What You Need to Know About Making an Offer
Luckily, when it comes to making an offer on a home you’d like to buy, you’re not doing it alone—you’ll have the help and guidance of your real estate agent! But as you start the process, there are a few things about making an offer that will be helpful to consider.
What exactly is an “offer”?
As a buyer, an offer is basically a written agreement that states things like how much money you're offering to purchase the home for, and any other terms and conditions there may be. This includes potential contingencies, inspection agreements, title information, earnest money, and more. The offer is clearly written out and signed, and then it’s given to the seller to review.
An offer is like a contract; if it is accepted, it will become your agreement with the seller. It’s important that you carefully review the details so you know what you are agreeing to.
What is earnest money?
Earnest money is typically 1-2% of a home’s overall price. Earnest money is typically a check that is made out to the escrow company, and it is a sort of “good faith” symbol, showing sellers that you are serious about your offer. Depending on your agreement, if you back out of the offer, you may lose your earnest money. Earnest money also works to protect against non-serious buyers.
How much money should I offer?
This will all depend on your real estate market. Like any supply-and-demand scenario, if there are 5 other buyers competing for your house, you have more incentive to offer an above-asking price if you really want a shot at winning the home. If there aren’t any other offers, you may consider offering a certain percentage below the asking price. If the sellers are anxious to sell, you may have the chance to score a deal!
After you give the seller your offer, what happens next?
There are a few different scenarios. First, a seller can of course reject an offer. A seller could also make a counteroffer, which is a response to your original offer. Then, you have the opportunity to accept or reject it, or make your own counteroffer.
As you get closer to sealing the deal, you’ll need to prepare to close on the home. Read our blog post on a few extremely important things to avoid during the closing process of buying a home!