How to Make an Offer on a House
You have found a house that you love. Now you need to make an offer. This is where the process really begins. It is time to get serious and start the paperwork.
Buying a home isn’t a handshake deal. Verbal agreements just don’t count. That’s why everything important. Any details that are part of the sale must be written down and specifically agreed to. There are no shortcuts.
The Steps to Make an Offer
You need to be prepared to negotiate, or even walk away, if the terms aren’t right or you feel pressured. It doesn’t matter how excited you are about the prospect of your new place.
You’ve done your homework. You know your local market and have a list of sales that are comparable to the house you’re interested in. It is now time to make an offer on the home. Here’s how the process works:
- You make a written offer.
- The seller accepts, counters, or declines the offer.
- If it’s accepted – you move on
- When they make a counteroffer – you either accept it or go back to step 2.
- If the offer is refused – you can make a new offer or find a different house.
- Your agent will do all this for you.
The Offer Process
The written offer is legally binding. This means that in most cases a simple letter won’t work. Your real estate agent can give you a Residential Purchase Agreement that complies with applicable state and local laws.
A written offer should contain these elements:
- A legal address and the legal property description
- Details regarding the purchase price and terms
- The amount and terms regarding earnest money
- A requirement that the seller will provide clear title to the property
- Details regarding any buyer’s participation in closing costs or other fees
- Details on as how certain taxes and expenses will be prorated between the buyer and the seller at closing
- The date and time of the offer’s expiration
- A projected loan closing date
- Other state-required provisions or disclosures
- Any contingencies that the deal is subject to
Contingencies and Disclosures
At least a couple of standard contingencies are usually in the written offer. These are a few things that have to happen before the sale can happen. Your offer will most likely include some normal contingencies. A good example is one stating that the deal hinges upon you obtaining financing within a specified time. Another could be that a home inspection will be required. There could be several others.
Federal, state, and local laws require seller disclosures. This is information about the property and improvements the owner is aware of that can affect its value. Disclosures could include:
- Natural hazards
- Structural issues
- Other substantial defects
You will need to look over these carefully before committing to a purchase.
Earnest Money
You will submit a deposit when you make an offer, known as earnest money. The seller will hold it as good-faith money. This could be anywhere from 1% to 3% of the total purchase price. The offer agreement includes the circumstances for forfeiting or returning the money.
What Happens Next?
Remember that a phone call, handshake, or verbal commitment doesn’t make it official. It’s not a done deal until both the buyer and seller sign the offer agreement. Then it is time to get down to the serious business of closing the sale. That can take an average of 30 to 60 days to complete.
If you want to buy a home, give us a call. We will help you find the right home, make an offer, and get you to closing. This is the perfect time of year to start living in the home of your dreams.