How To Make An Offer On A House

How To Make An Offer On A House

Buying a new home can be complicated process.  From financing to finding the right place to making sure the timing is right, you have a lot to think about.  Of course, once you’ve actually found the right place at the right time, you still have to make an offer.  To maximize your chances of success, it's a good idea to understand what goes into crafting a good offer and how to prepare ahead of time. 

Preparation to Make an Offer: You’ll Need Money, an Agent, and a House

Get Preapproved

There can be quite a bit of groundwork to lay before making an offer on a home.  Before you do anything, getting preapproved is a good place to start.  If you do, you will be able to make an offer right away when the time comes, with no delays. 

Most sellers prefer that you have documentation available to show that you will be able to secure the funding you need to make good on your offer, so avoiding prequalification, which does not require income verification, and getting preapproval is usually the way to go.

Hire a Real Estate Agent

Once you know what kind of financing you will have available, you should considering getting yourself a good real estate agent.  The best agent will have a track record of success in the neighborhood and may be able to save you a ton of money in the long run.  They will have access to all the information you need to make a smart offer, and they know what questions to ask your prospective sellers.  With a competent buyer’s agent at your side, you should have an excellent safeguard against rookie homebuying mistakes.

Find the House

For some people, shopping for homes is the fun part while others may find it to be stressful.  Either way, look at as many MacDonald Ranch houses for sale in your price range as possible and learn as much as you can about what the market offers in your preferred area. 

Will you be able to get everything you want or need for a price you can afford?  Will you have to look in a different community?  If you take the time and effort to find a home that fits your situation, you’ll be able to craft a better offer when the time comes.

Steps to Create a Good Offer on a House

1. Decide How Much to Offer

Houses are a big investment, so you should consult and consider your agent's knowledge and expertise and your preapproval amount to guide you here.  When you ask your agent to do a comparative market analysis (CMA), you'll gain access to all sorts of helpful information, whether it's a buyer's or seller's market, to what similar houses in the area sold for. 

Compare the info from the CMA to the house you want to buy.  How many days has it been on the market?  What’s its condition?  Does it need repairs or renovations?  The hotter the market, the more recent comps you will have to work with, and the easier it may be to narrow down a price range.

Finally, consider your budget.  One common home buying mistake is offering your max preapproval amount right away. You don’t have to offer your full preapproval amount.  If you do, you likely won't be able to negotiate further, and you might not be able to afford any repairs and upgrades after you move in.

2. Provide Earnest Money

Earnest money is like a security deposit – it shows the seller that you are serious about your offer and that you have access to funds.  If you back out of the purchase, once your offer’s been accepted, you generally may lose your earnest money.  Typically, the earnest money is not more than 2% of the sale price.  An escrow account holds the money until it is applied to your down payment after closing.

3. Establish Contingencies

Contingencies are conditions that the seller must satisfy for you to agree to the sale.  If the seller fails to meet any or all of the contingencies you propose, you can back out of the deal with your earnest money intact.

Typical contingencies may include home inspections, appraisals, title checks, and financing.  Generally, fewer contingencies make for a stronger offer; but buyers want certainty, too.  If you offer cash, that obviates the need for financing and appraisal contingencies, and some buyers will even waive contingencies altogether in a seller’s market. 

4. Write and Send the Offer Letter

Your agent will draft the offer letter for you, but you should still know exactly what it contains.  The most important information in the letter is the address of the property, the names of the people who will be on the title once you buy it, and the amount of your offer. 

The letter will often have a paragraph each for contingencies you require, concessions you are willing to make for things like repairs or closing costs, and what items you want to be included in the sale, such as appliances, lighting, and window accouterments. 

To show that your offer is serious when buying a 55+ house in Las Vegas – or any type of home, anywhere – your agent will include the earnest money you have agreed to give, as well as a copy of your preapproval information from the lender.  Finally, the letter will end with your expected close date, preferred move-in date, and a deadline for the sellers to respond. 

What Happens Once You Make an Offer?

Sending the offer letter is not the end of the process.  There are three possible responses that could come your way from the seller. 

  • Rejection - They could reject your offer for any reason or for none.  They may have gotten cold feet, or someone else may have put in a more substantial offer.  As disappointing as it can be, use it as a learning experience.  Remember, if you did your homework before putting in your offer, a rejection may be in your best interest – nobody should pay more than they can afford.
  • Counteroffer - If the seller sends back a counteroffer, consult with your agent to figure out whether it's something you can accept or something that requires a little more negotiation.  Remember, you can negotiate with more than just the price.  Try waiving contingencies or making concessions on minor repairs if you feel you should not increase the dollar amount of your offer.
  • Offer Accepted - Whether it’s at the first asking or after drawn out negotiations, they can accept your offer.  If they do, congratulations!  After you and the seller both sign the paperwork, and you send along the earnest money, you can finally move on to the closing process

Making an Offer on a Home

Making an offer may not take long, but it really is a pivotal moment in the home buying experience.  It bridges the time you spend preparing and shopping with the time it takes to close on your mortgage and execute the move.  Luckily, thoughtful preparation, a good agent, and a well-written offer letter can make the transition from casual shopper to serious buyer much less stressful. 

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