Everything You Need to Know Before Making an Offer on a House

As a first-time homebuyer, it can be easy to get overwhelmed. What first-time homebuyer loans am I eligible for? Which areas can I save money? How do I find the right neighborhood for my family? The good news is, you’re asking the right questions. The better news is, Amy Stockberger Real Estate (ASRE) is here to help you make an offer on a house.

This article will assume you’ve already spoken with a lender, gotten pre-approved for a mortgage, and saved up for your down payment.

Our team at ASRE will help you research the market, review comparables (comps), and ensure you get a fair price. However, before we jump into how you make an offer on a house, make sure you have done the following:

  1. Research the Area: Drive by the property and explore the neighborhood. Google the address to learn what shops, restaurants, and businesses are near the house.
  2. Talk to the Neighbors: This may be easier said than done, but these could be the people you share a street with for years to come. Pay attention to any excessive noises, potential pet issues, unkempt landscaping, or other red flags that might lead to bigger issues in the future.
  3. Confirm the School: Just because your prospective home is near a certain school district doesn’t necessarily mean that’s where they will end up going to school. Confirm which zone you fall under with the district.
  4. Get a Utilities Estimate: You may know what your monthly mortgage payment will be, but what about the electric bill? How much does it cost to heat the house during the winter months? Ask for an estimate on all utilities prior to making an offer.
  5. Do a Final Walk-through: As a first-time homebuyer, it’s easy to fall in love with the first couple of houses you see. Before you make an offer, do one last walk-through and dig deep. Take a closer look at the exterior of the home, backyard, flooring, kitchen cupboards, appliances, etc.

How to Make an Offer on a House

It’s important as a first-time homebuyer to understand the process of making an offer and what to expect. Here is a brief overview of how it works:

  • The real estate agent will send your offer to the seller.
  • The seller will either accept the offer, decline the offer, or make you a counter-offer.
    • If the seller counters, you will then have the option of accepting, declining, or making a counter-offer of your own.
    • If you decide to counter, this will begin negotiations between you and the seller. Offers can go back and forth as many times as needed until you reach an agreement or one of the parties decides to walk away.
  • After an offer is accepted (by either yourself or the seller), you will sign the purchase agreement, which is a legally binding contract for the real estate transaction.

During this time—known as the contingency period—home inspections, appraisals, and any other purchase agreement terms will take place.

1. Determine Your Starting Price

The starting price will be based on the following criteria:

  • Your budget
  • The local real estate market
  • The house’s condition
  • The seller’s terms

Here is when it’s crucial to have real estate experts like ASRE on your side. Our team has years of industry knowledge and experience, and we will arrive at the best, possible starting price for you.

2. Outline Your Contingencies

As we previously mentioned, your contingency period is the time between the purchase agreement and closing date. Here are two, very important events that should take place during this time period:

  1. Home Inspection: This is a deep dive that will uncover any potential issues or repairs that need to be done and consequently impacting the initial terms of the contract. You wouldn’t want to move into a house and find out the roof needs to be replaced.
  2. Home Appraisal: This is an independent review of the property in order to provide an unbiased estimate of the home’s value. You may discover the house isn’t worth as much as you had first thought.

3. Make an Earnest Money Deposit

Also known as a good faith deposit, this is money included in your purchase agreement that shows a seller you’re serious about buying their house. Generally, earnest money deposits are between one and three percent of the purchase price, but offering a higher earnest money deposit could give you the upper hand in a competitive housing market. Consult your real estate team to make the best, most educated offer. Just remember, if you back out of the deal for any reason that is not allowed by your contract, the seller will get to keep the earnest money deposit.

4. Write a House Offer Letter

Again, in a competitive real estate market, you need all the advantages you can get! If you really have your heart set on a certain property consider writing a house offer letter. This is a sentimental approach in which you would write the seller a letter telling them how much you love their home, essentially. Here are tips for an effective house offer letter:

  • Use premium stationery
  • Try to make a connection in the opening paragraph
  • Be open about yourself and your life
  • Tell them what you love about the house
  • Explain your bid to give it more context (without making excuses if your bid was low)
  • Be gracious

A word of caution if you decide to go this route: While a house offer letter is an emotional appeal, try to avoid being overly aggressive, manipulative, or including information that would jeopardize your offer. Keep your house offer letter light and personable, and consult your real estate team if you have any questions about how to write it.

5. Submit Your Offer

If everything is ready to go, your real estate team will send the offer to the seller (or the seller’s real estate agent). Now, take a deep breath and smile! Regardless of whether the seller accepts, declines, or counters your offer, this is a big step and you should be proud of yourself. With a little bit of luck, you will be closing on your new home in no time!