Picture this: you’ve been looking at Gatlinburg and Pigeon Forge homes for sale, and you’ve finally found one you love and want to purchase! It checks all your boxes, and the asking price is within your budget. If you want to buy the house, the next step is to make an official offer. Keep reading to learn how to make an offer on a house in just a few steps.
Step 1: Make sure your finances are all set.
One of the most important things to do before you make an offer on a house is to make sure your financing and cash are all set. Unless you’re paying entirely with cash, you will need to be preapproved for a mortgage before making an offer. This preapproval tells you how much you are qualified to borrow, and it affects how much you can afford to offer. It also shows the seller that you are financially able to make the purchase. In addition to having a mortgage preapproval, you will also need to make sure you have all the cash you will need for the down payment, earnest money deposit, and closing costs. This money should be in a bank account that you have direct and immediate access to.
Step 2: Decide how much to offer on a house.
If you want to learn how to make an offer on a house, this is likely the most daunting step. Your real estate agent can help you decide the right dollar amount to offer on the house you want to purchase. You and your agent should research the home and its history, the local market, and comparable properties to determine the right price. If the house has been on the market for a while, the seller may be more willing to take an offer under the asking price. If the home was just listed, they may be more likely to hold out for the highest price. It’s also important to keep your budget in mind. It’s never a good idea to offer more than you can reasonably afford.
Step 3: Determine how much earnest money to offer.
Earnest money is a good-faith deposit that shows the seller that you are committed to purchasing the house. If the seller accepts your offer, the money is put into an escrow account and can then be applied toward your down payment at closing. If you decide to walk away from the purchase for a reason not listed in the contingencies, the seller gets to keep your earnest money. If the deal falls through because of the seller, you should receive your deposit back. Most earnest money deposits are around one to three percent of the home price. However, offering more can help you get the seller’s attention and show you’re serious about the purchase.
Step 4: Choose the contingencies to include in your offer.
The next step in how to make an offer on a house is to choose the contingencies to include in your offer. Contingencies are clauses that provide specific circumstances under which you can walk away from the deal without losing your earnest money. A common contingency is final loan approval, which gives you an out if your mortgage does not get approved within a specified timeframe. Most people also add a home inspection contingency. This requires the home to undergo an inspection and specifies how any issues found during the inspection will be addressed. For example, this could give you an out to walk away from the deal, require the seller to do repairs, or give you the chance to negotiate the price.
Step 5: Write your initial offer.
One of the most important steps in how to make an offer on a house is writing the initial offer using a residential purchase agreement. Your real estate agent will usually do this for you. This agreement should comply with all applicable local and state laws, and it is then customized to suit your needs as the buyer. This agreement becomes a legally binding contract once you and the seller sign it. Elements that generally need to be included in the offer are:
- Legal address of the house
- Purchase price details
- Earnest money amount and terms
- Date and time when the offer expires
- Fixtures and personal property included in the purchase
- Name of the title or escrow company and officer
- Contingencies
- Concessions you’re requesting from the seller
- Projected closing date
- Closing costs
- Broker’s fees and details
- Walk-through inspection details
- Deadline for delivery of possession
Step 6: Negotiate the price and terms of the sale.
Upon receiving your offer, the seller can choose to do one of three things: accept the offer, make a counteroffer, or reject the offer. If the seller accepts your offer, congratulations! Your next steps are to produce an earnest money check and sign the sales contract, move forward with your mortgage lender, and start scheduling inspection and appraisal visits. If the seller makes a counteroffer, you can decide what to do next. You can accept the counteroffer and move forward, or you can negotiate. Your real estate agent can reach out to the seller or their agent to find out whether they are willing to negotiate on price and terms. These negotiations can often be done in informal conversations before ultimately being added to the purchase contract. Some things you can negotiate include purchase price, repair requests, closing date, etc. If the seller rejects your offer, it’s time to regroup with your agent and begin a new round of house hunting.
Need help navigating the house buying process? The experienced real estate agents at Local Realty Group have the knowledge and expertise you need to help you purchase the home of your dreams in the Smoky Mountains of Tennessee. Reach out to us today to connect with an agent and get started!
