You’ve found your dream home – congratulations! It’s now time to take the next step towards making it yours: making an offer.
An offer letter is a sale contract that’s legally binding, so it would do you well to be cautious. Besides, making a competitive and informed offer also gives you the best chance of getting the home you want. Here’s everything you need to know about making your first offer on a home!
Decide How Much to Offer
The right offer will depend on different aspects, such as how competitive the local real estate market is, how long the house has been on the market, and the number of buyers interested in the house. Comparable sales can also give you an idea of what a property might be worth. Keep in mind that you should always stay within your budget and never offer more than what you can comfortably afford.
Consider the Contingencies to Include
Contingencies are clauses you include in the offer to protect yourself. Typically, they’ll allow you to back out of the sale transaction in certain situations without facing legal consequences or losing your earnest money. The most common types of contingencies in a homebuying offer are:
- Home inspection
- Current home sale
Since contingencies usually mean more risk for the seller, waiving some of them could make your offer more competitive. But ensure that you speak to your real estate agent before doing this since waiving away certain contingencies could land you in a lot of trouble and regret later on.
Decide How Much Earnest Money to Offer
Cash is king when buying a home. And even if you aren’t buying a home with cash, you’ll be required to submit a good faith deposit: earnest money. The amount of earnest money varies, but it’s often 1-2% of the home purchasing price. Note that the more earnest money you offer, the more competitive your offer is.