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How To Make An Offer On A House

Victoria Araj6-minute read
March 22, 2022

So, you’ve found the house of your dreams and want to make it your own. That’s exciting news! Before you start picking out paint colors, though, you’ll need to get the seller to agree to the sale by putting in an offer.

Making an offer can be a tricky process, though. There’s a fine balance between getting a great deal and remaining competitive, especially if there are other buyers vying for the same home, and knowing exactly how to make an offer on a house can be confusing if you’ve never done it before.

Let’s talk today about home offers, how to determine your purchase price, and what to expect once your offer’s been submitted.

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The Importance of Your Home Offer

When deciding to submit an offer on a home, it’s important to know that it’s more than just a written request to buy a listing. It’s also the first impression you put forth: the first opportunity you’ll have to make yourself stand out to the seller.

This is more important in competitive markets than slow markets, of course. But if you’re really interested in a specific home, you’ll always want to approach your offer in the right way.

Does It Cost Anything To Put In An Offer?

You won’t have to pay anything when you make an offer on a home. Your buyer’s agent will draw up this purchase proposal on your behalf and present it to the sellers and/or their agent, at no cost to you.

With that said, putting in an offer involves the promise of money, if accepted. That includes the purchase price that you’re proposing, of course, as well as any earnest money you’re willing to include in the offer.

Earnest money can be presented as a check that’s included with your offer or sent along once the purchase agreement is signed. Your earnest funds are given as a sign of good faith in the deal and, as such, may help “sweeten” your offer a bit in the eyes of the seller. These funds will be held in escrow until closing and then applied to closing costs.

So while making an offer on a home may involve putting up funds right away, the offer itself does not cost anything.

Making A Reasonable Offer

It goes without saying that no one wants to overpay when buying a home. However, it’s just as important to make sure that your offer is reasonable and fair.

 

Deciding what to offer on a house involves asking yourself a few key questions. These include:

  • How much house can I afford? Keep in mind that a home’s “cost” includes the down payment, mortgage, property taxes, insurance, and maintenance throughout the year. What can you realistically afford to spend?
  • What will my lender give me? You’ve built the credit score needed to buy a house and saved for your down payment – now you need to know what size loan your lender is willing to provide. Making an offer above that may require you to increase your down payment contribution.
  • What is the market like right now? A hot seller’s market may mean making an offer that’s at (or even above) asking price, just to stay competitive.
  • What are the comps? Have your agent look at comparable, recently sold homes in that same area to gauge how the market is performing.
  • How much do I love this house? Sometimes, it’s about more than just what a home is worth to the market … it’s what the home is worth to you. If it’s an incredibly special property, you might be willing to offer a little more in order to sweeten your bid.

 

A good buyer’s agent will know exactly how to bid on a house that you love, and can guide you in figuring out your smartest offer.

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Should You Offer Less Than the Asking Price?

A seller’s asking price can be based on a number of factors: what the bank says their home is worth, what the tax appraiser’s office says their home is worth, and what they believe their home to be worth. When it comes to selling, though, a home is really only worth what a buyer is willing to pay.

You can absolutely offer less for a home than the asking price and may get a good deal in the process. This is especially true if the market is slow or if there’s something about the house that warrants a lower price. But be reasonable.

“Buyers need to have a valid reason why their offer is below the asking price if they want to be taken seriously by the seller,” says Ford Shanley, one of Austin’s top-producing real estate agents. “It shouldn’t just be because they want to pay less. If the asking price is fair, then the buyer needs to provide another valid reason for why the seller should accept a lower offer.”

These reasons could include upcoming construction on a nearby highway, a new building that will change the home’s scenic view, or even a projected economic downturn. Or, if the home was priced above market value, you could provide proof of that with recent comps.

Be prepared to make your argument for the lower offer price, especially if there’s a notable delta.

Also know that in some markets, you may actually want to offer more than the asking price, especially if there are multiple buyers competing. Your offer could also include things like a personal note, additional earnest money, or a prequalification letter from your lender if you want to sweeten the deal more.

What’s Considered a Lowball Offer?

It’s one thing to offer less to the seller than they’re asking; it’s another thing entirely to send a lowball offer.

While there’s no standard that dictates when you’ve crossed into “lowball” status, these offers are recognized as significantly below asking price. Submitting a lowball offer is a real gamble: your best-case scenario is that the seller is motivated, and accepts or counter-offers. Your worst-case scenario is that the seller is insulted and refuses to sell to you altogether.

Says Shanley, ”Unless a seller is desperate to sell quickly, they will usually choose to lower their asking price a bit to attract additional buyers before they will accept a lowball offer from anyone.”

How to Make an Offer on a House

Once you’ve decided how much you’re willing to pay for a house, it’s time to actually submit your offer to the seller.

If you have a buyer’s agent (which is definitely in your best interests), they can help with this process. Making an offer involves:

  • Your agent sending your official letter to the seller and/or the seller’s agents
  • The seller either accepting, countering, or declining your offer
  • If the seller counter-offers, you can choose to accept, counter, or decline their offer
  • If the seller accepts, or if you accept the seller’s counter-offer, you will sign a purchase agreement and provide any applicable earnest money funds
  • If the seller declines your offer, you can either submit a revised offer or take your house search elsewhere

Once an offer has been agreed upon by both parties and the purchase agreement signed, it’s time to prepare for closing. The closing process can take anywhere from a few days to many weeks, depending on a multitude of factors.

Final Thoughts

Whether you’re buying your first house or your fifth, it’s always a significant purchase. If you’re looking for a starting point, consider getting preapproved. Sellers often prefer buyers who can show that they have a preapproval letter, and having one in hand should also help you understand your true budget. Get preapproved today so you’re ready to strike when you see an opportunity to own your dream home.

Apply for a Mortgage with Quicken Loans®

Call our Home Loans Experts at (800) 251-9080 to begin your mortgage application, or apply online to review your loan options.

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.