How to Make an Offer on a House: Your Step-by-Step Guide

first-time home buyers working with a realtor to create a home offer letter

Making an offer on a house isn’t as simple as just throwing out a dollar amount you’re willing to pay. If you expect to be taken seriously, there is an extensive home-buying process to follow — and you must be able to prove you can actually get the home loan you need to seal the deal. An experienced real estate agent can be a priceless advocate when it’s time for you to make an offer on a house. This guide will help you understand how to make an offer on a house and what to expect in unexpected situations.

Step-by-Step Guide to Making an Offer on a House

Making an offer on a house doesn’t just mean making a quick phone call (or worse, a text). Your purchase offer will actually be submitted in the form of a legally binding written letter and will have a lot more information than a single purchase price.

When you’ve found the new home of your dreams online or through open houses and you’re ready to make an offer, the offer process will follow these steps:

1. Contact Your Real Estate Agent

Once you’ve viewed a home and you’re sure you want to make an offer, you shouldn’t hesitate to get the ball rolling. You’re likely not the only buyer interested. Your agent knows time is of the essence and will let you know of any additional steps you need to take (like getting a preapproval letter from your bank) before writing up the offer letter.

2. Write Up the Offer Letter

Your home is an important purchase, and the offer letter is the vessel to get you to closing day. This letter will state the price you’re willing to pay, as well as all the details regarding the home purchase.

Your agent’s expertise will be helpful here (especially for first-time home buyers) because there are many factors that influence the value of a home. They’ll help you learn about the local selling market, how long the home’s been on the market, and if there are additional offers on the home. After you determine your home offer amount, these details will also be added to the offer letter.

  • Your down payment amount
  • Whether you’ve been preapproved for a mortgage by mortgage lenders
  • If you’re selling your current home, details of the contract, and the expected closing date
  • Your offer’s expiration date
  • Contingencies (like an inspection contingency)
  • A personal letter to the seller about why you want the home

Pro Tip for How to Make an Offer on a House:

Learning why the house is on the market can be a valuable tool. For instance, if the seller needs to leave the state immediately, you can offer to speed up closing for a quicker sale.

3. Wait for the Seller’s Response

After your agent writes up and sends the offer letter, you wait for a response from the seller’s agent. This typically goes one of three ways:

1. The Seller Accepts Your Offer Price

You did it! As soon as both parties sign the offer letter, you’re officially on the way to becoming a homeowner.

2. The Seller Makes a Counteroffer

If the new offer price is agreeable, you can accept the offer. Otherwise, you can make a counteroffer of your own or simply decline.

3. The Seller Declines

If your budget allows, you can make a more attractive offer. If not, it’s time to go back to house hunting.

4. Begin Final Negotiations

Surprisingly, the act of agreeing upon an offer doesn’t eliminate the chance for additional negotiations before the final purchase agreement. The contingencies you included in your offer included services like an appraisal and home inspection. If these inspections reveal new information, you might need to reconsider your final price.

For instance, if significant repairs are necessary and the owner doesn’t have time to take care of them, you’re left holding the bag. These costs should be deducted from the home’s value. Additionally, you may have the power to demand the owner meet the appraisal price if it’s lower than the agreed-upon offer.

Pro Tip for How to Make an Offer on a House:

An earnest money deposit is a good-faith deposit that’s set aside in an escrow account. Talk to your realtor about how much earnest money you should put down as part of the negotiations process.

FAQs About Making an Offer on a House

couple talking to a realtor about non-standard home offers

If you’ve been house hunting for long, you probably know that some home-buying situations aren’t a clear-cut process. Still, this doesn’t mean you have to check your dream home off the list because of a few complications. Here are some common questions that arise during a less-than-ordinary home buying situation.

Can I Make an Offer on a House Without a Realtor?

Yes. It’s perfectly legal to write up an offer to the seller (if it’s for sale by owner) or the real estate agent handling the sale. However, you could be taking a risk moving forward without the expert advice of a real estate agent.

Before you do anything, it’s vital to get a firm understanding of the laws surrounding an offer for a house in your state. Your offer letter is considered a legally binding document, and you won’t get a do-over. Include the following details in your offer letter and submit it to the seller’s listing agent:

  • The home’s address
  • Your full legal name
  • Offering amount
  • Contingencies
  • A copy of your preapproval
  • Expected closing and move-in date
  • A response deadline

How Do I Make an Offer on a House for Sale by Owner?

When the seller is taking care of the home sale without an agent, you must still submit your offer in writing. That’s a constant requirement in how to make an offer on a house.

Making an offer on a house for sale by owner is similar to dealing with a seller that has representation. You can seek representation from a real estate agent or compose an offer letter on your own. If you decide not to use an agent, both parties will avoid commission costs, but you’ll lose the expert advice of a real estate agent. Even without any agents involved, you’ll still need to submit a preapproval letter and be prepared to include good faith funds.

Can I Make a Lower Offer on a House That’s Overpriced?

Yes, and you probably should. If a seller is truly motivated to sell and the home’s sale price is truly too high, you may still have a chance to get a price you can afford.

Follow this short guide on how to make an offer on a house that’s overpriced:

  1. Compare the list price to similar properties recently sold in the area.
  2. Determine how long the house has been on the market.
  3. Provide documents to support your offer.
  4. Understand the seller’s motivation level.
  5. Make your offer more attractive with a higher deposit, fewer contingencies, or a flexible closing date.
  6. Be prepared to walk away.

How to Make an Offer on a House: 5 Mistakes to Avoid

Now you know how to make an offer on your dream house. Unfortunately, there are still a few mistakes that can lead to a financial loss or even not getting that home you’re already in love with. When you’re making an offer on a house, avoid these common mistakes.

1. Skipping Preapproval

When you’re shopping for a home, you should begin by learning what you can afford. Your preapproval letter shows the seller you’re serious about buying a home. It’s easy to assume you’ll have time to get preapproval after you find the perfect house. But you should always consider that other buyers will be involved and ready to buy.

2. Failing to Research the Housing Market and the Seller

Understanding the local market is one of the most important tools for determining your offering price. A competitive market, or a seller’s market, for example, will give you less negotiating room because there are lots of other homebuyers. Researching the seller can give you an additional edge. Careful research can reveal the seller’s motivation, facts about the home, and a good closing date.

3. Submitting a Lowball Offer

If other homebuyers are interested in the home, a low offer will likely be declined without a counteroffer. Even without other homebuyers, a very low offer that’s too far from the house’s market value could be insulting to a seller leaving a beloved home.

4. Using the Seller’s Agent

The listing agent works for the seller. Simply put, it’s their job to promote the best interests of the seller. This leaves little room for negotiations and the advice of an advocate in your corner.

5. Including Too Many Contingencies

To you, contingencies are a safety net. They help you get your earnest money back if there’s a significant issue with the deal. But to the seller, they’re obstacles to a successful closing. Pick your battles carefully and include only the contingencies that are most important to you. For instance, a home inspection is a must, but an early closing date might not be necessary.

When you decide to make an offer on a house, it can be an exhilarating and overwhelming time — especially if you’re a first-time buyer. Understanding the details of how to make an offer on a house can help things go smoothly so you can avoid unnecessary stress and get a good deal. Also, learning how to make an offer on a house could be the difference between moving into your dream home or continuing your search.

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