How to Properly Make an Offer on Property

Making an offer on property is a significant step in the home-buying journey. This formal process involves presenting your proposed terms for purchasing a home to the seller. Crafting a well-structured offer requires careful preparation and an understanding of its components to be competitive and protect your interests. It sets the foundation for potential negotiations and the acquisition of a new home.

Preparing Your Offer

Before submitting an offer, buyers establish financial readiness, often by securing mortgage pre-approval. Lenders evaluate income, assets, and credit history to provide a pre-approval letter, indicating the maximum loan amount. This document signals to sellers that the buyer is a serious and qualified candidate, capable of obtaining financing. It also helps the buyer understand their affordability range, preventing offers on homes beyond their financial reach.

Determining an appropriate offer price involves thorough research into comparable sales, often referred to as “comps,” in the local area. Buyers analyze recent sales data for similar properties, considering factors like square footage, number of bedrooms and bathrooms, age, and overall condition. Market conditions also influence pricing, as a competitive seller’s market might warrant a stronger offer, while a buyer’s market could allow for more negotiation. Evaluating the specific property’s condition, including any necessary repairs or upgrades, also informs the proposed price to ensure it reflects the property’s actual value.

The offer also includes various components designed to protect the buyer, known as contingencies. A financing contingency allows the buyer to withdraw from the contract and retain earnest money if they cannot secure a mortgage loan by a specified deadline. An appraisal contingency ensures the property’s value, as determined by a professional appraisal, meets or exceeds the offer price. A home inspection contingency provides a period, typically 7 to 10 days, for a professional inspection to uncover any significant issues with the property, allowing the buyer to request repairs, renegotiate the price, or cancel the contract. Some buyers may also include a home sale contingency, making their purchase dependent on selling their current home within a set timeframe.

An earnest money deposit, sometimes called a “good faith” deposit, demonstrates the buyer’s serious intent. This deposit is typically 1% to 3% of the offer price, though it can be higher in competitive markets. The funds are usually held in an escrow account by a neutral third party, such as a title company or attorney, until the sale closes. If the sale proceeds, the earnest money is applied towards the down payment or closing costs.

The desired closing date specifies when the property transfer is expected to finalize. Buyers consider personal timelines, such as relocation needs or the sale of an existing home, when proposing this date. For financed purchases, closing typically takes 30 to 60 days from offer acceptance, while cash transactions can close in 7 to 14 days. The offer should also clearly list any items included in the sale, such as appliances or light fixtures, and any items specifically excluded. This clarity helps prevent misunderstandings.

Drafting and Submitting Your Offer

Once preparatory decisions are made, the next step involves formally documenting the offer using a standard real estate purchase agreement. These forms are often state-specific contracts, provided by a real estate agent or accessible through state real estate commissions. The agreement outlines the terms and conditions of the sale, creating a legally enforceable contract once signed by both parties.

The buyer’s chosen offer price, selected contingencies (financing, inspection, appraisal), earnest money amount, and desired closing date are entered into the designated sections of the form. The document also includes sections to list any specific inclusions or exclusions, and any additional terms or conditions, such as seller credits or repair requests. The buyer then signs and dates the document, and a thorough review is conducted to verify accuracy and completeness before submission.

The offer is then submitted to the seller through their real estate agent, either electronically, via physical delivery, or through other agreed-upon methods. Upon submission, the buyer’s agent seeks confirmation of receipt from the seller’s agent, ensuring the offer has been successfully delivered and is under review. This formal delivery initiates the seller’s period to consider the proposal and respond.

Responding to the Seller

After an offer is submitted, the seller has a few options for how to respond. One possibility is outright acceptance, which means the seller agrees to all terms and conditions presented in the buyer’s offer. At this point, the offer becomes a legally binding contract, and the process moves forward to steps such as opening escrow, scheduling the home inspection, and arranging for the property appraisal.

Another outcome is a direct rejection of the offer. This means the seller declines the proposal entirely without proposing any changes. If an offer is rejected, the buyer can choose to walk away and pursue other properties, or they might decide to submit a new offer with revised terms, perhaps at a different price point or with fewer contingencies.

The seller may also issue a counteroffer, which indicates they are willing to sell but on different terms than those originally proposed by the buyer. A counteroffer might involve a higher purchase price, different contingency terms, an adjusted closing date, or changes to inclusions and exclusions. The buyer then has the opportunity to accept the seller’s counteroffer, reject it, or issue their own counter-counteroffer, leading to a negotiation process.

This negotiation often involves a back-and-forth exchange of offers and counteroffers until both parties agree on all terms or one party decides to terminate discussions. Offers and counteroffers usually include specific expiration dates, typically a few days, requiring a timely response from the receiving party. Real estate agents play an important role during this phase, facilitating communication, providing market insights, and guiding their clients through the negotiation process to reach a mutually agreeable outcome.