Take These Steps to Make an Offer on a House

Brookings Home Team - Take These Steps Before You Make an Offer on a House

Are you a first-time home buyer in Brookings, SD? Then you may have already encountered some of the confusing and/or challenging aspects of purchasing a house. You are probably asking yourself a lot of questions:

Luckily, the experts at Brookings Home Team can help you research the market, review comps, and ensure you get a fair price.

Make an Offer

Before we jump into the steps for making an offer, it will be assumed you have already spoken with a lender, gotten pre-approved for a mortgage, and saved up for your down payment.

It’s important for a first-time homebuyer to understand the process of making an offer and what to expect. Here is a brief overview of how it works:

  • Your Realtor or real estate agent will send your offer to the seller.
  • The seller will either accept the offer, decline the offer, or make you a counter-offer.
  • After an offer is accepted by either yourself or the seller, you will sign the purchase agreement, which is a legally binding contract for the real estate transaction.

During this time—known as the contingency period—home inspections, appraisals, and any other purchase agreement terms will take place.

Step #1: Calculate Your Starting Price

Your starting price will be based on many factors, including your budget, the local housing market, the home's condition, and the seller's terms. Here is when it’s crucial to have real estate professionals like the Brookings Home Team on your side. We have years of industry knowledge and experience, and we will arrive at the best possible starting price for you.

Step #2: Define Any Contingencies

As we previously mentioned, your contingency period is the time between the purchase agreement and the closing date. Here are two, very important events that should take place during this time period:

  • Home Inspection: This is a deep dive that will uncover any potential issues or repairs that need to be done and consequently impacting the initial terms of the contract. You wouldn’t want to move into a house and find out the roof needs to be replaced.
  • Home Appraisal: This is an independent review of the property in order to provide an unbiased estimate of the home’s value. You may discover the house isn’t worth as much as you had first thought.

Step #3: Make a Good Faith Deposit

Better known as an earnest money deposit, this amount is included in your purchase agreement to show a seller you’re serious about buying their house. Generally, earnest money deposits are between one and three percent of the purchase price, but offering a higher earnest money deposit could give you the upper hand in a competitive housing market.

It's always best practice to consult a Brookings Realtor first to make the most educated offer possible. Just remember, if you back out of the deal for any reason that is not allowed by your contract, the seller will get to keep the earnest money deposit.

Step #4: Write a House Offer Letter to the Seller

In a competitive real estate market, you need all the advantages you can get. If you really have your heart set on a certain property consider writing a house offer letter. This is a sentimental approach in which you would write the seller a letter telling them how much you love their home, essentially. Here are tips for an effective house offer letter:

  • Use high-quality stationery
  • Be open about yourself and your life
  • Try to make a connection in the opening paragraph
  • Tell them what you love about the house
  • Explain your bid to give it more context
  • Always be gracious

A word of caution if you decide to go this route: While a house offer letter is an emotional appeal, try to avoid being overly aggressive, manipulative, or including information that would jeopardize your offer. Keep your house offer letter light and personable, and consult your real estate team if you have any questions about how to write it.

Step #5: Submit the Offer

If everything is ready to go, your real estate team will send the offer to the seller (or the seller’s real estate agent). Now, take a deep breath and smile! Regardless of whether the seller accepts, declines, or counters your offer, this is a big step and you should be proud of yourself. With a little bit of luck, you will be closing on your new home in no time!