Homebuying 101: Making an Offer on Your Dream Home

Homebuying 101: Making an Offer on Your Dream Home

You've been preapproved for a loan, found the perfect property, and you're ready to make an offer—so what's next? Making an offer is a crucial part of the homebuying process. With the guidance of an experienced real estate agent, you can navigate this step smoothly. An agent brings valuable knowledge about local market trends, helps you craft a competitive offer, and negotiates on your behalf.

In this Homebuying 101 guide, we'll walk you through the key steps involved in making an offer, from initial pricing to closing the deal.

Crafting Your Offer

Set a Competitive Price

Before you put in an offer, it’s essential to do your homework. Dive into the local real estate market to understand recent sales, neighborhood trends, and specific property characteristics. Your agent can provide detailed insights into the property and local market conditions. With this information in hand, you can determine a competitive offer price. Consider factors like the property's condition, comparable sales in the area, and the seller’s motivation.

Include Essential Contingencies

Contingencies are your safety net in the homebuying process. Common contingencies include home inspection, financing, and appraisal clauses. These allow you to renegotiate or withdraw your offer if certain conditions aren’t met.

Wait for the Seller’s Response

After submitting your offer, the seller has three options: accept, reject, or counter your offer. If your offer is rejected or another offer is chosen, your agent can help you understand why. It’s important to remember that sellers don’t always pick the highest bid—other factors often come into play. Learning from this experience can help you refine your strategy for your next offer.

Negotiate if Needed

If the seller counters your offer, you can either accept their terms or submit your own counteroffer. Typically, sellers might propose a higher price than your offer but still lower than their original asking price. Once both parties agree and sign the purchase agreement, the home enters escrow.

Navigating the Escrow Process

Opening an Escrow Account

Once your offer is accepted, the next step is to open an escrow account. This involves depositing earnest money, which shows your commitment to buying the property. The money is held in escrow until the sale is finalized, at which point it will be applied to the purchase price.

Conducting a Home Inspection

During the escrow period, you’ll arrange for a home inspection. After presenting a copy of the signed purchase agreement to your lender, you can hire a home inspector. The inspector will conduct a thorough evaluation of the property, checking major systems like the roof, HVAC, plumbing, electrical, and foundation. Based on the inspection results, you can negotiate repairs, adjust the sale price, or even cancel the deal if necessary.

Ordering an Appraisal

After the inspection, your lender will order an appraisal to determine the property's value. A licensed appraiser will assess the home’s condition and compare it to similar properties in the area. If the appraised value is lower than the agreed purchase price and you’ve included an appraisal contingency in your offer, you have the option to renegotiate the price, provide additional funds to cover the difference, or walk away from the deal.

Finalizing the Sale

With the appraisal complete and contingencies satisfied, you’re ready to move toward closing. The appraisal report is key in securing your financing and finalizing the sale.

As you approach the finish line, there are a few more steps to ensure a smooth closing. Stay tuned for the next edition of Homebuying 101, where we’ll cover everything you need to know about closing the deal and taking ownership of your new home.