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If you're interested in buying property, you need to know how to make an offer on a house. If you have a real estate agent, they'll walk you through this process. But it's still helpful to understand the steps. If you don't have an agent, you'll have to submit offer paperwork on your own.
You make an offer by submitting a written document outlining the terms of the transaction. Submit the offer directly to the sellers, or the sellers' agent (if they have one). Making an offer on a house means committing to buy the property if the offer is accepted.
There are standard forms used for offers. The document is usually called a Purchase and Sale Agreement or Real Estate Purchase Agreement. However, make sure your contract complies with state laws. Typically, your real estate agent provides these forms. If you don't have an agent, you can get the forms online or hire a lawyer.
Specify all the terms and conditions of your agreement to buy the property in your offer. Typically, you should make it contingent upon certain things occurring -- like getting a satisfactory inspection and appraisal. You may also want to make it contingent on getting an affordable loan after you apply for a mortgage.
Remember, a purchase offer becomes a legally binding contract if accepted.
Here are the steps involved in putting in an offer on a house:
If your offer is accepted, you'll be making a legal commitment to buy it.
You may offer the full asking price -- or make a higher or lower offer depending on your local market. Research comparable sales to decide on a fair offer.
You can get a standard Real Estate Purchase Agreement for your state from your real estate agent or online. Or you can hire a lawyer to draft an agreement.
Contingencies are things that must happen for the sale to go through. At a minimum, consider making the purchase contingent on a satisfactory inspection. Also consider making it contingent on a home appraisal and mortgage approval.
If you're buying a foreclosed property, the seller may be the bank. Or it may be an estate if you're buying from a deceased person. If it's anyone other than an individual owner, that adds complexity. Consider talking with a lawyer.
Generally, if your offer is accepted, you'll need to make an earnest money deposit. This shows a seller you're serious about buying their home. You'll have a few days (usually three or four) to make your deposit once your offer is accepted. The earnest money deposit is typically a percentage of the sale price.
Include the property address, your full name, the seller's full name, your offer price, contingencies, the earnest money deposit amount, the desired inspection period, how closing costs will be split, what personal items will transfer to your ownership with the property, and the date you want to close.
Sellers typically want to see proof of mortgage pre-approval before accepting.
A real estate offer contains all the details that will govern the sales transaction. A written offer should include:
A real estate offer becomes the Purchase and Sales Contract when the seller accepts it. That contract determines each party's rights and responsibilities. If an agreement between the buyer and seller isn't in the offer, it's not legally binding. To learn more about the ins and outs of buying a home, our first-time home buyer guide can help.
Making an offer is just the beginning. The seller will either accept your offer, counter it, or reject it -- and their response determines what happens next.
If your offer is accepted, you're legally bound to follow through with the terms of the purchase contract. Make your earnest money deposit.
If your offer included contingencies, such as an appraisal contingency, work on meeting those conditions. You'll need to schedule inspections and appraisals within the time allowed. After each condition is met, you'll acknowledge that in writing so the sale will no longer be conditioned upon it occurring in the future.
If a problem develops with any of the conditions of the sale, such as an issue in inspection, negotiate a resolution with the seller or cancel the contract. If you decide to move forward, you'll finalize your mortgage loan approval and prepare any money you have to pay on the day of your closing.
If your offer is rejected, the seller may make a counteroffer. You can negotiate to see if you can reach acceptable terms. If the seller just declines your initial offer, you could make a more attractive offer. Or you could move on to a different property.
One reason it's helpful to work with a real estate agent is because an agent can help you make an appropriate offer for your local housing market. Your offer might have been rejected because the seller received a higher offer. Even if you didn't think your proposal was a lowball offer, if you're in a competitive market, others may offer higher than you would expect.
Even if your offer is rejected, don't feel too discouraged. Rejected offers are a normal part of the home shopping process. Keep your head up and keep searching for your dream house -- and you just might land it.
If you're a first-time home buyer, our experts have combed through the top lenders to find the ones that work best for those who are buying their first home. Some of these lenders we've even used ourselves!
We've compiled a first-time home buying guides to help you confidently take the next step to land your best mortgage deal. Check out The Ascent's first-time home buyers guide for essential education.
To make an offer on a house, get or draft a Real Estate Purchase Agreement or Purchase and Sale Agreement. There are standard forms available. Make sure they comply with your state's regulations. Specify all of the terms and conditions of the sale. They include the purchase price, the transaction timeline, and contingencies. Contingencies are things that must happen for the sale to go through, like a satisfactory inspection.
You can make an offer on a house without a real estate agent. But make sure you understand your rights and obligations. If accepted, your offer will be legally binding.
A real estate offer letter contains all the details that will govern the purchase transaction. This should include:
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