Each aspect of buying a home comes with its own set of steps and challenges. Agreeing with the seller on the price and terms of the purchase are no different. Understanding how to make an offer on a house will help you avoid overpaying and prepare you for the many nuances of making this major purchase. With the assistance of a Real Estate Attorney or Buyers Agent, the following steps will help you make the right choices when negotiating the price of your new home with the seller.
How to Make an Offer on a House: 3 Steps
Step #1 Get Pre-Approved. Getting pre-approved for a mortgage is becoming an increasingly important factor in buying a home. This process requires a brief sit-down with a potential lender so that they can verify some of your financial info. Pre-approval will give you a clear idea of what your price range will be and signal to a seller that you’re serious. Without pre-approval, buyers can develop serious misconceptions about what they can afford.
Step #2 Decide What Price to Offer. When you find a home that you like and decide to make a play for it, you need to take a number of factors into consideration when determining what you'll offer. For example, you'll need to gather information about:
- The selling price of nearby comparable houses.
- The house's aesthetic or other appeal to the average buyer.
- Whether the local real estate market is hot or cold. Is there much competition from other prospective buyers?
- Offers from other prospective buyers.
- The seller's needs, such as to move quickly, or to unload a house that's been on the market for several months.
- The physical condition of the house, taking into consideration the results of an inspection.
- Whether the house is uniquely valuable to you, for example if you need an in-law unit, barn or workshop.
- What you can afford, after looking over your budget carefully.
After considering all these factors, you may decide to bid thousands of dollars less, or more, than the seller is asking for. You'll need to be careful here. You don't want to overpay, but offering too low a price on the mistaken theory that the seller will come back and negotiate for more could result in you losing the house to another buyer or insulting the seller to the point where they refuse to negotiate any further with you.
Step #3 Counteroffers. Your offer may be accepted or rejected straight away, in which case you'll either have a deal, or you'll need to move on. However, the seller may like everything except the sale price, or the proposed closing date, or the bedroom vanity you want left with the property. In these cases, which are common, you may receive a written counteroffer, with the changes the seller prefers. You can then accept or reject the counteroffer or make your own counteroffer. For example, you might make a concession on the price in order to keep the vanity.
You want to avoid getting sucked into a bidding war, so it’s typically better to walk away from a home and keep looking than endlessly negotiate with a picky seller. You also don't want to deviate too much from your max price, which can lead to financial troubles down the road.
You can typically expect a counteroffer or two before settling on a mutually acceptable price and sealing the deal.
Want Some Legal Experience on Your Side When Buying Real Estate? Get a Free Consultation Today.
Buying a house is a big deal and it can go wrong in many ways. As attorneys with significant experience in both Bankruptcy and Foreclosure, we see the ramifications of ill-suited and ill-done real estate transactions. Knowing how to make an offer on a house is just one piece of the puzzle. We can save you money and stress by working with you through he whole process.
At Suburban Legal Group PC, we help people in Illinois avoid financial pitfalls by offering essential legal advice and representation. Our services include: Chapter 7 and Chapter 13 Bankruptcy, and Residential Real Estate.
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