Making an Offer on a House in 3 Easy Steps

Making an offer on your dream home takes a bit of planning and preparation. In fact, it’s essential to start crafting your offer before you’ve even found the home you want to buy. Fortunately, with a bit of forward thinking, you can create a fantastic offer in just three steps.

1.     Be Prepared and Do Your Research

First, you’ll want to ensure that you’re only looking at homes you can afford. It’s no good finding your dream home only to realize that buying it is either beyond your means or would make you “house poor.” So, create a watertight budget before you even start searching.

With a budget in place, your next step should be to get pre-approved for a mortgage. This shows the seller that you are serious about buying the home and have the means to do so. Without being pre-approved, you’ll need to delay your offer while you secure financing.

Finally, research the local market when you’ve found the home you want to buy. Check out comparable properties to make sure that the sale price is fair or whether there’s a little wiggle room to negotiate.

2.     Make Your Offer

With the preparation and research complete, you can confidently make your offer. However, bear in mind that your offer is a legally binding contract, and once you’ve made it, you can’t easily back out if it’s accepted. So, take your time and ask your real estate agent for advice.

The most common way to make an offer is in writing using a standard purchase agreement. You can easily find templates online, or your real estate agent can supply one.

As you fill out the form, it’s essential to be as specific as possible regarding your offer terms and leave no room for confusion. You’ll typically need to provide the following information:

• Buyer and seller information: name and address

• Full property address

• Purchase price: how much you’re willing to pay for the home—not necessarily the list price

• Earnest money deposit: a small, lump sum of cash from the buyer to the seller that is usually put in escrow

• Type of financing: mortgage, cash, etc.

• Contingencies

When you make an offer, it’s important to add specific conditions that must be met before the sale can proceed. For example, it’s common for real estate offers to be contingent on the results of the home inspection and appraisal, as well as whether the buyer is able to secure financing or not. These conditions offer protection and enable you to back out of the deal if not met.

Since each transaction is unique, be sure to speak with a real estate professional about other conditions you could add to your offer.

3.     Negotiating and Counteroffering

If all goes well, the seller will accept your offer outright. However, it’s much more common for them to negotiate and send a counteroffer. This is an important step, and it’s good to be flexible here. After all, if both parties are happy with the offer, the sale will likely go smoothly. In general, be flexible in areas you can be, but stay firm on the terms that are most important to you.

If, after the home inspection, repairs need to be carried out, negotiations can continue. As a buyer, you have several choices depending on the extent of the damage. You can either insist that the seller has everything repaired before the sale can proceed or have them lower the price. Alternatively, you could also walk away from the sale at this point, provided your offer was contingent on the inspection results.

Once again, a good real estate agent or lawyer can assist with the negotiations. Then, when all parties are happy with the offer, and all conditions have been met, you can close the deal.