How to Buy a House (With Actual Steps) Part 3 Offers

Once you have found a property that appeals to you, the next step will be writing an offer to purchase this property.  When working with a Realtor they should be able to provide you more detail and inform you of any provisions specific to a particular state.

In general offers can be written with any terms that the buyer would like; that does not always mean that any offer you write will be accepted, but as long as all provisions are legal, the offer terms can be whatever you would like.

Your Realtor most likely will use an offer form that is standard to your state and will have all legally required disclosures included in the form, the information that you will need to make decisions on will include obvious things such as offer price (how much you would like to pay for the home), and type of financing (Conventional, FHA, Cash etc.).  You will also have to make decisions regarding less obvious things such as how long your escrow period will be, this being the time from when an offer is accepted to when the sale is finalized.  

You will also have to select contingency periods that work for both you and your lender.  For example the inspection contingency, which allows you to inspect the property and make sure that there are no hidden defects before committing to the purchase.  You will either go with the default contingency period which varies by state or select a number of days that you and your lender feel comfortable with.

Once you have made all the decisions required for your Realtor to write up a complete offer they will have you sign the offer and then submit it to the seller's agent and await a response.  Sometimes you will get no response, which generally means the seller is not serious about selling the property, or the seller received a lot of offers and only responded to the highest and best.  There are also two obvious responses that a seller can give those being either accepting all terms of the offer or simply rejecting the offer.

Finally, the seller can also submit a counteroffer, which you must then decide to accept, reject, or counter again.  Usually when a seller takes the time to write up a counteroffer, it means that you are close to what they want for their home, sometimes they will want only a few terms changed, and sometimes they will want a higher price, other times they will want both; counteroffers will vary widely and should be evaluated on a case by case basis.

On a final note while a buyer can submit an offer with whatever price and terms they like, it is best to write offers that have a reasonable chance of being accepted.  For example writing an offer for half of the list price in a market where homes sell quickly is not realistic and it just takes up time for all people involved including the seller, the seller's agent, your Realtor, your lender, and of course you.  Your Realtor should be able to give you a good idea of whether or not your offer is realistic, but they cannot determine the exact price you should submit at.

Once an offer has been agreed upon the agents will open escrow and the sale process begins we will cover this in more detail in Part 4 of How to Buy a House (With Actual Steps)