In the dynamic world of real estate, understanding common acronyms and jargon is crucial for both buyers and sellers. One frequently encountered term is "BOM," which stands for Buyer's Offer Made. This simple phrase carries significant weight, marking a pivotal moment in the real estate transaction process. Let's delve deeper into what a BOM signifies and its implications.
What Happens When a Buyer Makes an Offer (BOM)?
A BOM signifies that a potential buyer has officially submitted a written offer to purchase a property. This offer isn't a casual inquiry or a preliminary expression of interest; it's a formal, legally binding document outlining the buyer's terms and conditions for purchasing the property. This includes the offered price, financing details (if applicable), closing date, contingencies (such as inspections or appraisals), and any other special requests or stipulations the buyer might have.
This offer is presented to the seller through their real estate agent (if they are using one). The seller then has the opportunity to accept, reject, or counter the offer.
What Information Does a BOM Typically Include?
A comprehensive BOM will generally include the following:
- Purchase Price: The amount the buyer is offering to pay for the property.
- Earnest Money Deposit: A good-faith deposit showing the buyer's seriousness. This money is typically held in escrow until closing.
- Financing: Details regarding how the buyer plans to finance the purchase (e.g., cash, mortgage).
- Closing Date: The date the buyer and seller agree to finalize the transaction.
- Contingencies: Conditions that must be met before the sale can be completed. Common contingencies include:
- Appraisal Contingency: The buyer's mortgage lender must appraise the property for at least the purchase price.
- Inspection Contingency: The buyer has the right to conduct a professional inspection and may back out if significant issues are found.
- Financing Contingency: The buyer must secure financing for the purchase.
- Possession Date: When the buyer will take possession of the property.
What Happens After a BOM is Made?
Once the seller receives the BOM, several scenarios can unfold:
- Acceptance: The seller accepts the offer as is. The contract is signed, and the transaction moves forward.
- Rejection: The seller rejects the offer entirely.
- Counteroffer: The seller proposes changes to the buyer's offer (price, closing date, contingencies, etc.). The buyer then has the opportunity to accept the counteroffer, reject it, or make a further counteroffer. This back-and-forth negotiation continues until both parties reach an agreement or one party terminates the negotiations.
What are the next steps after a BOM is accepted?
Once an offer is accepted, the process moves toward closing. This involves securing financing (if applicable), scheduling inspections, and completing all the necessary paperwork. This process is overseen by real estate agents, lawyers, and other professionals involved in the transaction.
Is a BOM Legally Binding?
A BOM, while not always a fully legally binding contract, is a serious indication of intent. It usually contains a clause specifying it is binding upon acceptance by both parties. Once the seller accepts the offer and both parties sign the document, it becomes a legally binding purchase agreement.
How is a BOM Different from Other Real Estate Terms?
It's crucial to differentiate BOM from other frequently used terms like:
- Under Contract: This indicates that a legally binding purchase agreement is in place. The property is considered "under contract" after the seller accepts the buyer's offer and both parties sign the purchase agreement.
- Pending: Similar to "under contract," this signifies that the transaction is underway and progressing towards closing.
In essence, a BOM is the precursor to a property going "under contract" or being listed as "pending." It's the starting point of the negotiation process and a critical step in the real estate transaction journey.
Understanding what BOM means in real estate is essential for navigating the complexities of buying or selling a home. It signifies the formal commencement of the purchase process and highlights the importance of clear communication and negotiation throughout the transaction.
