What Do You Need to Put an Offer on a House?

Making a well-crafted offer is a key step in buying a home, formally communicating your intent to purchase under specific terms. A prepared offer shows sellers your seriousness and financial readiness, influencing outcomes in competitive markets. Understanding its components and process helps ensure a smoother transaction.

Financial Foundations for Your Offer

A solid financial foundation is essential before presenting an offer. Mortgage pre-approval demonstrates your borrowing capacity to sellers. A pre-approval letter from a lender indicates a preliminary review of your financial information, showing you likely qualify for a loan up to a certain amount. This involves examining your income, assets, credit history, and employment stability.

To secure pre-approval, lenders request documents like recent pay stubs, W-2 forms, bank statements, and tax returns, and conduct a credit check. While not a final loan commitment, pre-approval indicates your financial standing and maximum loan amount, making your offer credible.

A substantial down payment strengthens your offer. The down payment is the upfront portion of the home’s purchase price, reducing the borrowed amount. Down payment percentages range from 3-5% for some loan programs; conventional loans often require 10-20% or more.

Having these funds readily accessible (typically in savings or other liquid assets) is important. A larger down payment can reduce monthly mortgage payments and may help avoid private mortgage insurance (PMI). The source of these funds (savings, investments, or gifts) should be documented.

An earnest money deposit (good faith deposit) accompanies your offer to show commitment. This deposit is a portion of the down payment, typically 1-3% of the home’s purchase price, varying by local market norms. Funds are usually held in an escrow account by a neutral third party, like a title company or real estate attorney.

Earnest money protects the seller by providing compensation if the buyer defaults without valid reason. If the offer is accepted and the sale closes, earnest money is credited towards your down payment or closing costs. If the deal falls through due to contract conditions (e.g., failed inspection or inability to secure financing), earnest money is typically returned.

Key Details for the Offer Document

The offer document contains specific terms. Determining the offer price is central, influenced by market conditions, comparable sales, and the home’s condition. Your real estate agent can provide a comparative market analysis (CMA) detailing recent sales of similar properties, helping you arrive at a competitive price.

Contingencies are clauses protecting the buyer, allowing them to back out of the contract without losing earnest money under specific circumstances. A common protection is the inspection contingency, granting the buyer the right to have the home professionally inspected within a specified timeframe. If significant issues are found, the buyer can negotiate repairs, request a price reduction, or withdraw the offer.

Another protection is the financing contingency, making the purchase conditional upon securing a mortgage loan. This contingency often works with an appraisal contingency, ensuring the property appraises for at least the purchase price. If the home appraises for less than the agreed price, the buyer may renegotiate or terminate.

For buyers needing to sell their current home, a sale of existing home contingency can be included. This allows cancellation if their current property does not sell within a specified period. These contingencies provide safeguards, offering an exit strategy if certain conditions are not met.

The proposed closing date specifies when property ownership transfers. This date is typically 30 to 60 days from offer acceptance, allowing time for loan processing, title searches, and final inspections. The timeframe can be influenced by loan complexity, party efficiency, and specific buyer or seller requests.

Specifying inclusions and exclusions prevents misunderstandings about what items convey. Inclusions typically refer to items like appliances (refrigerator, washer, dryer), window coverings, light fixtures, or outdoor structures like sheds that remain. Exclusions are items the seller intends to remove, such as a specific chandelier or personal property. Listing these items avoids later disputes.

Accurate buyer information is required for legal validity. This includes the buyer’s full legal name, contact information, and other identifying details for contractual purposes. Ensuring this information is precise is important for subsequent legal documents, including the purchase agreement and title transfer paperwork.

Formalizing and Submitting Your Offer

Formalizing and submitting your offer begins with your real estate agent drafting the document. Real estate agents use standardized, often state-specific, contract forms complying with local real estate laws. These forms ensure all necessary legal disclosures and terms are included.

Your agent will input all agreed-upon details: offer price, contingencies, proposed closing date, and inclusions. Review the drafted offer with your agent for accuracy and to reflect your understanding. This review allows for corrections before finalization.

Once complete and reviewed, sign the offer document. This signature, physical or electronic, signifies your legal commitment. Electronic signatures are widely accepted and legally binding, providing a convenient method for remote signing.

After signing, the completed offer and supporting documents form the offer package. This package typically includes your mortgage pre-approval letter and earnest money deposit details. Your real estate agent then submits this package to the seller’s agent.

Submission often occurs electronically via secure portals or email, though physical delivery is also an option. The seller’s agent confirms receipt and presents it to their client. Sellers typically take 24 to 48 hours to review and respond to the offer. They can accept, reject, or counter-offer with different terms.