Making an Offer

When you’ve found a home you love and are ready to make an offer, it’s important to approach the process thoughtfully and strategically. Making an offer is one of the most critical steps in the home-buying process, as it sets the tone for negotiations and potentially securing the property. Here’s an overview of what the offer process looks like:

 

• Discuss Your Goals and Budget: Your agent will help you understand what’s reasonable in terms of pricing based on the home’s value, market conditions, and comparable sales (comps). They’ll also help you define your negotiation strategy.
• Prepare for Multiple Offers: If the home is in high demand, there could be multiple offers on the table. Your agent will advise you on how to make a competitive offer without overextending your budget.

• Market Analysis: Your agent will conduct a comparative market analysis (CMA) to determine the home’s fair market value. This takes into account the sale prices of similar homes in the area, the home’s condition, and current market trends (e.g., whether it’s a buyer’s or seller’s market).
• Consider the Asking Price: Consider whether the home is priced fairly or if it’s above or below market value. Your agent will help you decide whether to offer the full asking price, a lower price, or even higher than the asking price if the market is competitive.

Contingencies are clauses in your offer that protect you as the buyer. Common contingencies include:

 

• Home Inspection Contingency: Allows you to have a professional inspection done on the property. If significant issues are found, you can either negotiate repairs or walk away from the deal.
• Financing Contingency: Ensures that you can back out of the offer if you’re unable to secure financing (a mortgage).
• Appraisal Contingency: Protects you if the home appraisal comes in lower than the sale price, allowing you to renegotiate the price or walk away from the deal.
• Sale of Your Current Home (if applicable): If you’re relying on selling your current home to purchase the new one, this contingency gives you an out if your sale doesn’t go through.

• What it is: Earnest money is a deposit you make to show the seller you’re serious about buying the home. It’s typically between 1-3% of the offer price and is held in escrow until closing.
• Purpose: If you back out of the deal without a valid contingency, you risk losing the earnest money. However, if the deal proceeds, it goes toward your down payment or closing costs.

Your agent will help you draft the official offer, which includes the following elements:

 

• Offer Price: What you’re willing to pay for the home.
• Contingencies: Any conditions you require (inspection, financing, etc.).
• Closing Date: When you want to close on the property.
• Inclusions/Exclusions: List of items that are part of the sale (e.g., appliances, fixtures, or furniture) and anything that’s not included.
• Earnest Money: The amount you are offering as earnest money.
• Expiration Date: An expiration date for the offer, typically 24-72 hours, to encourage the seller to respond promptly.

• Submit the Offer: Your agent submits the offer to the seller’s agent, who will present it to the seller. In a competitive market, your agent may also send a personal letter or “buyer’s letter” explaining why you love the home, to make your offer stand out.
• Offer Timeline: Once the offer is submitted, the seller will either accept, reject, or counter your offer. Your agent will communicate with the seller’s agent to keep you updated.

• Acceptance: If the seller accepts your offer, you’re ready to move forward with the next steps, such as securing financing and scheduling an inspection.
• Counteroffer: If the seller counters your offer, you’ll have the option to accept, reject, or negotiate further. This is common in a seller’s market or when the seller has received multiple offers.
• Rejection: If the seller rejects your offer, you can decide whether to make a new offer or move on to another property.

• Price Negotiation: If the seller’s counteroffer is higher than you’re willing to pay, you can make a counteroffer of your own. Be sure to stay within your budget.
• Contingencies and Repairs: If the inspection reveals issues with the home, you can negotiate repairs or request a price reduction. If the appraisal is lower than expected, you may renegotiate the price or ask the seller to cover the difference.
• Closing Costs: You may be able to negotiate who pays for certain closing costs, such as title insurance or property taxes.

Once both parties have agreed on the terms (price, contingencies, timeline, etc.), you’ll sign the purchase agreement. This is a legally binding contract that commits you to the purchase if you meet all contingencies.

 

• Home Inspection: Typically, you’ll have a 7-10 day period to arrange for a home inspection. A certified home inspector will assess the condition of the home and identify any potential issues.
• Appraisal: If you’re financing the home, your lender will require an appraisal to ensure the property is worth the loan amount.

As you approach the closing date, you’ll receive a Closing Disclosure, which outlines the final terms of the loan, closing costs, and the amount you need to bring to the closing table. Review this document carefully with your agent and lender to ensure everything matches what you’ve agreed upon. If there are discrepancies, address them immediately.

 

 

• Final Walkthrough: A day or two before closing, you’ll do a final walkthrough of the property to ensure it’s in the agreed-upon condition and that any negotiated repairs have been completed. • Gather Necessary Documents: Bring your ID, proof of homeowner’s insurance, and any other required documents provided by your lender or agent. • Arrange Payment: Make sure you’ve wired the funds for your down payment and closing costs or have a cashier’s check ready, depending on what’s required in your jurisdiction.

 

• Signing the Paperwork: On closing day, you’ll sign the final documents, including the mortgage agreement (if applicable) and the title transfer.
• Transfer of Ownership: Once all paperwork is signed and funds are disbursed, you’ll receive the keys to your new home, officially making you the owner!

Making an offer on a home is an exciting yet complex process that requires careful planning and collaboration with your real estate agent. By understanding the steps and approaching each phase strategically, you can increase your chances of securing the home of your dreams while protecting your financial interests. Happy house hunting!