Buying a home can be challenging, especially when it comes to making an offer. Luckily, a knowledgeable agent can help educate and guide you through this process. Here, Freddie Mac offers an outline of the traditional offer procedure, so you’ll know exactly what to expect when it comes time to make a deal.
Step 1: Determining the price
At this point, you already will have obtained a preapproval letter, set your budget and determined the best mortgage option. So, you’ll have a good idea of what you’re going to spend. However, you’ll want to work with your agent to determine an offer price that is fair for the home you want. This price is based on key considerations, such as the recent sales prices of similar homes in the same neighborhood; the condition of the house; and what you are willing to pay.
Step 2: Submitting the offer
Once you’ve determined a price, your agent will draw up the offer—or purchase agreement—to submit to the seller’s real estate agent. The offer will include the purchase price and terms and conditions of the purchase, including target closing date; provisions for certain fees; a deadline for the seller to accept or counter your offer (typically one to two days); and any contingencies, such as an appraisal and a successful home inspection. If the seller accepts and signs your initial offer, you’ll have a binding contract.
Step 3: Negotiating the offer
The seller often will counter the offer, typically asking for a higher purchase price or to adjust the closing date. In these cases, the seller’s agent will submit a counteroffer to your agent, detailing their desired changes. At this time, you can either accept the offer or decide if you want to counter. In every instance that changes are made through a counteroffer, you or the seller have the option to accept, reject or counter it again. This is the time to rely most heavily on your agent. Once you receive a counter offer, you and your agent should discuss the maximum price you’re willing to pay and items on which you’re willing to budge. Then have an open discussion about how involved you want to be in the negotiation process and how often you’d like to be updated, so you’ll know what to expect.
Step 4: Finalizing the offer
The contract is considered final when both parties sign the written offer.