How to Make a Smart Offer on a House
10-27-2021 • MHS Lending
Buying a home is one of the most expensive purchases you’ll ever make and because it’s a commitment, it’s important that you are confident with your offer. When you step into your dream house and realize you want to make an offer, you’ll need to act quickly to ensure your offer is both fair and smart so you can have a strong chance of having that offer accepted. While real estate agents are experts on crafting competitive offers, it will also help if you know what to expect so you are ready to go the second you find the house you want to become your home.
Get pre-approved by a lender
Nothing shows the seller that you mean business more than a pre-approval in hand proving that the amount you’re offering is within your buying power. In order to get pre-approved, you’ll need to first pick a lender and then provide the necessary documents like paystubs, bank statements, and tax returns so they can calculate the amount you can borrow for a mortgage. If you’re looking for a lender that has experience with VA Loans and working with military families, give MHS Lending a call at 619-728-7620.
Offer a fair price that you’re comfortable with
A home purchase is a transaction between a buyer and a seller who are each trying to get the best deal. Because the seller wants to walk away with as much money as possible and the buyer wants the fairest price, selecting an offer price that the buyer thinks the seller will accept is crucial. First, buyers should consult their realtor who will assess the market value of the property through a competitive market analysis.
Limit the number of contingencies
Many home offers include contingencies, which are opportunities to address unforeseen issues. These are often mostly beneficial to the buyers as they allow them the opportunity to walk away from the deal if certain conditions aren’t met. Some of the most common types include home inspections, appraisal, mortgage, and home sale contingencies.
Show you’re serious with earnest money
Earnest money is a deposit made before a sale is final that typically lies around 1% to 3% of a purchase price. Buyers can show they are serious about a sale by putting earnest money up front into the offer. Putting earnest money down is not a big risk for buyers as it will either be returned if the offer is rejected by the seller or will go towards the loan at closing.
Be prepared for a counteroffer
While in an ideal world, the seller would accept the buyer's offer without making any changes, there are many circumstances where sellers will counter or reject offers. Counteroffers often have a higher purchase price or remove some of the contingencies, so the best way to swiftly navigate this is to be prepared with a counteroffer. Think about what you’re willing to pay and what contingencies you can live without (and which you can’t) so if there is a counter, you’re able to come back quickly with an answer.