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So, you’ve been house hunting and finally found the perfect home within your budget. Now what? Well, if you’re ready to move forward with the purchase, it’s time to put in an offer. The offer you submit to a seller plays a large role in the homebuying process. In fact, it determines whether you’re able to buy the property at all! A buyer’s agent can help you iron out the details, but here are a few things to keep in mind during the process.
A purchase offer is a proposal that a potential buyer sends to the seller. In it, the buyer includes the amount they’re willing to pay for the home and any contingencies requested in the purchase.
A home’s asking price is a good place to start when formulating an offer, but it doesn’t have to be the final say. The amount you include in your submitted offer can also be contingent on:
Aside from a proposed price, you can also include requests in your offer. If competition for the home is stiff, you can even use your purchase offer to entice the seller to choose you.
Contingencies can include things like home repairs, or asking the seller to cover closing costs, appraisals, and even a home inspection. You can also suggest changes to the required earnest money, which is a deposit made to show good faith. Earnest money is typically held in an escrow account until closing, when it is applied to your down payment and closing costs.
If you want to make your offer more competitive, you can offer the seller extra earnest money, a quick closing, or to take the home as-is. If you’ve been pre-approved for a mortgage, now’s the time to mention it, and you can also submit an offer letter to make your proposal a bit more personal.
Once you’ve submitted your offer, it’s time to wait for a response. Now, the seller has three options: accept, decline, or send back a counteroffer.
Congratulations, the seller accepted your offer! Now it’s time to sign a purchase contract and deposit the agreed-upon earnest money into an escrow account.
An inspection and appraisal will be conducted (if desired or required), as well as any agreed-upon repairs. Your mortgage lender will proceed with funding, and you’ll close on your new home in about a month, give or take.
Offers can be declined for many reasons. The seller may have accepted a better offer, or maybe someone just got there first! If that’s the case, you’ll need to keep looking. But, if they declined your offer for being too low or having too many contingencies, you can always revise it and try again.
A seller has the option to send back a counteroffer in the negotiation process. They may cross off some of your requests, offer a higher price than you originally proposed, or even make requests of their own.
If you’re satisfied with their counteroffer, you can accept. If not, you can counter their counteroffer. The negotiation process can go back and forth as long as necessary. Just keep in mind that another buyer could submit a more enticing offer at any time!
Making an offer can be nerve-wracking, especially once you’ve found your dream home. Consult with a buyer’s agent to properly analyze your offer, and be sure to include any contingencies at the offset. Then, cross your fingers and wait for that acceptance notice. Once you receive it, it’s time to celebrate; you’re one step closer to homeownership!