First-Time Buyers Guide to Making a Home Offer on a House
First-Time Buyers Guide to Making a Home Offer on a House
Buying a house seems simple enough. All you need is to figure out the financing and choose a house, right? Well, those are important steps but they aren’t the only steps to buying a house.
Once you find the house that you want to purchase you have to know how to write the home offer. There’s a lot more that goes into writing an offer than just telling the seller how much you are willing to pay for it.
When you submit a home offer to the seller you are creating a legal document. If the seller decides to accept your offer you will be locked into the deal, or risk losing your earnest money deposit. This is why it’s so important that you know how to carefully craft a home offer that works for you and is appealing to the seller.
What should be included in the home offer
As mentioned above the offer is about a lot more than just the sale price. The details in the offer spell out how the rest of the closing process will go and what the expectations are for both parties.
Some of the things that could be included are: sale price, address of property, target closing date, earnest money deposit you are making, type of deed, details about a clear title, any contingencies that you want to include such as home inspection and appraisal, along with a deadline for the offer.
What you need to know about contingencies
The contingencies that you include in your home offer are important to help protect you and you money. The most popular ones to include are for a home inspection, appraisal, and financing. These keep you safe in case the house isn’t worth the price you offered, there are major problems found with the house, or your financing falls through at the last minute.
Without contingencies in place for these situations you would still be expected to purchase the house. And if you backed out, you would lose your earnest money deposit.
What is the earnest money deposit?
This is a chunk of money that you place into an escrow account controlled by a third party to show you are serious about buying the house and that you have skin in the game. If your offer is accepted and you are working through closing, these funds eventually become part of your down payment.
This money is also used to help stop you from taking advantage of a seller. If you back out of the deal for reasons that aren’t documented in the offer than you lose this money.
Deciding on a price
It’s best to submit an accurate offer on the house from the start. If you try to lowball the seller they may not want to work with you any longer. At the same time, no one wants to come in too high and spend money they don’t have to.
Talk to your real estate agent about the price. They can show you comps in the area to help you determine what the market value of the house is.
There are other tactics that can be helpful in getting a seller to accept your offer when you write a home offer. One of these is to include a letter to the seller explaining why you love the house and are making an offer. This extra touch can be just the thing needed to push your offer to the top of the list.