Finding the home of your dreams is very exciting. However, in today’s seller’s market, it can be very challenging to make an offer that sticks.
Homes are moving very quickly, and many areas are seeing multiple offers on attractive homes. How do you make a strong offer on a home, and how do you make your offer stand out from others?
Fortunately, there are several strategies you can employ. Here’s what you need to know about how to make an offer on a house.
Be Sure You’re Financially Pre-Approved
Any home seller will want to know that the offer you’re making has real money to back it up. Perhaps you have a full-cash offer – if so, that’s great!
If you don’t, though, you want the seller to know that you’re in good financial shape and are highly likely to be approved for a mortgage. The best way to do that is to provide your pre-approval letter or make sure your offer states you have one.
Getting pre-approved takes some time, so it should be done before you begin looking for homes. The lender will need to look at your credit history and receive proof of your income and other financial details.
Once you’re pre-approved, you’ll receive a letter letting you know the mortgage you’re likely to get. The letter is good for 60-90 days.
In most markets, you don’t have time to wait and decide on an offer after you’ve seen a few more homes. The real estate market has fewer homes available than buyers who want to purchase, so you have to act quickly once you find a home you love.
Many properties receive offers on the very first day they’re listed, so be sure your buyer’s agent is on top of the listing market and shows you homes right away. If you can see yourself living there, make an offer immediately.
There are a few markets that are buyer’s markets, such as Las Vegas, NV or Portland, OR. If you’re in one of those markets, you may have more time to think about your decision.
Decide What Price to Offer
Working with an experienced buyer’s agent is a great way to get proper advice on the offer price. Perhaps you want to offer the asking price, or maybe your agent thinks the price is high and that you might get a lower number approved.
There’s a chance your agent will recommend you come in above the asking price if your market is particularly competitive. Of course, sellers are likely to choose the highest available offer, although sometimes other factors come into play.
If you know something about the seller’s situation, you can take that into account as well. Are they super motivated to sell, or do they have plenty of time? That can affect your offer.
Decide on Contingencies
Contingencies in your offer protect you by allowing you to back out of the sale if something goes wrong. One of the most common is an inspection contingency, where the seller is required to give you time to hire a home inspector. If the home inspector finds problems that are more than you want to deal with, you can walk away from the sale free and clear.
Having an inspection contingency is an important protection, but you may want to include others as well. Talk to your realtor to determine what makes the most sense for a home in your market.
Of course, a seller will favor an offer with fewer contingencies, but don’t skip them without giving it a lot of thought. You could easily end up with a problematic home you can’t get out from under.
Put in the Written Offer
Once you’ve decided to make an offer and what price you want to use, it’s time to submit a written offer. Remember that the offer is a legally binding document, so you should be sure of the price and conditions you’ve set.
The offer will have a variety of details, including the price, contingencies, and the amount of earnest money you’re offering. The earnest money is a good-faith deposit that helps show you’re serious about the sale.
The seller will keep the earnest money if you violate the sales contract, but if all goes well, it will be applied toward the price of the home.
Include a Letter With Your Offer
If you’re in a competitive market, you may want to use a letter to give some personal information about you and why you’re interested in the home.
Share why you’re in love with the house, and talk about how much you’d enjoy living there. You can also share other information that might sway the seller in your favor. For instance, if you have a larger-than-usual down payment, that can encourage the seller to choose your offer since the mortgage is less of a concern.
The goal is to show your personality, how much you care for the property, and to point out how well qualified you are to buy the home.
Be Ready for a Counter Offer and Negotiation
Sometimes the seller will accept your offer as it stands, and other times they will reject it in favor of another offer. Those are the two outcomes most home buyers are ready for.
But what if they counteroffer? Sometimes this catches buyers off guard, and they aren’t sure how to respond. Your agent should be able to give you some great tips about how to answer a counter offer.
One of the keys is to know what the seller wants most from the deal. Are they looking for speed? Maybe you can shorten the time-frame for closing to avoid paying more.
Are they interested in certainty? Remind them that you’re pre-approved and offer to increase the earnest money rather than the price.
Once you work your way through the counteroffer and negotiation, you’ll hopefully end up with an accepted offer.
Are you looking for a house that’s really worth what you are paying for, and even more? Whether you’re a first time homebuyer, a traditional real estate investor, or looking for a home to put on AirBnB as a side hustle, Zumbly’s algorithm has got your back.
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