A strong purchase offer involves more than deciding how much you’re willing to pay for a home. Price matters, of course, but so can financing, contingencies, timing, earnest money, and other terms. The goal is to put together an offer that works for you while giving the seller good reasons to take it seriously. Here are some factors worth considering when it’s time to make your offer.
OFFER PRICE
- Start by considering the home’s asking price, condition, recent comparable sales, current market conditions, and how much the property is worth to you. An offer that is substantially below what the market supports may be rejected rather than countered, while an unnecessarily high offer can create its own financial and appraisal risks.
- If multiple offers are possible, price may become more important, but offering above the asking price doesn’t guarantee success. A seller may also consider financing, contingencies, timing, earnest money, and the overall likelihood that the transaction will close as agreed.
- Seller concessions toward allowable buyer closing costs can sometimes be negotiated as part of an offer. How much may be permitted can depend on the loan program and other circumstances, and any concession also affects the seller’s net proceeds. Your lender and real estate agent can help you understand how the numbers work before you structure the offer.
FINANCIAL ABILITY
- If you’re financing the purchase, including an appropriate lender pre-approval with your offer can help demonstrate that you have already taken meaningful steps toward obtaining financing. Pre-approval processes vary by lender, so it’s important to understand exactly what your lender has reviewed and what conditions remain before final loan approval.
- Earnest money is a good-faith deposit made in connection with the purchase contract and is generally credited toward the buyer’s funds due at closing when the transaction is completed. In some markets, the amount of earnest money offered can help demonstrate a buyer’s commitment. However, the circumstances under which earnest money may be refundable or forfeited depend on the contract and applicable law, so understand those terms before increasing your deposit.
OTHER CONSIDERATIONS
- Terms can matter almost as much as price. If you have flexibility with the closing date, your agent may be able to learn whether a particular date would be helpful to the seller. In some situations, a seller may request to remain in the property for a short period after closing. Any post-closing occupancy arrangement should be carefully documented so that both parties understand the timing, responsibilities, insurance considerations, and other terms.
- Contingencies can protect you if certain conditions of the purchase are not met. Common examples involve financing, inspections, and appraisal, although the protections available and exact contract language vary by transaction and location. In a competitive market, fewer or narrower contingencies may sometimes appear more attractive to a seller, but giving up a protection also means accepting additional risk. Before modifying or waiving any contingency, understand what could happen if financing falls through, the appraisal is low, or an inspection reveals a significant problem. Your agent can help you evaluate the competitive benefit against the potential risk and involve your lender or other appropriate professionals when necessary.
- Be thoughtful about requesting personal property that isn’t included in the listing. Furniture, televisions, artwork, equipment, and other belongings may have personal or financial value to the seller, and adding unnecessary requests can complicate an otherwise straightforward offer.
- Look at the offer from the seller’s perspective as well as your own. Depending on the situation, a seller may value price, net proceeds, timing, financing strength, fewer uncertainties, or other terms differently. Your agent can communicate with the listing agent to better understand which legitimate transaction terms may matter to the seller.
The strongest offer isn’t always the highest one. It’s often the one the seller believes is most likely to close as agreed. A well-constructed offer balances what the home appears to be worth, what may matter to the seller, and the amount of financial and contractual risk you are comfortable accepting.
When the time comes to make an offer, I can help you look at recent sales, current competition, the seller’s circumstances when that information is available, and the different terms you may want to consider. From there, you can make an informed decision about the offer that makes sense for you. I’ll present it professionally, keep you informed of the seller’s response, and help you evaluate your options if further negotiation is needed.