How to Make an Offer on a House

You’re primed and ready to enter the housing market. You’ve shopped around and found a home you really love. It’s time to make an offer, but what exactly does that mean and how is it accomplished?

Real estate offers are conditional offers made by buyers to purchase a property. They become legally binding once accepted. An offer includes information like closing date, financing guarantee, down payment, and what the purchase includes. The following steps will walk you through the process so you can be confident going forward.

Five steps for making an offer on a house

You’ve found your dream home, and now you need to know how to make an offer on a house. These are the steps involved: 

1. Get approved for a mortgage

You can do this before you start shopping for a home. It’s a good idea to make sure it’s done at least before you make an offer on a house. It may seem odd to get approved before you begin looking, but by doing so, you’ll know what you can afford. Then, if you do find the perfect place, you can make an offer right away.

Speed can play a factor in housing deals. If you need to go through finance approval while another potential buyer does not, they’ll send out an offer quicker and you may have lost your chance. Sellers also prefer buyers who are already approved for financing. It verifies who you are and informs them that you mean business.

2. Create your offer

Your offer is the blueprint for the home’s final sale. It’ll include information such as the address of the property, the sales price, and the seller’s promise to provide a clear title. You’ll outline the terms, such as whether it is conditional on your mortgage approval and a passing home inspection. You’ll include the target date for the closing of the sale, as well as any earnest money offered and how it’ll be returned should the offer be rejected. You’ll outline how to transfer the utility costs, usually by pro-rating the bill based on the closing date. You would have any state requirements necessary and a closing date for the offer. Of course, you’ll also have your contingencies.

3. Consider earnest money and contingencies

Earnest money is different from a down payment and should be considered when factoring in what to offer on a home. A down payment is provided to a money lender (who provides you the mortgage loan) to bring your payments and term down. Earnest money is cash offered to the seller to be delivered immediately upon closing the deal. This payment counts toward your down payment and is usually 1% to 5% of the total sale. If there’s a problem with the home, or the seller backs out, you would have a stipulation that your earnest money would be returned.

The two main contingencies for purchasing a home are based on financing approval and the home (and termite) inspection. Home inspections are generally done within 10 days of an offer. They ensure an unbiased party has outlined all the potential defects within the home.

4. Home inspections ensure there are no surprises

A home inspection is a crucial step before buying a home. A home inspector has knowledge of all aspects of the home, including the foundation, electrical, roofing, and the hazards you’ll need to know about.

A home inspection may reveal unseen issues, and you may be able to use it to negotiate a fix or bring the buying cost down. Most often, a home inspection reveals small issues within the home. Some big issues that fail a home inspection could be a bowing roof, dangerous electrical wiring, leaks, or a cracked foundation. If a home fails a home inspection, you’ll want to reconsider your purchase.

5. Price negotiations

Once you submit an offer on a house, the seller might accept your offer outright, or they may create a counter-offer. This means you’ll have a new decision to make – whether to accept the offer. You can try to discuss the price of the home, which your real estate agent can do with the seller. Other areas which you can negotiate, aside from price, are repair requests for home defects.

If your seller needs to close fast, you may make your offer more attractive if it helps the seller do so. The seller generally doesn’t want to sit on their new home for very long, so hopefully, they’ll want to make a favorable deal.

How do I make an offer on a house without a realtor?

You don’t need a realtor to make an offer on a house. You can hire a lawyer to write up an offer for you or to assist with the entire transaction. You can also write your own real estate offer, though ensure you are thorough when you do. Since these offers are legally binding, it’s worth considering a professional for the job.

Here’s what you’ll need to make an offer:

  • The full address of the home you want to buy
  • Any contingencies and concessions to the offer
  • Your mortgage approval letter
  • The target closing date
  • The moving date
  • A deadline for the seller to accept the offer

What happens after an offer is accepted?

Once your offer is accepted, you’re going to need to arrange the agreed-upon payments. This is known as fulfilling your purchase conditions, which may include selling your own home or getting financing approval.

You’ll need to ensure you’re ready to pay your legal fees and have arranged your home insurance by the closing date of the deal. You’ll need to do anything within the offer that requires your attention, like the inspection and appraisal. If everything works out without a hitch, you then get to wait until you take possession.

What if your offer is rejected?

You can’t win them all. An offer can be rejected for any number of reasons and they might not tell you why. You can try another offer with more money involved, or you can move on. It can be hard to turn away from the home, especially once you start dreaming of living there. Even if everything looks perfect, and you haven’t yet found anything close to it, don’t despair. Houses go on the market constantly, and your next perfect home may be right around the corner. A rejection of an offer isn’t personal, and it’s not the end of the world. You’ll find another amazing home.

There can be a lot that goes into a home offer and it may seem overwhelming. If you have concerns, you should lean on a professional who understands these offers inside and out. Making an offer can be thrilling, stressful, and full of excitement. You may have to bounce counter offers back and forth, or you may have to make offers on multiple homes. Patience and perseverance are the keys to successful home shopping. Once an offer is finally accepted and you’re moving into your new home, it’ll be completely worth it.