In any offer to buy a house, you could get a yes or a no. While getting a no certainly sends you back to house hunting, getting a yes is a leap forward. Are you prepared to make the next move? How do you make a seller accept your offer?
First, make a purchase offer.
You can’t buy a house without a formal purchase offer. The offer on a home is a legally binding document that contains the pertinent items as shown below that make your initial bid.
Given the legality of this document, it’s important to engage a real estate agent and/or a real estate lawyer to draw up your offer.
What’s in the offer
The legal wording of an offer varies among states but it generally contains these sections:
- Purchase price and financing terms. This contains how much you are willing to bid for the property. This section also lays out how much is the down payment and how much is going to be financed with what type of loan. Get preapproved for a mortgage so you can have financing ready. Most sellers also prefer it.
- Earnest money deposit. This often makes up 1% to 3% of the total offer price. This earnest money deposit is applied to the purchase price if the transaction closes, or it may or may not be refunded to you if the sale does not push through.
- Property and furnishings. This describes the property as on the title. Another section will identify any and all furniture and fixtures that are included in the sale.
- Deed. This identifies what kind of deed will govern the transfer of ownership of the real property.
- Taxes. This spells out your and the seller’s responsibility in settling property taxes, utilities, and special assessments. Mortgages like FHA loans and conventional loans have specific guidelines about the payment of special assessments like PACE vis-a-vis their first-lien mortgages.
- Closing date. This contains the date the transaction will close or be finalized. The offer will also set out when the buyer can move in the property.
- Seller’s consideration window. This sets the deadline on how long the seller is going to consider your offer.
Second, make your offer on a home stand.
Before making an initial bid, ask your real estate agent to run a comparative market analysis (CMA) to make your offer on a home as close to the market price as possible and give you enough wiggle room to negotiate.
Don’t make too high an offer or you’d have a hard time repaying your loan. Remember that you have to pay back the loan’s principal + interest and property taxes and insurance (PITI). Avoid making your offer at the low end either as the seller would not like it.
Third, make yourself ready.
If the seller accepts your offer, be sure you are prepared. Getting mortgage pre-approved is just the first step in a more involved process. You have to submit documents, which should be ready and work with your lender to close the purchase.
But before the big closing date, the lender would require an appraisal to determine the true market value of the home. You also have to pay for an inspection to investigate flaws, if any, in the home that would have to be corrected or repaired.
Even if it’s important that the seller gets to like you and your offer, don’t hesitate to stand your ground if you think things should be done contingent to closing. This is just one contingency among the many that would require amending the initial offer and move you closer to successfully completing the deal.
Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.
