July 8, 2015
Writing an Offer for a Home (Buying a Home, Step 4)
Putting yourself out there with a written offer is a binding commitment to purchase the property, so you may feel some first-time jitters, like you’re at the edge of the high dive for the first time. You know you’re going to jump, you just don’t now how it’s going to feel.
“What if they reject my offer?” “Are there better offers out there?” They might counter at a higher price, or with less concessions, or they really love that lamp and it’s going with them to Phoenix come hell or high water.
So many variables, so many unknowns.
There are four main pieces of a real estate contract:
- Deposit (aka earnest money)
- Method of payment
- Closing date
Price is simply what total price you are willing to pay for the property. It can be helpful to find out if the seller is entertaining other offers. Writing an offer for a higher price won’t necessarily win you the deal, though, especially if the other buyer and seller have forged a bond during the process. The seller can accept or reject any offer, for any reason (except for race- that’s the one protected class across all real estate laws). Just know that price isn’t always the main consideration.
Depositing a thousand dollars is a way to show you’re serious about buying the house, although it can be any amount. It can also be anything non-cash. Two pigs would qualify as ‘valuable consideration’ for a deposit. The key here is that it has to be something of value.
Payment is usually cash or a mortgage; it could also be two more pigs, or a 1984 Olds Cutlass Supreme. Whatever you and the seller negotiate is fine, as long as all parties interested agree to the terms. If the seller still owes $150,000 on the property to the bank, it’s unlikely the bank will accept two pigs in exchange for the 4 bedroom, 3 bath Cape Cod on the waterfront.
Closing on a financed deal will likely take 6 weeks or so to finalize all the documents, but cash can happen in as little as 1 week if you’re not having any inspections done on the property. ALWAYS get inspections done. It’s easy to fall in love with a home and overlook the finer details.
Home inspections will provide you with an X-ray view of your desired home’s true condition and can save you tens of thousands of dollars.
Make sure you allow yourself (and the sellers) enough time in the deal to get everything done before closing. Sure, you can always extend closing, but that’s more paperwork for everybody and rescheduling of your time, the seller’s time, and multiple professionals working on your behalf.
Whatever offer your write, be prepared to:
a) have your offer accepted
b) have your offer rejected or countered
Buying a house can be an emotional event. You can easily let your emotions take over when the buyer counters at a higher asking price or refuses to do any repairs to the house. Make sure you’re willing to perform the details of the contract before signing it. You’ll save a lot of time and emotional energy when you stay committed to the deal.
Working with a Realtor can ensure you have the best decisions at your disposal, and end up in the house you want without a huge, embarrassing belly-flop.
PRO TIP: Remember to keep your lines of credit unused until after closing. Your monthly payment (and even approval for the mortgage) depends on it!
Thanks for reading!
Up next: Step 5 in buying a home: Negotiation