You’ve found the perfect place. Now, you need to know how to make an offer on a house. Take a deep breath, don’t rush, and use the handy information below.
How to Make an Offer on a House
The National Association of Realtors reports that some 5.34 million existing homes were sold in 2019. That means plenty of homebuyers figured out how to make a winning offer on a house. To join their ranks, take a look at an overview of the basic process before zeroing in on a few of the finer points that could help you tailor your approach.
The Basic Process for Making an Offer
Where do you start when you’re ready to make an offer on the house that you hope you’ll soon be calling home? Zillow offers a step-by-step guide that provides a handy overview of the process of making an offer:
- Verify the financial feasibility. Start by playing with the numbers. Look at the estimated monthly payment. Can you afford it? What would your down payment need to be? Do you have enough for property taxes, insurance, HOA dues, maintenance, and other expenses?
- Request comps from your real estate agent. Ask your agent to pull comps so that you can get a sense of what price is fair for the property. Talk with your agent about their strategy for home offers.
- Draft and submit your offer. After talking with your agent, decide on an offer that includes your offer price and any contingencies. This offer is legally binding, so it’s best if it’s written up by your agent in the form of a purchase and sale agreement.
- Wait for the seller’s reply. The seller could accept your offer. This would mean you’d start moving toward the closing process. The seller could decline your offer, which would send you back to the drawing board. Alternately, they could come back with a counter-offer. This opens up negotiations. Generally, buyers and sellers will barter back and forth over a few different points before either reaching a deal or deciding to take their chances elsewhere.
A Buyer’s Market vs. a Seller’s Market
Savvy buyers take the nature of the housing market into account before making an offer. A buyer’s market has more homes available than interested buyers. A seller’s market has fewer homes than interested buyers. Why does the type of market matter? As HomeLight indicates, you face greater competition when you’re trying to purchase a home in a seller’s market, so you don’t have as much leeway to negotiate or barter.
Why Contingencies Matter
A contingency clause is something that must be met in order for a contract to be binding. Including contingencies can protect your interests by giving you a way to back out of the deal, but having too many in the offer can make sellers reluctant. The trick is to choose your contingencies wisely. According to Redfin, some common contingencies include the following:
- Home Inspection: A home inspection provides a report detailing the home’s condition and offering suggestions regarding any repairs that should be made. This contingency gives you the freedom to reassess your offer if the inspection reveals previously unforeseen major issues.
- Appraisal: Mortgages are secured by the property, so if the property appraises for less than the loan amount, the lender may refuse to make the loan. With this contingency in your contract, you can walk away if the lender’s appraiser does not agree that the house’s value is either equal to or greater than the sales price listed in the offer.
- Financing: Sometimes, a last-minute surprise causes a buyer’s financing to fall through. This contingency protects you if your lender decides not to approve your loan during the final stages of the mortgage approval process.
When you have questions about how much of a mortgage you can afford, what type of home loan fits your needs, or how to make an offer on a house, turn to the experts at PrimeLending KC for answers. We believe buying a home should be a positive experience, so we offer helpful guidance, personal service, and expert advice. Contact us today to get started.