How to Make an Offer
You’ve found the perfect home – great! Now it’s time to get down to business and make an offer.
- Decide how much to offer
This is the number one question in most buyers’ minds. There are a lot of factors to consider, especially how hot the neighborhood is, how long the house has been for sale, and whether you are in a buyer’s or seller’s market. Looking at “comps” (what houses with the same size, condition, and location recently sold for) is helpful but not an absolute. Do your research, but listen to your agent.
- Decide your terms and contingencies
The terms included in your offer could potentially represent thousands of dollars in additional value – or costs – to you, so consider them closely. Terms you might wish to add to your offer include how long the offer is good for, closing costs, target closing date, whether you are an all-cash or pre-approved buyer, and who pays for inspections and appraisals. You’ll also want to include some contingencies – ways you can leave the contract if necessary. Two popular contingencies are financing (if you can’t secure the loan amount) and inspection (if the house fails to earn a satisfactory inspection report).
- Pay your earnest money
Earnest money is a deposit made with your offer to show good faith. Earnest money is usually about 1% of the offer price, but can be higher in a hot market. If the sale closes successfully, the earnest money is deducted from the price. If not, it may be refundable – but verify with your agent.
- Prepare to negotiate
Your realtor will make the offer to the seller and the seller’s agent (no need for you to try and maintain a poker face!). Stay in very close contact with your realtor at this time – most offers that aren’t rejected immediately go into some form of negotiations, and those can move very quickly. Buyers should attend the house inspection, if possible, to walk through the house with a third party and go over the report with the inspector.
Hopefully, you and the seller will come to a mutually satisfying agreement, and after the appraisal, survey, and title review, you will be the proud owner of a new home!