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Writing a Purchase Offer for a Home

writing a purchase offer on a house

What are the requirements for writing a purchase offer?

Say you've finally found the house you want to buy. Most sellers will not accept an offer unless you are preapproved, which means you should have a preapproval letter from a bank or a lender that shows how much they will lend you. Getting preapproved for a loan before making offers helps establish your price range and how much you can afford. It also shows the seller your offer is serious.

When you make an offer it is customary to include an earnest money deposit of a certain percentage of the home price. The amount of the deposit varies between areas of the country, but a general rule of thumb is to estimate about 1-3% of the offered price. The check for this is usually given to your Real Estate Agent at the time of offer or within a few days of your offer being accepted. Don’t worry — this money sits in a third party escrow bank account until your closing day and is then credited back to you at settlement. If you are making an offer on a foreclosure property (REO, or real estate owned) you may be required to submit a certified check rather than a personal check. If you are paying for your home in cash, the seller may require proof that you have the funds available. This could be satisfied by providing a copy of a bank or stock statement. Ask your Agent for more details on your specific situation.

Here's a breakdown of the steps to make an offer:

  1. Initial Offer: Once you find your ideal home, you will want to make an offer. Usually, your Agent drafts your offer paperwork with you. Your agent will create a Comparative Market Analysis (CMA) for you. It compares your desired home to similar, recently sold homes (comparables) that are near your home. It helps estimate the projected sales price based on current market activity.
  2. Seller Response: Your initial offer usually includes a deadline for the seller to respond. This deadline may vary from a few hours to 1-2 days, depending on your market and your timing. The seller may respond by accepting your offer, making a counter-offer, or rejecting your offer outright.
  3. Negotiations: If the seller counters your initial offer, it's usually because they want more money or a faster date for closing the deal. Your Agent will negotiate on your behalf to get you the best deal possible. You may come to a quick agreement, or you may go back and forth with the seller for many rounds of negotiations. During this stage, either party may walk away from the deal at certain times.
  4. Mutual Acceptance: Once you and the seller agree on price and terms, you'll both sign the purchase contract which makes the contract ratified. In most areas, you will now submit a check for your earnest money deposit to your Agent. This money is given in “good faith” within one to three business days after agreeing with the seller on a price for the home to show that you are serious about your offer. You and the seller are now contractually obligated to complete the deal, unless a contingency is not satisfied.
  5. ...or...

  6. Rejection: Home offers do get rejected, and many buyers go through multiple rejections before finally landing their ideal home. It can be disappointing to lose a home, especially if you are already emotionally attached to it. However, this can be an important opportunity to learn, refocus on what's important, and refine your offer process.

Want more advice about all things home — including homebuying or selling advice? Nestiny is a great place for homebuyer education and to help you gauge how ready you are to buy a home. Journey Homeward allows you to enter all your wants and needs while the True Affordability Tool will break down your budget, showing what you can comfortably afford. You will also receive a Ready Report that will give you a vital head start in the home buying journey, saving you valuable time and money.

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