Purchasing your first home is an exciting milestone, but it can also feel overwhelming. One of the most important steps in the process is making an offer to purchase the property. Understanding how offers work, what terms should be included, and when to seek legal advice can help you avoid costly mistakes and move forward with confidence.

At Peet Law Group, we assist Vermont homebuyers with contract review, title examinations, title insurance, and residential real estate closings throughout Vermont. Understanding the offer process is one of the first steps toward a successful real estate transaction.

Understanding How Home Purchase Offers Work in Vermont

In some states, buyers and sellers may begin negotiations with a letter of intent or other preliminary documents. Vermont residential real estate transactions typically work differently.

In Vermont, a buyer's offer is usually made by signing a proposed Purchase and Sale Contract. The contract contains the terms under which the buyer is willing to purchase the property.

Once the seller receives the offer, several things can happen:

Seller Accepts the Offer

If the seller signs the contract exactly as presented, without making any changes, a binding contract is created.

Simply put:

Buyer's Offer + Seller's Acceptance of the Same Terms = Binding Contract

Once both parties have agreed to identical terms, the transaction moves forward toward closing, subject to any contingencies contained in the contract.

Seller Makes a Counteroffer

If the seller wants different terms, the seller may make a counteroffer.

Common examples include:

• A different purchase price
• A different closing date
• Changes to contingencies
• Requests regarding personal property included in the sale

A counteroffer is not an acceptance. Instead, it is a rejection of the original offer and the presentation of a new proposed agreement.

The buyer may then accept, reject, or make another counteroffer.

Seller Rejects the Offer

The seller may also reject the offer entirely. In some cases, the seller may indicate what terms would be more acceptable, allowing the buyer to submit a revised offer.

Most Vermont Home Offers Are Prepared Using REALTOR® Forms

Most residential real estate transactions in Vermont involve a real estate agent and a standardized Purchase and Sale Contract prepared using REALTOR® forms.

These forms are widely used and generally provide a solid framework for residential transactions. However, every property is different, and no standardized form can address every legal issue that may arise.

That is why many buyers choose to have an attorney review the contract before it is submitted or include an attorney review contingency that allows legal review after the contract is signed.

Should You Have an Attorney Review Your Offer?

Many first-time homebuyers are surprised to learn that the document they are signing is often the actual contract that will govern the transaction if accepted.

Because the offer can quickly become a binding contract, buyers should carefully consider whether legal review would be beneficial.

Generally, buyers have two options:

Option 1: Attorney Review Before Submission

Some buyers have a Vermont real estate attorney review the proposed contract before it is submitted to the seller.

Advantages may include:

• Identifying legal concerns before negotiations begin
• Adding protective language when appropriate
• Clarifying contingencies
• Addressing unique property issues

Option 2: Attorney Review Contingency

Another common approach is to include an attorney review contingency.

This allows the buyer to sign and submit the offer while preserving the right to have the contract reviewed by legal counsel within a specified time period.

If issues are identified during the review period, the parties may negotiate modifications or, depending upon the language of the contingency, the buyer may have options to terminate the agreement.

For many first-time buyers, an attorney review contingency provides an additional layer of protection while allowing the offer process to move quickly.

Key Terms to Consider When Making an Offer

Purchase Price

The purchase price is often the most visible part of an offer, but it is not always the only factor influencing a seller's decision.

When determining an offer price, buyers should consider:

• Comparable sales
• Property condition
• Current market conditions
• Competing offers
• Seller motivations

A higher price may not always win if another offer provides greater certainty of closing.

Earnest Money Deposit

An earnest money deposit demonstrates that the buyer is serious about completing the transaction. Common deposit amounts are between 1% and 5% of the purchase price, but it’s negotiable. 

The deposit is typically held in escrow by the Realtor or attorney and credited toward the purchase price at closing.

Buyers should understand:

• The amount required
• When the deposit becomes non-refundable
• How contingencies may protect the deposit

Before signing a contract, buyers should understand the circumstances under which they may or may not recover their deposit.

Financing Contingency

Most first-time homebuyers obtain mortgage financing. 

A financing contingency helps protect the buyer if financing cannot be obtained despite good-faith efforts. 

