By Jesse McCarl
It’s time to make ‘em an offer they can’t refuse! When you’re looking to buy a home, nothing is of more paramount importance than writing an effective offer.
Obviously you will have your handy dandy Realtor on hand for every step of the process, making sure everything is being communicated properly. However, there are a lot of decisions you need to think through before sitting down with your Realtor to discuss details.
Here’s a step by step run-down of how to write an offer on an effective home so that you know what to expect when your perfect real estate is on the line.
Step #1 – Make Sure It’s the House You Want
This sounds obvious, but you’d be surprised how many people feel the pressure of a ticking clock and wind up making an offer that they immediately second guess. You don’t want to go through the hassle of writing an offer only to decide the floor plan isn’t open enough and you need an excuse to back out.
Step #2 – Come Up With That Magic Number
A good real estate agent will not tell you what to offer on a home; they will simply talk through the pros and cons of some of the numbers you’re considering. Most states don’t allow clauses like, “I will pay $1,000 more than your best offer,” so you’ll need to go with your gut on this one.
Depending on the market, the best you can do may be to simply pay the asking price and have enough other factors and contingencies to make your offer stand out.
Step #3 – What’s the Down Payment?
You will need to make a good faith deposit, or earnest money deposit, and disclose it with your intended down payment.
The old rule of thumb is 20% of the purchase price should be made in an all cash down payment. It’s perfectly normal to not pay that much up front, but the rest of your offer (not to mention your mortgage!) could be an uphill battle.
Step #4 – Terms of Financing
Now that you’ve told the seller how much you’re willing to pay, they need to know how you’re going to do it. This is another portion that your Realtor will be a valuable asset for, but the items you need to consider beforehand include: maximum interest rate you’re willing to pay, the type of loan you plan to obtain, and pre-approval documents.
Step #5 – List Your Contingencies
Contingency offers exist to protect you, the buyer. This is where can be balance out the factors you don’t like. For example, a home inspection contingency gives you permission to back out of the offer if the final home inspection finds something wrong that isn’t promptly fixed.
Here are the most common contingencies:
- Home Inspection
- Mortgage/Loan funding
Step #6 – Who Pays Fees?
Here’s a little secret for you: the seller usually pays all the miscellaneous fees. They’re the ones trying to sell a house, they can handle the little charges. In some cases, though, it may behoove you to take some of the fees upon yourself to make your offer more appealing.
The party paying for services also choose the provider. So if you have an escrow company you really want to work with, you may have to bite the bullet on those charges.
Here are the most common fees:
- Transfer Tax
- Home Inspection
Step #7 – Set Some Deadlines
The end of your offer will include a bunch of dates. These are obviously still negotiable after presenting your offer, but it’s best to supply the seller with your ideal timeline. Here are the dates in order of how they should appear in your offer:
- Expiration on said offer
- Possession date (usually the day after closing, to give the seller time to move last minute things, but can be immediately upon closing)
- Terms if the possession date and closing date are farther apart than one day
If you know what to expect going into writing an offer for a house, then you can ensure maximum effectiveness when you work out the details with your Realtor. We hope this helps you in securing the house of your dreams!