Crafting the Perfect Offer on a House

You’ve finally found it – that perfect dream home you’ve been searching for. You decide you want to put in an offer; but where to start? Work with your agent and take the steps below to create the offer that will make that house yours!
Set a price.
Your agent should do a comparative market analysis and review what similar homes in the area have sold for recently. This will help you determine a solid offer. Additionally, you should consider the market. If it’s hot and the house was recently listed, you might want to offer more than what the seller is asking. If the house has been on the market for quite some time, offer less. Most importantly, educate yourself and talk with your agent to choose the right number.
Explain yourself.
If your offer is much lower than the asking price, it could be a shock to the seller, or they could be offended. Consider explaining what brought you to that price. Write a letter that recaps your offer and includes information from the comparative market analysis. The seller’s agent is legally bound to provide the seller with anything you present in writing, so explain yourself. It will help the seller understand your offer and the market conditions that led you to it.
Choose an expiration date.
An offer to buy a house has an expiration date, and you get to set it. This date depends on how hot the market is and the average length of other offers in your area. In a hot market, you’ll want to leave the seller a short amount of time to consider your offer to prevent someone else from making a better offer and getting the house. Your offer can range from hours to days, and your agent can help you decide that time length based on different aspects. You will also need to choose a closing date for when you want the deal to be finished and the house to be yours.
Show the money.
To put your seller at ease, show them you have your finances in order. Many sellers require a pre-approval letter to show just how you will pay for the home. This letter will determine you are working with a lender who will loan you the money you need, therefore the seller will be confident in accepting your offer.
Another way of “showing the money” is through the “earnest money” check you will most likely be asked to write. This is essentially a deposit and shows the seller you are serious about purchasing the house. Your agent can advise you on how much to put down, which can range from one to ten percent depending on how hot the market is. If the seller accepts your offer, the check will be placed in an escrow account and put toward your down payment.
Determine escape routes.
Should something be wrong with the house or your financing falls through, you will want to have plans set so you don’t lose your earnest money. This is when contingencies come into play. The most common are inspection and financing contingencies.
With an inspection contingency, you will need to ask the seller to make the home available within a certain number of days for you to bring in a professional inspector. You will also need to specify what will happen if any problems should surface that you would like to address. Beware! You will want to keep the amount of days for inspection short, as it’s possible you can lose the house within that time frame.
A financing contingency will let you get out of the sale without losing your money if you can’t secure a loan – although this shouldn’t be an issue if you are truly pre-approved.
Once you’ve crafted your perfect offer, your agent will meet with the seller’s agent to present it. This ensures emotions will not get in the way of the negotiation.
And now you wait. Eventually you’ll get a call from your agent to find out if the seller accepted your offer, rejected it or made a counter-offer. If they accept by your “expiration date,” you are legally bound to the house. With counter-offers, if you and the seller cannot come to an agreement, the contract is cancelled and you get your earnest money back.
Good luck!