How to Make an Offer on a House
Point of Interest
Understanding the nuances of making an offer on a home can help your offer get accepted — and help you get into the house you want.
Buying a house is an exciting time in anyone’s life, whether it’s your first time or you’re a seasoned pro. If you’re new to the home buying process, you may be wondering how to make an offer on a home. While the process is pretty straightforward, there are several nuances that need to be accounted for to get the best results. A firm grasp on these details can help you successfully make an offer on a home.
What the offer process looks like when buying a home
If you’ve never purchased a home before, you’ll quickly learn that the process is quite different from the process of buying almost anything else. This process is unique even when compared against other higher-ticket purchases like buying a new car. Thankfully, making an offer on a home generally follows the same steps, regardless of whether the home is small or large, a new or existing build, or whether it’s your first or fifth home purchase.
Make sure your credit and finances are in order and get preapproved by a lender.
There’s no point in making an offer on a home if you’re not sure that you can live up to the offer. Before you make an offer on a home, check your credit, get your financials in order and talk to a lender about getting preapproved. Doing so will give you an idea of what you can safely offer and signal that you’re a serious buyer. Plus, if your offer is accepted, you can move forward with confidence.
Find the right home and determine whether the asking price is feasible for your budget.
Once you’re ready to make an offer, it’s time to find a house you’re interested in. By getting preapproved, you’ll know exactly what you can afford. You can also use mortgage calculators to estimate your payment size for different houses to give you a better idea of what home fits into your budget.
Ask your real estate professional for comps.
What’s the first thing you should do when shopping for higher-priced items? You should compare the price to similar products to see if you’re getting a good deal. When you are making an offer on a home, you’ll want to compare the asking price to similar properties in the area that are either on the market or have recently sold. Your real estate agent can help you pull these numbers, known as comps, for the area you are shopping in.
Determine your timeline for closing, any contingencies you want to include and other specifics of your written offer.
Once you’ve picked out a house you want to make an offer on, it’s time to iron out the details. Determine how long you want to schedule to close, as well as any other requests or contingencies you have that you want to be included. Contingencies can include things like appraisal results and the time limits for the buyer to secure financing, home inspection results, the sale of your existing home or anything else that you want to ask for.
Draft, sign and submit your offer.
After you’ve ironed out all the details, it’s time to draft and sign your home offer. Your real estate professional will help you do this. Make sure that you thoroughly review the offer before you sign and ensure it includes everything you’ve identified in the previous steps. Once you’ve checked, sign the offer and send it over to the homeowner.
Go through the counteroffer process and negotiate until you have a deal.
Ideally, your offer is instantly accepted, and you’re ready to move on to the closing process. In reality, most homeowners are going to counter with another offer based on price and possibly the contingencies that you included in the offer. You’ll want to respond to the counteroffer quickly and try to come to an agreement.
How to get started buying a home
Getting started on the home buying process can be a slow or fast process, depending on your goals and the timeframe you have to work with. A few of the things you can do to expedite the process include:
- Check your credit report for any discrepancies.
- Collect bank statements, proof of assets, W2s, pay stubs, tax returns and any other financial documents the lender may need.
- If you are gifted money for closing, get a letter from the person gifting it that states the amount and that it’s a gift for this purpose.
- Start by broadly identifying neighborhoods where you might want to live.
- Create a list of your deal-breakers, wants and needs. The more you can dial this list in, the easier the process will be.
- Take advantage of online home search apps and websites that allow you to filter results quickly and efficiently.
What’s included in a house offer?
Before making an offer on a home, check with your local and state laws to see what is required. For the most part, the basic elements will be the same across all offers. Make sure to include the property address, the proposed terms of the deal, pricing, earnest money requirements, contingencies, a target date for closing and any other details that you, the seller or the local and state laws deem necessary.
Tip: Make sure to check the local and state laws to see what needs to be included in a home offer. A real estate professional in the area can do this for you.
How much should you offer on a house?
The amount you should offer on a house is generally determined on a case by case basis. That said, many of the factors that go into the price will be the same. You’ll want to pay close attention to comps, the demand (or lack thereof) in the market, how long the house has been on listed and what you can afford.
While it may be tempting to send in a low-ball offer, it’s not always the right move. Doing this can turn off a buyer, or you may risk someone with a more appealing offer beating you to the finish line. Ideally, your real estate agent should have knowledge of the area and can help guide you through the process of making an offer that works for both parties.
Tips to consider when making an offer
- Always look at comps, market conditions and future market projections.
- While it’s important to get an offer in quickly, don’t rush the process. Make sure you detail everything you want.
- Be prepared for a counteroffer. Know what contingencies you are willing to budge on and how far up you’re willing to go with price.
- Lean on the knowledge of local experts. A good realtor knows the market they work in and what offers have the best chance of getting accepted.
- Put yourself in the seller’s shoes before submitting your offer. Would you accept the offer you’re submitting? If not, rework the details. A fair offer for both sides is always the best approach.
The final word
Making an offer on a home is a unique process, but also a relatively straightforward one. The key to having success is knowing what you want and anticipating the seller’s needs. Move quickly when you find a home you are interested in, but never rush the process to the point of making mistakes. If you follow the basic steps of the process, you may be well on your way to closing on the home of your dreams.