Making an offer on your dream house

Act quickly

Good deals on homes don't last very long. Well-kept homes that show well and is priced right will catch the attention of many buyers. So when you have found a good home, act quickly. Inform your agent immediately that you are ready to make an offer. Your agent will at once inform the listing agent that an offer is forthcoming. The listing agent will then inform your agent if there are other offers in hand or other offers are expected.

Deciding the offer price

Every seller wants the best price which is often the listing price. Not often do we find a buyer offering the listed price unless there are other buyers competing for the same house. I have also seen buyers who offer above the listed price when they wanted to make sure that the seller doesn't accept the offers of other buyers. But in most situations, the offered price is lower than the listed price.

Take the help of your agent to decide the offer price. Ask your agent to prepare a CMA report that compares houses that were sold in the recent months. These houses should be similar to the house you are planning to make an offer in the following ways: (a) they should be in the same neighborhood. (b) they should be similar in as many ways as possible. (c) they should have been sold in recent months. Examine the listed price and the sale price of these properties to get an idea of the market. Your agent can also give you another tool to estimate the fair value of the house: SEV (State Equalized Value) of the house. Using the CMA report and SEV as well as guidance from your realtor, you can decide on an offer price.

Avoid Overpaying

In a multiple-offer situation, don't forget your market research. Negotiate with a clear head and don't get carried away by your emptions. No matter how much you want the house, you'll probably feel worse knowing you overpaid. Don't be afraid to walk away. Unless it's a unique property, you'll probably find another house you like just as much.

Writing up the offer

Your agent will bring along the form on which offers are to be written and explain the legal mumbo jumbo. Your agent also will fill out the form for you to sign. In addition to the offered price, there may be other contingencies that you can include in the offer. For instance, you may want some obvious repairs to be done by the buyer. Or you may want some appliances to be included in the offer price. But the two most important contingencies included in every offer is the option to withdraw the offer without penalties if 1. home inspections reveal structural problems that cannot be easily fixed and 2. your application for a mortgage loan is rejected by lending institutions.

Earnest money

It is common practice to give the seller 'earnest money' along the offer perhaps to demonstrate that you are a serious buyer. After the offer has been accepted the seller, if you withdraw from the deal (except for reasons mentioned above), you forfeit your earnest money. So it does demonstrate that you have strongly committed to buying the home. The money is not really handed to the seller along with the offer. Your agent takes it to his/her brokerage to deposit in an eschrow' account. If the sale contract is rescinded for a valid reason, the money is returned to you. If the sale goes through, the amount is deducted from the sale price at the time of closing.

How is the offer delivered to the seller?

It is the responsibility of your agent to deliver the offer personally to the seller or to seller's agent. The packet that will be delivered will include the offer document, your pre-approval report and a copy of your contract with your agent.

When will the seller respond to the offer?

The offer gives the seller a date and time before which he/she has to respond. Your agent is likely to get the response of the seller from the listing agent.