How to Make an Offer on Your First Home
After months, maybe even years, of searching, you’ve found your dream home. But you’ve never bought property before, so it’s a scary and exciting time. Here’s how to make an offer on your first home.
Use your experience, trust your judgment
When it comes to making an offer, there’s no single right answer and no “exact” price or terms. The best strategy is to gather market knowledge, partner with a savvy local agent, and trust your judgment. Think about the homes you’ve toured and open houses you’ve attended, and you’ll start to see where your home of choice fits in the market’s overall context.
Learn all you can
Before making an offer, find out everything you can about the listing. To make the best offer, you’ll need to know how long the home has been on the market, if there are other offers on the table, and if there’s a specific day the sellers will review the offers. Find out why the sellers are selling. Pull all that information together and then mesh it with comparable home sales in the area.
Review the comps
Ask your agent for the last six months of recent sales data to review and compare. These “comps” tell about the most recent market and what current buyers/sellers have agreed on for a sale price.
Consider pending sales first and see if your agent can uncover information about them, as they represent the most updated market data. Ask about the number of offers they received or a ballpark selling price. Ask your agent what his opinion of the home’s value is and start to mull over this information.
Alert your lender
Let your lender know you plan to make an offer on the home. You’ll need a pre-approval letter with your offer, and you’ll want an update on mortgage rates and products, as these change daily. From the time you applied for pre-approval until you’re ready to make an offer, there could have been a massive shift in rates or a new product that could benefit you.
Decide on terms
In addition to price, you’ll need to decide on terms. How long will you take for inspections? Do you want to close quickly or take a longer time? Will you need an appraisal and loan contingency? How long should that be?
The terms of your offer can make or break your deal. If the seller wants a quick close, give it to them if possible. If you’re competing with a cash offer, make your loan terms foolproof. Marry all of the data from above and take your best shot.
Always remember: There will be other houses
Rarely does a buyer score the first house they make an offer on. Don’t worry. There will be other homes for sale—and you might find something even better down the road.