the negotiation process could take several days going back and forth completing multiple purchase agreements. Nowadays your agent may complete the first written purchase agreement with the original offer, then do most of the negotiating verbally. Once both sides agree, the purchase agreement will be changed to reflect the agreed upon terms. The updated purchase agreement can be sent and signed by both parties by way of electronic signature. Once the document is signed by both parties, the home is no longer available to be purchased by another buyer and will be marked "pending." At that point, the seller can only accept back up offers in the event that the original sale falls through.
There are numerous terms that can be negotiated other than price. Closing date, deposit, down payment, occupancy, tax pro-rations, repair items, personal property, and concessions can be included in the negotiations. Each buyer and seller will have differing priorities regarding each of these variables, so the value of each can't necessarily be assigned a dollar amount in the same way that the sale price can. For example, if you the buyer can be flexible on the closing date, or offer the opportunity for post closing occupancy, the seller may be more flexible on the sale price. You may have more leverage than just dollars when negotiating the sale. Your agent should advise you on a negotiation strategy that will provide the best total outcome, not just the price. The seller and the buyer can walk away from the deal feeling really happy with the terms. Win, win!
Every offer must also include an Earnest Money Deposit, or EMD. The minimum amount of that deposit is typically determined by the sale price of the property, and is agreed upon by the seller and buyer. A larger deposit tends to be perceived as a stronger offer to the seller in cases with multiple offers, and can be used as a component of your offer/negotiation strategy. The EMD must be in the form of a certified check, not cash or credit. Ultimately the EMD will be applied to the sale price of the home upon closing, but both parties must agree to the deposit refund in the case of a failed transaction completion.
Once you have a contractual agreement, your transaction moves into the next phase of the process. Here's where a lot of the behind the scenes action happens. Anything can happen between the contract and the closing. Read all about it in my Buyer Series #4- Contingencies.