Making an offer
You make an offer by paying earnest money and signing a contract called a Residential Offer to Purchase. Signing a contract doesn’t necessarily obligate you to buy – it allows you to cancel your offer if significant problems are uncovered during the inspection or appraisal, if you have contingencies for these problems. It gets the negotiations started.
The offer to purchase
If the seller likes your offer, he/she will sign the contract. If seller doesn’t like your offer, he/she will probably make a counter-offer by preparing a new contract with different terms for you to sign. The process repeats until you either have a contract signed by both parties, or the deal falls through because the two parties couldn’t agree. A good buyer’s agent like Robin or Wil can advise you and facilitate this process for you. If the seller accepts your contract he/she will take the home off the market. This puts you first in line to buy the house, and you can get it inspected and appraised to make sure it’s worth what you offered for it.
Earnest Money
Along with signing the contract, you pay earnest money, a deposit to show that you are serious about your offer. The earnest money is applied toward the purchase price if the deal goes through and is usually held in escrow by the listing broker until closing day.
If the deal doesn’t go through, you can usually get your earnest money back, unless you default on the contract. Once you sign the contract, make sure to have the inspection, and appraisal performed quickly, or you can lose your earnest money.
How much to offer
Whether to offer less than, more than, or the exactly what the seller is asking depends on a number of considerations.
- Your realtor’s advice
- How much the house is worth
- How much loan you can get pre-approved for
- Your appetite for negotiation
- How quickly homes are moving off the market
- Whether any other buyers are competing for the same home
- How much you want the house
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