In most retail transactions, Americans pay the price the seller is requesting. Negotiating isn’t expected or welcome at your local grocery store, pharmacy, or gas station. Real estate purchases are different. The seller’s asking price is simply a starting point. In some situations, the seller will end up settling for far less. In others, they’ll walk away from the deal with the amount that they asked for. In highly competitive markets, they may be pleasantly surprised by offers from determined buyers that are actually above their asking price. Clearly, learning how to make an offer on a house is an essential skill for aspiring homebuyers.
How to Make an Offer on a House
Do you know how to make an offer on a house? To get started, it’s important to understand the basics of the offer process. From there, you’ll want to learn more about the components that make up the offer.
Learn How the Offer Process Works
Making an offer is a process, which means there are several steps involved. NerdWallet breaks them down in a basic overview so that you can get a sense of how things work:
- Step 1: The buyer makes a written offer.
- Step 2: The seller accepts, declines, or counters the offer.
- Step 3: If the offer is accepted, the buyer can celebrate. They’re one step closer to buying a home and can begin planning for closing. If the offer is declined, the buyer can either make a new offer or start over with a different property. If the offer is countered, the buyer can either accept it or counter it with their own revised offer.
Decide on a Price
The price that you’re willing to pay is a crucial piece of your offer. How much should you offer? Paying too much will hurt your wallet, but offering too little could offend the seller and ruin your chances of getting the home. An experienced real estate agent is an invaluable ally when you’re deciding on a price. However, as The Balance indicates, there are some factors that can help you. Consider things like comparable sales, how much the seller paid for the property, square foot averages, and how long the home has been on the market. It’s also wise to consider the competitiveness of the current market.
Decide on Contingencies
As Homeward explains, contingencies are stipulations that must be met for a home sale to occur, and they’re fairly common. Sellers don’t like to see too many of them because they can cause headaches, but they expect buyers to protect their interests. Therefore, it pays to be smart about contingencies. Common choices include home inspection, appraisal, and financing contingencies. Basically, if anything unexpected pops up when the home is being inspected or appraised or when the buyer is finalizing their financing, these contingencies allow the buyer to break the contract.
Decide on the Earnest Money
Earnest money is the money that you put down as a deposit to show that you’re serious about the purchase. As Trulia points out, you need to take the matter seriously because if you walk away from the offer for a reason that isn’t allowed by the contract, the seller gets to keep this money. However, you’ll want to bear in mind that a buyer who puts down a sizeable sum may be viewed more favorably than one who puts down a smaller amount.
Consider a House Offer Letter
House offer letters aren’t mandatory, but as Zillow reports, they can be the deciding factor for sellers who want to see their home left in good hands. If you decide to include a house offer letter, keep it short and complimentary, but make sure to include a personalized touch or detail that will connect with the seller.
Whether you’re buying your first home or your first home in several years, the home loan experts at PrimeLending Dallas are ready to assist you. With our wide range of loan products and streamlined loan process, we’re here to help you achieve your housing goals. To get started, contact the location nearest to you.