When you find the perfect home and it's priced right, it's time to make an offer. In a competitive market, you want to make the best offer possible and your real estate agent can make that happen. Let's look at the steps necessary to help your offer rise to the top.
Get pre-approved for a mortgage before making an offer on a house because if you can't afford it, you're wasting everyone's time. A mortgage lender will determine how much you can afford to spend on a home and provide a pre-approval letter. The pre-approval will show the home seller that you're serious about buying their house. Also, you'll feel confident making an offer, knowing that you can truly afford the home.
Determining Your Offer
When determining how much you want to offer, take advantage of the expertise of your real estate agent. Your agent can compare the price of your dream home to similar homes, recently sold in the neighborhood, to come up with a competitive price. Making an offer that doesn't compliment current market conditions could leave you out of the running for a home.
Making the Offer
Now it's time to make an offer and have your real estate agent submit it to the seller's agent. Especially in a competitive market, your agent will encourage you to make the best offer you can and as soon as possible. You'll be going up against other potential buyers who also want the house, and your offer needs to stand out. It's advantageous if your agent has actively sold homes in this neighborhood because he/she will know what it takes to make your offer shine.
After making an offer on the house, your agent may receive a counteroffer. A counteroffer is submitted when the seller wants to accept your offer but negotiate terms. For example, the seller might ask for a higher purchase price or possibly a different closing date. If the seller has countered with a higher price, you may decide to make an offer somewhere between your original offer but not quite as high as their counter. A request to change the closing date can make for an easier decision depending on when you need to vacate your current residence. Overall, you and your agent can decide if you want to accept the counteroffer, decline, or submit a counter-counteroffer.
Other reasons for counteroffers:
- Increase the earnest money
- Fix a mistake on the contract
- Seller's unwillingness to pay for certain fees
- Exclude/add personal property
- Add amendments
- Modify contract timelines (ex. contingencies)
If buyer demand is high in your area, it's important to act fast when you see a home you want to purchase. If your agent knows the market well, and it's a buyer's market, he/she will convey the urgency of making an offer. With a lot of buyers but few houses on the market, you and your agent want to come up with the best possible offer to triumph over others.
If the home you're interested in has been on the market for an extended period of time, work closely with your agent to see if the sellers are willing to entertain a lower-than-list-price offer. A home that's been on the market for 6+ months, without a price reduction (or much of one), leaves room to negotiate a low but fair offer. The seller may counter but there's a good chance that you will secure the home for below asking.
When it comes to making an offer on a house, talk to your real estate agent to ensure you make the best possible offer based on market conditions. Start with a pre-approval letter so the seller takes your offer seriously. If you're in a buyer's market, submit an offer quickly to avoid missing out on the home of your dreams. If you receive a counteroffer, work with your agent to determine whether or not you want to accept, decline or counter. You can make home ownership a reality by following the steps illustrated above. Good luck! Check out our extensive buying guide for more in-depth information: