How to Make an Offer on a Home

Making an offer on a house is one of the things home buyers need to learn. This quick and easy-to-read guide will help you get ahead of the competition, so the seller chooses you among other potential buyers.

Before you make an offer to buy a house, there are some things you need to know, especially if you’re a first-time buyer.

A few deciding factors to consider is how competitive the property is and any constraints you might have as a buyer. It is also important to give the sellers something they really want, so they can pick you among all potential buyers of the property. In fact, it is best to let your agent know right away about any constraints you might have, so he/she can help you find a workaround.

The buying process

Before making an offer, you have to understand first how the buying process works. Your real estate agent should explain to the buying process to you and give you sound advice on some issues you might encounter.

How do I make a good offer?

A good offer depends on multiple factors: the market, the neighborhood, the seller needs and the list price. Your agent should provide you with the best information on these factors. These are some questions you might ask:

• Is the list price low or high compared to the market?
• Is your offer the only one on the table or you are up against several?
• Are properties, in general, selling above or below asking in the neighborhood?

How do I win in a multiple-bid situation?

If there are a few other potential buyers for a property, you might find yourself in a tough competition. First, you have to understand the seller’s strategy and motivation. Find out how many other offers are on the table, the state of the market and the seller’s goals. Remember that a good offer is more than a purchase price – it is drafted carefully with overall terms that will appeal to the seller.

Should I provide a personal letter or enclose photos with the offer?

Yes, a personal letter and a photo or two, even a video, can help the seller paint a picture of who is buying their home. It shows how serious you are and how much you really want the property. Combined with a good solid offer package, a personalized cover letter will go a long way in helping the seller accept your offer.

How long will it take for me to hear back from the seller?

Normally, you will wait 24 hours for the seller to respond. The seller might request more time, but usually no more than a couple days. In the case of a short sale or REO, it can take weeks or months to hear back from the bank.

What is a counter offer and how does it work?

A counter offer is simply an offer made in response to your offer. When you make an offer, the seller can:

→ACCEPT IT

This means you are ratified and now “in contract” to buy the home.

→REJECT/DECLINE IT

The seller’s agent can let you know why the seller rejected your offer.

→OFFER YOU A “BACK-UP” POSITION

This means they have accepted another offer, and you are in first position to ratify if the first offer cancels or falls through.

→COUNTER YOUR OFFER

The seller can counter you on the purchase price, the length of escrow, contingency periods or any other terms. Once you receive their counter, you can then:

• • Accept
  • Reject
  • Counter their counter*

*Countering a counter offer can go back and forth many times until both sides come to an agreement. As soon as one party agrees to the other’s counter, you are ratified.

What is a multiple counter offer?

A multiple counter offer is a counter by a seller who receives more than one offer and counters all of them or a select few. Even if you respond to the seller’s counter offer, you are not yet ratified until the seller accepts your counter.

Documents needed to make an offer

Purchase Agreement

This document will have the buyer’s name, offer price, down payment amount and other data relevant to the sale. Your real estate agent will draft the Purchase Agreement based on your instructions. More information

Proof of funds

You need to provide proof that you have the money to purchase the property. These documents include proof of your down payment and closing costs, such as a bank statement, stock trading account statement and so on.

Pre-approval letter from the lender

The pre-approval letter from the lender is the seller’s guarantee that the lender has already done a background and credit investigation on you and that you are good to go.

Personal letter

The personal letter is a letter you write to the seller introducing yourself (and your family) and stating why you want to buy the home. It helps the seller decide who among the potential buyers can best take care of the home they are selling. It is important to indicate your motivation for buying the home, so the seller knows your plans for the property.

Reviewed and signed Seller Disclosures

Seller Disclosures are a set of documents from the seller listing any known issues with the property and any works they had done during the time they owned the property. Signing these documents means you have reviewed and acknowledge the information stated in them.

If you haven’t found the home of your dreams yet or are having difficulty doing so in such a competitive market, here are some tips on how to find a good deal on the MLS.

To find condo properties in San Francisco, check out these condo listings for some of the best deals in the city.