Without an adequate financing contingency, a buyer could face significant financial consequences if a mortgage loan is ultimately denied.

Discussing the financing contingency with a mortgage lender to learn what loan terms can likely be approved is an important step before making an offer. 

Buyers should carefully review:

• Financing deadlines
• Loan application requirements
• Documentation obligations
• Circumstances under which the contingency may be satisfied or waived

Home Inspection Contingency

A home inspection contingency allows the buyer to investigate the property's condition.

Even attractive homes can have hidden issues involving:

• Roofing
• Foundations
• Structural components
• Plumbing systems
• Electrical systems
• Heating systems
• Water intrusion

The inspection contingency may provide opportunities to:

• Request repairs
• Seek credits
• Renegotiate terms
• Terminate the transaction if significant defects are discovered

For first-time homebuyers, a professional inspection is often one of the most important parts of the due diligence process.

Attorney Review Contingency

As discussed above, an attorney review contingency allows legal counsel to review the transaction documents after the contract has been signed.

This contingency can be particularly valuable when:

• The property has unusual features
• The buyer is unfamiliar with real estate transactions
• The buyer wants additional legal guidance
• Special contract provisions may be appropriate

Title Examination Contingency

Many buyers focus heavily on inspections while overlooking title issues.

A title examination contingency provides an opportunity to investigate whether the seller can convey good and marketable title.

A title examination may reveal matters such as:

• Easements
• Rights-of-way
• Restrictions and covenants
• Shared driveway rights
• Utility rights
• Boundary-related concerns
• Other title defects or encumbrances

Some title issues are minor and easily resolved. Others may affect how the property can be used or transferred in the future.

A title examination contingency helps ensure that buyers have an opportunity to review and address title concerns before closing.

Closing Date

The closing date establishes when ownership will transfer from the seller to the buyer.

Buyers should consider:

• Mortgage approval timelines
• Moving schedules
• Lease expirations
• School schedules
• Seller timing needs

Flexibility regarding the closing date can sometimes strengthen an offer.

Included and Excluded Personal Property

One of the most common sources of confusion involves personal property.

The contract should clearly identify what items will remain with the property.

Examples may include:

• Appliances
• Window treatments
• Light fixtures
• Generators
• Wood stoves
• Outdoor structures

Assumptions can lead to disputes. Clear contract language helps avoid misunderstandings.

Competing Offers and Escalation Clauses

In a competitive market, sellers may receive multiple offers.

When this occurs, buyers may need to decide whether they want to improve their offer terms.

Potential strategies include:

• Increasing the purchase price
• Offering a larger deposit
• Providing scheduling flexibility
• Strengthening financing terms
• Using an escalation clause

An escalation clause generally provides that the buyer's offer will increase automatically under specified circumstances if competing offers are received.

Because escalation clauses can have important legal and financial implications, buyers should carefully review the language before using one.

Common Mistakes First-Time Homebuyers Make

Focusing Only on Purchase Price

The strongest offer is not always the highest offer.

Contingencies, financing strength, timing, and overall transaction certainty often influence a seller's decision.

Failing to Read the Entire Contract

Many buyers focus on only a few key provisions.

Every provision matters.

Buyers should understand the rights and obligations created by the contract before signing.

Waiving Important Contingencies Without Understanding the Risks

In competitive markets, buyers may be tempted to waive contingencies.

Before doing so, buyers should fully understand the potential consequences.

Waiting Too Long to Consult an Attorney

Legal review is often most effective before issues arise.

Obtaining guidance early in the transaction may help avoid disputes and surprises later.

How Peet Law Group Can Help Vermont Homebuyers

Purchasing a home is one of the largest financial decisions most people will ever make.

Peet Law Group focuses exclusively on Vermont real estate law and assists clients throughout Vermont with:

• Purchase and sale contract review
• Attorney review contingencies
• Residential real estate closings
• Title examinations
• Title insurance
• Resolution of title issues
• Real estate closings
• Real estate legal guidance throughout the transaction process

Whether you are purchasing your first home or your tenth, experienced legal guidance can help protect your interests and provide peace of mind.