Okay so you’ve saved for a downpayment, you’ve got your financing sorted and you’re working with a great agent but are wondering what the offer process looks like, so let’s get into it.
Once you have identified a property you want to call home the next step is to submit an offer to the seller to buy the property.
Sounds simple right? Well there’s a lot that goes into an offer both in terms of strategy and in terms of putting the offer itself together.
You need to think about what the market is doing before you submit an offer. Are you in a sellers market (Spokane), are you in a buyers market or are you in a balanced market.
In a buyers market you can consider things like requesting to have the seller cover some closing costs, pay for a home warranty or make a repair or update as part of the offer.
In a sellers market you may want to consider if you can close early or whenever is most convenient to the seller. You will be at a disadvantage if you ask for closing costs or request that the seller pays for a home warranty. Also in a sellers market the list price may not be enough particularly if the property had a lot of showings in the first few days.
Putting An Offer Together
Here’s where your agent goes to work - your agent will have looked at comparable recently sold properties in the area and will have a pretty good idea of what it will sell for.
Your agent may also reach out to the listing agent to find out what is important to the seller other than money. Remember sometimes money isn’t everything to a seller.
Once you as a buyer have all the facts you need you will discuss with your agent what a competitive offer looks like.
You’ll want to confirm:
the price you’ll offer,
the amount of earnest money you want to offer,
the loan type you’ll be using,
the proposed closing date,
whether you want to request some closing costs and how much,
whether you want to request a home warranty and
any thing else you want to include in an offer.
Once you have the details of your offer your agent will draft the offer and send it to you for digital signature.
It’s important that you read and understand what you’re signing at this stage and if you have any questions then you should reach out to your agent for clarification. Remember you’re buying a house not agreeing to facebooks terms and conditions - take the time to understand your obligations in the contract that you’re signing.
It’s a good idea to put as much of your discussions in writing so it can be referred back to at a later date
Waiting For A Response
Waiting to hear back isn’t fun. It can be quick or it can take a while. Most offers will have an expiration date, I usually put an expiration date of 3 days from the date you sign it meaning the seller should respond to you within that time frame.
They can respond in the following ways :
accept your offer
reject your offer
counter offer where the seller will propose new terms such as an increased purchase price.
Not reply at all - if you haven’t heard back about your offer and the offer has expired, i.e. it’s over 3 days old then you should consider the offer rejected.
What to include with your offer?
In a sellers market you will want to include a recent pre-approval letter to show the seller you can bring money to the closing table.
You may also wish to consider including a personal note to try build rapport with the seller.
What do I do once my offer is accepted?
If your offer is accepted your agent will advise you on the next steps and i’ll be doing a separate video on this later.
Is it first come first serve?
The early bird catches the worm and sometime in real estate this same principle applies. It can’t hurt your chances by getting in first.
However, on a popular listing that's listed on a Friday, for example, a seller may review offers on Sunday night so it won't matter in this instance.
Can I make multiple offers?
Unless you are approved with 2 loans you would not be acting in good faith to offer on multiple properties at the same time. If both your offers are accepted you will have to exit the other contracts which could harm the seller.
Does the highest priced offer always win?
Is the highest offer always the one the seller chooses - 9/10 the seller is looking for the highest price yes. However, sometimes circumstances may make other criteria more important. For example if a seller has had one deal fall apart due to financing a cash offer may be preferred. Equally a deal may have fallen apart and the seller may be buying another house so closing quickly may be appreciated in those circumstances - that’s the value of an agent to make that call to the seller and figure out what is important to them to make your offer stand out.