Have you decided to make an offer on a home but don’t know exactly what you need? In this video, I’m going to show you the exact steps you need to take to prepare an offer. We’ll learn about everything from creating a strategy to preparing the contract so you can ultimately get into the home you really want.
One of the most frequent questions we get is, “What do I need to make an offer on a house?” It’s very important to know exactly what you need to put an offer together because the ultimate goal is to get your offer accepted.
One of the things we have to do is relay confidence to the seller. If we don’t have everything we need in the offer, they’re probably not going to be very confident in accepting it. But don’t worry: we’re going to give you some very important tips to make sure that you’re preparing your offer correctly.
Creating Your Strategy
The first thing that you need is a strategy. At this point, you’re probably working with a real estate agent, so you’re going to want to go over a strategy with them. If you’re in a multiple-offer situation, are trying to get a lower price on it, or want to secure the house right away, you need to be very honest and transparent with your agent. That way they’ll know the right way to present your offer.
For example, is this a take-it-or-leave-it offer where there is no negotiation room? Or, do you want to have more of a back-and-forth in negotiations? The agent needs to know that so that they’re presenting the offer in the right manner. More importantly, how aggressive do you want your agent to be?
When you’re hiring a professional—whether that’s a real estate agent, attorney, or CPA—you need to make sure that they’re acting just as aggressively or not as you want them to. So talk about your strategy.
Your Pre-approval
The next thing you need to do before preparing the offer is to make sure you have a pre-approval from your mortgage lender. It’s also important to make sure the lender you’re working with is familiar with and experienced in the area and the property type that they’re lending in.
The listing agent or the seller is going to consider your offer based on not only your criteria but how likely it is that lender’s actually going to be able to get the job done. If you do not need mortgage financing, then you’re going to want proof of funds or a recent bank statement to show your liquid assets. These should be equal to or above the purchase price of the home.
Know Your Market
Of course, every market is different. This is why it’s important to work with a real estate agent, as they’re going to let you know the local market intricacies of how an offer should be delivered. Again, we want to relay confidence to the seller.
If you prepare your offer in a way that’s the norm in California but you’re buying a house in New Jersey, it’s just not going to work. Here, we present offers on a full contract of sale with all the terms and conditions. We also typically do not use letters of intent. We want to make sure your offer appears as strong as possible.
Asking The Right Questions
With your agent, you’re going to go over not only what the offer amount or purchase price is but how much of a good faith or earnest money deposit you want to leave with the title company until closing. How quickly do you want to close? What do you want your settlement date to be?
If you’re getting a mortgage, how much is the mortgage amount? How much is the cash amount? Are there any other contingencies? Are you having inspections? How long are those inspections? The standard inspection period is 10 to 14 days, but sometimes you’re modifying that to be more or less aggressive.
Do you have another home to sell? Do you have any other inspections that you want to be done? Are you doing a 1031 exchange, or is there anywhere else that the money is coming from? These are all things that you need to speak with your agent about so they can have it documented correctly in the contract.
We have other items in our market, too. If it’s a rental property, are you taking over their leases? Is it a condominium? Are there condo docs or rules and regulations that you need to review? If you want an opportunity to do that, it needs to be in the contract.
Setting Your Terms And Conditions
These things are all very important when presenting your offer. We often see mistakes where a buyer wants to play it by ear. That doesn’t work. When we present the offer, we want to let the seller know all the terms and conditions. We don’t want to leave anything up for debate.
Here’s an example. If you look at things from the other side—as a seller or even a listing agent—it’s very common to get offers that do not have all the terms and conditions. This will actually decrease the confidence or give concern to the seller.
They may start to think, “if the buyer couldn’t put all their terms into the offer, they didn’t know how to fill out the contract correctly, they didn’t use the right forms, or they didn’t use the right paperwork, what’s it going to be like working with this buyer?”
A Confident Offer
We have to deliver confidence to the seller. If your agent can’t prepare the contract the right way, they’re really going to lose hope in you as a buyer. We must have all these things together up front. If we do it all correctly, we’re going to present the offer in its best light and deliver as much confidence to the seller as possible. This will give you the best chance of getting your offer accepted.
There have been many times in my career when we have not had the highest offer or the best terms. However, the sellers accepted it because they were most confident that the client we were working with was actually going to show up at a settlement table and get through the whole transaction process.
I’m Here To Help
So if you’re thinking about buying a property, now you know all the steps to take to prepare an offer and the things to review with your real estate agent. You can reach me at 609-604-5958 and I’d be happy to help answer any of your buying, selling, or investing in real estate questions.
Make sure to subscribe to my channel so you’re alerted when the next video drops, where we answer more important questions about real estate buying and selling in our area. See you on the next one!