You figured out your budget, looked at some homes, and now you’ve found one that is perfect. So how to decide how much to offer?

Making an Offer

Staying within your budget is vital, but making an appropriate offer is more than just picking a number. You should think about the following things when deciding what your offer should be:

  • Are there similar homes on market in the area, and how long have they been on the market? If similar homes at similar prices have been on the market for a while, this indicates you probably aren’t facing a lot of buying competition. But if homes are selling quickly, then competition will be more serious. With greater competition, you’ll want to be sure to make a strong offer.
  • How long has the house been up for sale? If it’s been on the market for longer than 2 or 3 months, or has been listed multiple times, the seller might be willing to accept and offer lower than the asking price.
  • How much competition do you expect to have from other buyers? If the price is particularly good and/or the home is in a desirable area, you could end up in a bidding war. Decide on a hard upper limit that you’ll be willing to pay before making your first offer. If you are expecting several competing bids, it might be best to come with your strongest offer right up front.
  • Will the house need significant repairs or renovations to meet your needs? Keep these costs in mind to stay within your budget.

Can my offer exceed my pre-approval amount?

Your pre-approval letter from your lender states how much you’ve be pre-approved to borrow. You can offer more than that, but generally you’ll need to make up the difference with a bigger down payment. It’s best to check with your lender to be sure you can get approved for a higher amount in the event your offer is accepted.

What your offer should include?

Once you are ready to make an offer, your real estate agent will help you contact the seller and submit your offer in writing. Generally, your agent will write the actual offer letter, but these are specifics it will include:

  • The home’s address.
  • Your full legal name, and the names of anyone else purchasing the house with you (such as your spouse).
  • Your offer amount.
  • Contingencies you are requesting. These are conditions that must be fulfilled before the sale is finalized, like a satisfactory home inspection.
  • Concessions from the seller you are requesting, like cash towards your closing costs.
  • Any items in the house you want included in the sale, such as appliances, furniture, or window treatments.
  • The amount of your earnest money deposit.
  • Your pre-approval letter from your lender, to assure the seller you’ll be able to make good on the offer.
  • Your expected closing date.
  • Your expected move-in date.
  • The deadline by which the seller must respond to your offer.
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Can I request repairs be made before I buy the house?

Yes, buyers often request certain repairs be made as a contingency before they will buy the house. Some buyers also request upgrades such as installation of new carpet – but be aware that this can increase purchase price, and it’s ultimately up to the seller. Asking for repairs and upgrades in a competitive (seller’s) market is generally not advisable.

How to negotiate the price if your offer isn’t accepted?

If the seller accepts your initial offer, then it’s time to celebrate having successfully purchased a home. You’ll receive a Loan Estimate from your lender, outlining the costs and fees of your loan – though be aware these number may change somewhat (up to 10%) before closing. Before closing, your lender will give you a Closing Disclosure which details the final numbers.

If the seller rejects or counters your initial offer, you’ll have to decide how to proceed. Discuss it with your agent, and see if they can get in touch with the seller’s agent to feel out the seller’s willingness to negotiate. You may be able to negotiate things other than just the price, like the move-in date, contingencies, or concession.

Many people find negotiating stressful, so make sure to keep a level head. Buying a home is a major, long-term commitment, so don’t lose track of your goals in the heat of negotiating. Don’t be afraid to walk away if you can’t come to an agreement with the seller.

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**DISCLAIMER: Please note that interest rates, APR’s, closing cost, and monthly payment examples on this page are for illustrative purposes so that borrowers can better understand how programs work. Consumers should note that mortgage rates, APR’s, and payments will likely vary from what is listed in the examples given. Mortgage rates change frequently and not all borrowers will be eligible. Additional restrictions may apply. Please call and speak with a 247 Home Loans mortgage representative for the most up-to-date information.

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