Whether a buyer or seller if you are going to transact Real Estate you will use the Colorado form – Contract to Buy and Sell. Let me give you some high level insights into the contract and the process.
If you are a buyer you may have found the perfect home that fits your criteria and price point in the Crested Butte area and are ready to submit an offer! This is a very important step in the process. I want my clients to know I will be by their side, and help them through this whether a buyer or a seller.
An offer for real estate must be reduced to writing and I hope this article will help walk through some of the highlights about offer contracts.
Preparing An Offer Contract to Buy and Sell
It is important to me that my clients make informed decisions. I do my best to educate clients on the current market and do homework. Here is some of the information I would think helpful for a buyer:
- Current market information – detailed Crested Butte Market Report I prepare monthly
- Details about the specific area and patterns and trends and price points
- Is the home a part of a subdivision / HOA, what are the dues, amenities, and are there any important restrictions (ie: short term rental allowed or not?)
- What are the taxes and other expenses to operate the home?
- Who was the architect who designed the home
- Who was the builder who built the home, was there a remodel / expansion – who did that work?
- Additional History of the home (one owner…), do they rent the home – what is past rental income?
- The floor area ratio (FAR) – can you add on to the home per County, Town or HOA guidelines?
- The specific market value of other similar homes in the subdivision
- Information about adjacent lots around the home – will the views be unobstructed?
- Is the home in need of repairs or major updating?
This data is all helpful in deciding on the price my buyer clients are going to offer. With this information available to my clients I feel very confident in moving on to the next process of helping them make an offer on their future home.
What To Know About Offer Contracts In Crested Butte – Writing The Offer Contract
We use a contract system called CTMe Contracts. The contracts are online and electronic signatures are a great benefit. Both buyers and sellers and agents can sign documents electronically using a computer, tablet or iPhone. There are many areas that can be customizable and filled in or left blank.
It is important to have your entity name, or your full legal names as the buyer on the contract because this will be used by the title company. The title company will use this to draw up the Title Commitment, and Closing Documents and deed, the Lender will also use this info for the loan docs. There is also a section on the contract as to how you will take title to the property. If it is a couple buying the property they will usually be buying the home as Joint Tenants. Some of the most important things that are in the Contract to Buy and Sell are:
- The Purchase Price (currently in the Crested Butte market we are seeing discounts from Asking to Selling in the 3% – 6% range)
- The Earnest Money amount (typically 5% in the Crested Butte market) and when the Title Company will receive it.
- If there is a Loan amount and typically on a second home this is in the 70% – 80% of the purchase price.
- Full legal description and street address of the property.
- Contingency Dates for Title, Association Documents, Inspection, Appraisal, Survey (Improvement Location Certificate or ILC in Colorado), Loan Approval, Due Diligence docs… etc.
- Objection dates for the above and other contingencies as well as Closing Date and Acceptance Date.
What To Know About Offer Contracts In Crested Butte – Contingencies
The main terms of the deal are included, as listed above but also important to note are the contingency dates. There are dates assigned to the many contingencies so the buyer can ask for more information or object. And the seller can provide more information and respond. In Colorado the form contract gives the buyer the ability to object and terminate the contract for many of the contingencies above if “in their sole discretion” they are not satisfied with the property – they may terminate the Contract. And yes the Buyer will get their earnest money back. The seller may terminate the contract only if the buyer does not perform (ie: fails to submit earnest money on time or other… ).
Furniture and Furnishings
In the Crested Butte area most luxury homes are sold furnished because they are second homes. Lenders want to loan only on the real estate and not on personal property, so there is a separate form called a Personal Property Agreement. The Personal Property Agreement will detail the Included items to be conveyed outside of closing – generally for a nominal dollar amount. The furniture, furnishings, kitchen set-up, linens and other “stuff” are generally a great benefit to the buyer. Most Sellers consider their original cost to acquire these items – but also come to realize the expense in removing them. I always advise sellers to exclude the items that are special to them like artwork, and heirloom items. Generally best to remove the expensive plen air painting by local artist Shawn Horne prior to putting the home on the market (it will be the final counter from the buyer – they accept the seller’s number, but want the painting over the fireplace included).
Once The Contract Is Submitted
Once an offer has been submitted to the seller, they will either accept, reject or counter the offer. It is typical that an offer will be countered. I generally recommend that even if a seller receives a “low-ball” offer that they reply with a counter. A counter could include changes or modifications to one or more components of the offer – typically purchase price, dates and any additional provisions.
There can be multiple back and forth counter-offers that go between the buyer and seller. If the buyer and the seller can’t agree on all the terms laid out in the offer, or the contract is not signed within the Acceptance deadline there is no agreement or contract. Once the seller accepts the offer or the buyer accepts the counter-offer, it becomes a legally binding contract. Both the buyer and seller will work to meet the terms and conditions outlined in the contract.
There is not enough room here to detail out the many next steps for the Buyer and Seller here. The Seller will provide the Buyer a number of Disclosure Documents (some include: Title Policy prepared by the Title Company, Seller Property Disclosure, Square Footage Disclosure, Source of Water, Lead Based Paint Disclosure, Due Diligence Docs…etc.). The Buyer will hire a number of service providers to help them understand what they are buying (Inspection, Survey, Appraisal…) and work with the Lender to ensure they are providing all the docs needed to obtain funding. Most transactions will close in the 45 – 60 day timeframe in Crested Butte. This is dependent on the many service providers mentioned above who may be busy and dates may need to be adjusted.
Final Thoughts How Can I Help?
I have been in your shoes – as both a Second Home Buyer and Seller here in Crested Butte. I hope this article – What To Know About Offer Contracts In Crested Butte was informative. If you thinking about Buying or Selling and looking for help – I appreciate the opportunity to earn your business. My goal is to help make the entire process go as smoothly as possible, please reach out and contact me!
Give me a call… (970) 209-5405
Stay safe out there.
The Crested Butte area offers a wide variety of properties including ski-in/ski-out single-family homes, ski-in/ski-out condominiums, lake and river frontage properties, golf course property, quality homes in Downtown Crested Butte, and true fine mountain homes on acreage.
To see Crested Butte Homes For Sale or search the MLS – visit ChrisKopf.com.
The Crested Butte Real Estate Market is very active. Click this link to see my monthly Crested Butte Real Estate Market Reports.
I have consistently been a Top Real Estate Agent in Crested Butte, and I appreciate the opportunity to earn your business and be your Crested Butte Real Estate Agent.
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Global Luxury Property Specialist
Coldwell Banker Mountain Properties