How to Make an Offer on a House That Gets Accepted

Imagine you are a homebuyer scouring countless listings, visiting numerous open houses, and finding a beautiful home for which you now have to make an offer.

Placing a bid becomes even more important if the property listing price is within the home buyers’ budget. Moreover, home buyers still have questions and doubts that need answers. Should they offer the listing price, negotiate, or go above it to outbid other potential buyers? How do they get pre-approved for a mortgage to strengthen their bid?

In this blog, we will not only guide you on how to make an offer on a house, but we will also present a case study of a family's home-buying experience. You'll gain insights into the family's considerations regarding their offer price, contingencies, and how they get pre-approved for a home loan before securing their new home.

So, let's explore the details of making an offer on the house and help you secure your new home!

Key Takeaways

Preparing To Make An Offer: Get Pre-Approved

Get pre-approved for a mortgage to help you in the aspects mentioned below:

Managing Your Expenses
According to your financial position, getting pre-approved means that a lender agrees to lend you money up to a certain amount. This figure is critical as it caps your home-buying expenses at a manageable level.

Streamlines the Home Search
Moreover, when you get pre-approved, you'll have a specific price range to focus on during your search. You'll avoid wasting time on homes that are out of reach and concentrate on properties you can make an offer on.

Better Position in Negotiations
Furthermore, to get pre-approved before beginning your property search will give you greater negotiating power. This shows sellers that you’re up for securing a deal and can help you win over competitors in a tight market.

Considerations and Strategies To Make An Offer

Once you get pre-approved, it's time to make an offer on the house. The bid is more than just a number; it's a package of terms and conditions. Let's explore what to consider:

Offer Price vs. Listed Price

Your offer price is a critical component, and it's not necessarily the same as the price listed by the seller. Think about these factors as you make an offer:

• Situation Of The Market: Do conditions on the market favor sellers and result in a restricted availability of listed properties? Or does the market have more property options for buyers?
• Comparable Sales (Comps): Research recent sales of similar homes in the area to understand the going rates.
• Limitation In Your Budget: Securing mortgage pre-approval doesn't mean you should offer the maximum amount. Consider how the mortgage fits into your overall financial situation.

Contingent Conditions

Conditions that are contingent upon the property sale are called contingencies. For the purchaser, they provide both security and adaptability. Examples of typical contingencies are:

• The Financing Provision: Implementing a financing contingency protects you if your home loan application is rejected.
• Appraisal Contingency: Ensure the home is worth your buying price by including an appraisal contingency in your contract. Unless it does, you can renegotiate or, if required, withdraw.
• Inspection Contingency: Allows for a professional house inspection as a condition of the sale. If major flaws are present in the property, you can either request repairs or reject the bid.

Schedule

Your bid schedule should highlight crucial milestones like the inspection window and the closure day. It's vital to propose a reasonable timeline.

• Inspection Period: Give yourself enough time for a thorough inspection without unnecessarily delaying the seller.
• Closing Date: Consider your and the seller's preferences. Flexibility can be an advantage.

How To Make An Offer - The Harrison Family's Journey

Meet the Harrisons – a young, vibrant family of three searching for a new home. After months of house hunting and numerous open house visits, they finally find a cozy three-bedroom house in a peaceful neighborhood. The Harrisons are eager to make an offer.

The Scenario:

• Family Profile: James Harrison and Sarah Harrison, with a 4-year-old daughter, Emily.
• Financial Profile: Together, their annual income is $100,000.
• Current Savings: $25,000.
• Desired Property: A 3-bedroom, 2-bathroom house listed at $350,000.

Crunching the Numbers:

The Harrisons start by considering their financial situation. Their total income of $100,000 provides a good starting point for determining how much to bid on the house.

• Calculating The Down Payment: With savings of $25,000, the Harrisons must decide on the down payment. They plan to put down 10% of the property's price, which is $35,000. This includes their savings and some extra funds from their emergency fund.
• Seeking Home Loan Pre-Approval: Before placing a bid, the family decides to get pre-approved for a loan to understand their financial situation better. They can learn about their loan options by visiting a lender. They submit their financial information and get pre-approved with a 3.5% interest rate.
• Monthly Mortgage Payment: The Harrisons use an online mortgage calculator to estimate their monthly payments, including principal and interest. Their $35,000 down payment results in a loan amount of $315,000. At a 3.5% interest rate for a 30-year fixed mortgage, their estimated monthly payment is approximately $1,415.
• Allocate Extra Costs: The family estimates an additional $450 monthly expense due to homeownership-related charges such as insurance, property taxes, and maintenance. This adds to $1,865 a month in costs.

Harrisons Make An Offer

With a clear understanding of their finances, the Harrisons are ready to make an offer. Their calculations show that they can comfortably manage monthly payments of approximately $1,865, taking into account all homeownership costs. However, the listing price is $350,000, and they know the importance of a competitive bid in a tight housing market.

• Offer Price: The Harrisons decided to make an offer slightly above the listing price, offering $355,000. While this stretches their budget slightly, this bid gives them a competitive edge.
• Contingencies: The Harrisons include standard contingencies to ensure protection throughout the process. These include financing and home inspection contingencies to safeguard their interests.

The Result

The carefully crafted offer and sound financial planning pay off. The seller accepts the Harrisons' offer in a competitive market with several interested buyers. The family is ecstatic to secure a new home for $355,000, a price they consider worth the investment.

Moreover, the Harrisons completed the bid-making process through financial planning, thorough calculations, and a well-crafted offer. Their journey is a testament to the importance of understanding your financial capabilities, securing pre-approval, and placing a bid that is competitive yet within your budget.

Parting Words!

Much work and thought goes into placing an offer on a home. Moreover, remember that you can increase your odds of making a successful bid if you deal with an experienced property agent and get pre-approved for financing.

Furthermore, perform your due diligence, consider local market conditions, and make a competitive but sensible offer. Let’s get pre-approved for a home loan and make an offer!

FAQs

1. What are the advantages of offering a flexible closing date when I make an offer?

A flexible closing date allows both parties to coordinate their moves and transition smoothly. However, it's essential to communicate your preferences with the seller and be open to negotiation.

2. Can I include additional contingencies beyond the standard ones when I make an offer?

While adding extra contingencies is possible, striking a balance is crucial. It's advisable to focus on the most critical ones, such as financing, appraisal, and inspection contingencies.

3. Can I include personal items or requests when I make an offer?

While it's common to ask for specific personal property items like appliances or furniture to be a part of the sale, it's crucial to specify these details clearly in your offer.

4. How do I proceed if an offer I make is declined?

If you face rejection of your offer, don't be discouraged. The seller’s refusal may be due to various reasons. You can gather the seller’s feedback, revise bids, or continue searching for other properties.