Making An Offer
Here’s everything that goes into preparing an offer on your next home.
Putting in an offer on a home can be an emotional journey, especially for first-time buyers. Understanding the process can help you feel more confident.
It's common for homes to get multiple offers from other homebuyers, so you may not get the first house you put an offer on. When many offers are made on a house, the seller may select one above the asking price, so be flexible and work closely with your real estate agent to craft an offer that makes sense for you.
A good real estate agent can help you navigate the local market and design and an offer that stands out.
Below is an overview of how the process works.
Make sure you’re ready
Understanding the terms and offer process below can help you act more quickly when you find the right home.
Line up financing
Meet with a few different lenders as soon as possible to explore different financing options and what you qualify for. Ask them about their interest rate, fees, and the loan terms because they will likely vary from lender to lender and shopping around could save you money. Understand the difference between pre-qualification and pre-approval to help you estimate the loan you qualify for and to get an estimate of your monthly payment. This information is crucial when you're ready to make an offer.
Making the Offer
How much are you willing to pay for the home you want to buy? Based on what you offer, the seller may accept, counteroffer, or stick to the listed price.
What's in an offer?
In addition to setting a price, the offer contains:
Earnest money
The earnest money deposit, which is typically 1-3% of the offer price.
Credits
Credits, if applicable, like if the seller is willing to pay for needed repairs or cover the closing costs.
Contingencies
Contingencies or waived contingencies, which are certain defined conditions you’re requesting occur before the purchase can occur, such as passing a home inspection or financing approval.
Timing information
Timing information, like the offer expiration date and the proposed closing date.
Escalations
Escalations, where you plan to raise your offer if there is another interested buyer. You may want to include an escalation clause in your offer if you are willing to automatically raise the amount of your offer to a predetermined amount in the event that another buyer submits a higher offer on the same home.
Other
Other considerations, like whether you can be flexible on the closing date or other parts of the agreement.
Submit the offer to the seller
The buyer and sellers’ real estate agents will work together to reach an agreement.
- Sales Contract: Your real estate agent will prepare a detailed contract outlining the offer terms and present it to the seller's agent, who will deliver it to the seller.
- Consider Terms: The seller will review the offer and decide to accept, decline, or negotiate.
- Negotiation: If the seller wants to negotiate, they will propose new terms through their agent.
- Repeat Until Agreement: This back-and-forth continues until both parties agree. The offer becomes binding once signed by all parties and delivered to the buyer, becoming a ratified sales contract.
After the Offer
There are a few more steps to complete before the home is yours. Remember, it’s a good idea to avoid making any large purchases at this time. Lenders are sensitive to your financial information and making significant purchases could affect their decision to finalize the loan.
You'll need to:
- Ensure the purchase agreement is fully executed with all signatures,
- Contact your selected lender to secure your financing and lock in the interest rate,
- Complete a home inspection,
- Get an appraisal done (if required by your lender), and
- Finalize your loan on the agreed-upon closing date, and
- Complete any other items agreed upon in the purchase agreement by their due dates
These steps should identify and resolve any issues in advance, and facilitate a smoother closing process.
More to explore
What Do I Need to Know When Closing on a Home?
Use this checklist to make sure you know what costs you'll be responsible for, what to do ahead of time, and what to bring to your closing.
What Documents Do I Need to Get a Mortgage?
Get ready to apply for a mortgage. Learn what documents you'll need to provide that show what you earn, what you own, and who you are.
What Do I Need to Know When Getting a Home Inspection?
Prepare for your home inspection. Learn what the inspection includes, what questions to ask, and when to hire a specialist inspector.
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