5 Steps to Making an Offer
Say you've finally found the house you want to buy. You're been preapproved for a loan, you've spoken with your agent, and you're prepared to put down an earnest money deposit. So what's next?
Deciding how much to offer
Work with your agent to determine how much you should offer. There are a lot of factors that can influence how much you offer such as:
- How much you can afford
- How quickly you need to move into a new home
- Whether the seller is motivated to sell
- How many other offers are on the table
- The cost of repairs that might need to be made
- The price of similar properties in the area and the appraisal value
Here's a breakdown of the steps to make an offer:
- 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.
- 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.
- 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.
- 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, such as unresolved issues with the home inspection.
- 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 a home. However, this can be an important opportunity to learn, refocus on what's important, and refine your offer process.
Want more homebuying 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 of 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 free Ready Report that is personalized based upon the information that you entered. This report will give you a vital head start in the home buying journey, saving you valuable time and money.