How Do You Make an Offer on A House?

So, you’re in the market for a house! It’s an exciting but intimidating process, which we hope we can make easier for you.

One of the questions you may have is: “How do I make an offer on a house?” Is it as simple as having your real estate agent call the seller, or is it more involved? Is an offer legally binding? Should you make the offer above the asking price or below?

The more you know, the better your chances of getting the house you want at the right price. In this guide, we’ll talk about how to make an offer on a house. By the time you finish reading, you should understand the process and feel more confident about your knowledge and your capabilities!

Sort Out Your Finances

Before you put an offer in on a house, you need to have some money set aside in cash or assets you can quickly liquidate. You will need these for your earnest money and your down payment. Here’s the difference:

• Earnest money is a deposit you make when you sign a purchase agreement. Earnest money ensures that the seller will not accept another offer on the home while you secure financing, arrange for a home inspection, perform a title search, and do other tasks you will need to do before the sale is finalized. Earnest money is typically 1% to 3% of the purchase price of the house.
• A down payment is a payment toward the total purchase price of the house, which reduces the amount you need to borrow for the home. Down payments are required by most lenders to indicate that you have the resources and financial stability to carry a mortgage. A down payment can be up to 20% of the purchase price of the house, but it can be as low as 0%, depending on the type of mortgage you have.

Get Pre-Approval for Your Mortgage

The second step in how to make an offer on a house is to get your mortgage pre-approved. Although it’s not always necessary, it shows sellers that you’re serious about the process, and it locks in your interest rate for 30-60 days, which gives you more predictability.

Create a Realistic Purchase Budget

With your pre-approved mortgage, you’ll have a ballpark figure of how much you can afford. However, understanding how to make an offer on a house requires knowing the other expenses you will incur. These expenses include your down payment, your closing costs, property taxes, insurance, utilities, HOA fees, and your mortgage payments under different interest rates.

Be Prepared to Act Quickly

In a seller’s market or a popular area, you can miss out on the home of your dreams if you wait too long. A big part of how to make an offer on a house is getting the timing right. This is where having a great real estate agent really pays off; they’ll keep you focused and cue you when it’s the perfect time to make your offer.

Decide How Much to Offer

Again, a good real estate agent is crucial here; they’ll perform a comparative market analysis for you that shows recent sales of similar homes, takes market conditions into account, and keeps you within your budget. When you ask them, “How do I make an offer on a house?” be prepared for a detailed answer!

What’s Included in An Offer?

An important aspect of how to make an offer on a house is understanding what goes into the offer. An offer typically includes:

• The purchase price
• Your earnest money amount (1% to 3% of the purchase price)
• Any contingencies you want in the contract (ex: inspection, financing, title search, appraisal)
• Inclusions and exclusions (ex: lighting fixtures, draperies, appliances)
• Proposed closing date and expiration date of the offer

Negotiating a Price

Depending on market conditions, there may be room for you to negotiate the purchase price of the home and other specifics. Take the advice of your real estate agent about this, as they’ll be intimately familiar with whether you’re in a buyer’s or a seller’s market and how quickly homes in the area are selling. Ensure that your agent stays within your budget unless you’re certain that you can increase it if necessary.

Other negotiable factors include:

• The closing date
• Who will pay which closing costs
• Any repairs and replacements that must be completed before the sale closes

Can You Make an Offer on a Pending House?

A pending home is one that’s already under a purchase contract. Normally, that means that the seller can’t accept other offers unless and until the original buyer backs out. However, backup offers may still be accepted. Your real estate agent can help you understand how to make an offer on a house that’s pending sale.

How to Make an Offer on A House: Your Legal Obligations

Buying a home can be a life-changing experience, and it will feel this way! Be aware that your offer becomes a legally binding agreement if accepted. That doesn’t mean you are committing to buying a house when you sign a purchase agreement since your contingencies still need to be met. However, it does mean you need to be certain about what you are signing. If in doubt, ask your real estate agent for clarification or review the contract with a real estate attorney.

Ready to Make an Offer?

Hopefully, we have answered the question, “How do I make an offer on a house?” Now that you’re ready to go house hunting, choose a qualified, experienced real estate agent to guide you through the process.

Contact a REMAX agent today for the award-winning assistance you need to make a successful offer on the home of your dreams!