When home buyers begin the house hunting process, they often don’t realize just how many steps it entails. From securing a loan to finding a property you love to negotiating the purchase, it can feel like the process will never end. Luckily, if you have made it to the offer stage, the finish line is finally within reach. Together with your agent, you can make a bid on your dream home and hopefully seal the deal. In order to improve your chances at getting the house, however, your offer needs to be as strong as possible. Here is a look at some things to consider as you work with your real estate agent to draw up your contract.
Understanding What an Offer Contains Unless you are acting as your own real estate agent (in which case you should probably have a lawyer draw up the offer for you), you shouldn’t have to be the one doing any paperwork. Still, it’s important for buyers to understand the sorts of terms and contingencies a typical offer contains. In addition to the basics–like the address of the home and all of your personal details–the agreement will lay out the sale price, a target closing date, the amount of earnest money you will be required to put up, and any other contingencies that you are asking for. Your offer will also give a timeframe during which the sellers need to respond.
Choosing a Price Obviously, the element of the offer you are likely to be most concerned about is the price of the home. First-time buyers often have trouble deciding how much money to offer on a home, which is why it’s very important to work with a real estate agent you trust. Remember that the housing market determines how much a property is worth, so your agent will look at similar homes that have recently sold in the area in order to help you come up with a reasonable offer price. You should go into the negotiating process expecting to receive at least one counteroffer from the seller (so it’s rarely a good idea to offer top-dollar for a home right off the bat). You may also decide to make a low-ball offer just to see how flexible the seller might be, but you need to be careful not to offend the seller by making an offer that they feel is way too low.
Terms and Contingencies While price is usually the most influential factor when a seller decides to accept or reject an offer, there are other terms and contingencies that may impact negotiations. Almost all real estate professionals suggest that you insist upon a home inspection, for instance, so that you have the ability to back out of the purchase if you find out the property has problems that aren’t obvious to the naked eye. You may also want to write contingencies based on your ability to secure financing or sell your current house (not an issue for first-time buyers). Something as seemingly arbitrary as your chosen closing date might make a seller more likely to accept your offer–especially if they have already bought a new property and are anxious to move out. As a general rule, you should choose your offer terms carefully based on the specifics of the home you are considering. Make sure to find a balance between making your offer as appealing as possible and protecting yourself against any potential issues.
Sealing the Deal The final step once you have come up with an offer you’re happy with is presenting it to the seller. Negotiations can often feel like a game of telephone as your agent communicates with the listing agent, and then the listing agent communicates with the seller. You have the right to back out of your offer for any reason up until it is accepted. If the seller comes back with a counteroffer, you also have the choice to either accept the agreement or write another counteroffer yourself. Once both parties agree on an offer, you will both be bound in a contract, and you may not be able to change your mind without losing some or all of your earnest money. When you have finally sealed the deal, the home will officially be “under contract” as you await your chosen closing date. Barring any unforeseen issues, a signed contract essentially means that you have bought yourself a house, so you can congratulate yourself on finally reaching the end of a long process.