Make an offer

Step 2: Be a smart negotiator

Do it yourself

Now it’s time to take action! To make an offer on a home, take the following steps:

Step-by-Step Guide:

Note: If you haven’t done thorough market research independently and with your real estate agent, you need to learn about the market prior to making an offer on a home.

1. Do a home search with your real estate agent until you have found a home you would like to make an offer on. You should view at least several homes in person before making an offer, just to be sure you have a good sense of a neighborhood and what’s available.

2. Ask for a Seller’s Disclosure.

• Once you’ve found the home you’d like to make an offer on, ask the seller for a Seller’s Disclosure.
• A Seller’s Disclosure is a document indicating all the problems with the home that the seller is aware of.
• Some states don’t requirea seller to provide this type of disclosure, but you can ask the seller to provide one voluntarily, especially in a buyer’s market, where there is less competition to buy homes.
• Note: While the Seller’s Disclosure can help you learn about the problems a home may have, you should never rely on this disclosure alone to assess what is wrong with a home. You will need to hire a professional inspector after you make your offer, to help you uncover issues with the home. The Seller’s Disclosures can be incomplete, and it can be hard to legally prove whether or not a seller knew about a problem with the home at the time they prepared the disclosure.

3. Determine the amount you are willing to offer.

• Based on your research, the comparables your agent provided, and your agent’s input, determine what price you are willing to offer for the home.
• Remember, the seller is likely to counter your offer, so you probably want to offer slightly less than what you feel the home is worth.
• Additionally, don’t let your real estate agent talk you into offering higher than you’re comfortable with. Agents have been known to push for higher offers to close the deal more quickly and make a higher commission.

4. Prepare your purchase offer. Once you’ve determined an amount you’re comfortable offering, ask your agent to review with you the standard form you will use to document your offer. While laws on what needs to be included in a purchase offer vary by state, following is a list of items which you should be sure to include:

• the amount you are offering for the home, and how you will pay the seller (cash, check, etc.)
• contingencies to protect you if your financing falls through, or if the inspection unearths major problems with the home (because inspection happens after you make an offer)
• conveyances, such as whether the home comes furnished or unfurnished
• an expiration date, by which the seller must respond or your offer expires
• concessions, such as any closing costs or other costs you would like the seller to pay for
• the amount of earnest money you are offering, and how you will pay it
• the size of your down payment

5. Determine how much earnest money you will offer.

• The “earnest money” deposit can range from about $500 to 5% of the value of the home, depending on where you are interested in buying and the state of the market.
• The earnest money is typically put towards your closing costs; however, if you enter into a contract with the seller and then breach that contract, you could stand to lose this money.

6. Review your offer!

• When you are ready to submit your initial purchase offer, review it before you sign it.
• Your written offer forms the basis of a legal contract with the seller, so make sure it says what you’d like it to.
• Go through it point by point with your agent, making sure you understand what you’re offering, and other information you’ve included.

7. Sign your offer and submit it to the seller, along with your earnest money. (This is typically done through your agent.)

8. Wait for a response and then act accordingly. 

• If the seller rejects your offer, walk away.
• If he or she counters, use the negotiation skills you’ve learned about, your common sense, and the advice of your agent to help you work towards an accepted offer that you are happy with. You may go back and forth with the seller several times before reaching an agreement (or walking away).
• Once the seller accepts your offer, he or she will sign your offer and it will become a contract between the two of you.
• Then, it’s time to move on to the appraisal, inspection, getting fully approved for your loan, and then, the closing!

You’re almost there!

Key takeaways:

• Your written offer forms the basis of a legal contract with the seller, be thorough. There are some important details you should be sure to talk through with your realtor, such as contingences.
• Contingencies are one of the most critical aspects of your offer. You need to protect yourself if your financing falls through, or if the inspection unearths major problems with the home by providing contingencies in your initial purchase offer.
• Review your offer carefully before signing it and submitting it to the seller.
• Negotiate your way to a better deal:
• Treat your initial offer as an opportunity to gather information about the seller’s motivation for selling.
• Be realistic with your offer; don’t lowball.
• Be ready to walk away.
• Don’t show enthusiasm.
• Stick to your guns; don’t get talked into a price or conditions your’e not happy with.
• Set tight deadlines for the expiration of your offer.
• Be creative with your offer if the owner is stuck on price; use other aspects of the deal such as concessions to help close the deal.