Tips for Making an Offer on a House
You’ve found the home of your dreams — now it’s time to make an offer! But how do you make an offer on a house? And how do you know how much to offer on a house so that it’s both fair to you and attractive to the sellers? Don’t fret — we’ve got some tips to help you navigate the often confusing waters of house bidding.
Keep these tips in mind as you put in an offer for the home you want. Remember that your real estate agent will also assist you in writing and submitting an offer when the time comes. Between the help of your realtor and by following the tips below, you’ll have plenty of know-how and confidence to make an offer.
Put in an Offer With Pre-Approval
There’s a difference between being pre-qualified and pre-approved for a mortgage. If you’re already pre-approved by a lender, then you know how much your lender is willing to give you for your mortgage. Knowing what you can afford is key, not only for making an offer on a house but for shopping within your budget. Another advantage of being pre-approved is that you will get a pre-approval letter from your lender, showing you’re ready to buy and have your financing lined up.
Make an Offer With Contingencies
Quite often an offer to purchase a home comes with some contingencies. Not having contingencies may make your offer more attractive, but in some situations they’re necessary. Examples of contingencies when bidding on a house include:
Home sale contingency. The most common contingency in a home offer is the sale of the buyer’s home. This means that the prospective buyer has to sell the home they’re living in before they’re able to buy a new one. Sometimes this can cause a delay — which the seller may want to avoid. However, for first time home buyers, this contingency isn’t an issue.
Inspection contingencies. While you can remove inspection contingencies to make your offer more attractive, you probably shouldn’t. Most buyers still want the property checked thoroughly by an inspector to make sure it’s sound and there aren’t any unexpected surprises. Having this clause is not likely to make your offer less attractive than others and you’ll appreciate the insight.
Have Earnest Money Ready
Buyers put up earnest money to prove that they’re serious about buying. It’s similar to putting a deposit on an item — you’ll get it back when you buy or you’ll lose it if you’re the reason the sale falls through. That’s a real simplification, but you get the idea. A typical earnest amount is in the range of 1-2 percent of the asking price, but different types of property and different markets may drive demand higher. You may also want to offer more in earnest when making an offer on a home to prove you’re ready to buy.
Confirm Legal Requirements
A home purchase can be tricky due to the paperwork and legal requirements — and they vary by city and state. If you have a realtor working with you, they’ll be able to provide you with the appropriate paperwork. If you don’t have a realtor you may benefit from having a real estate attorney to help you make an offer on a house.