Keying being handed to new homeowner at signing

You’ve sifted through dozens (if not hundreds) of online “for sale” photos, toured multiple homes, and tried to envision yourself in each one. Finally, you’ve found the one you want to call home, and you’re ready to put an offer on it. This is a huge step! While you’re going to want to submit your offer as swiftly as possible, there are some important steps to follow to ensure you have the best chance to win the offer.

Here are the ways to make your offer letter as strong as possible, especially in a highly competitive market.

1. Get pre-approved for a loan.

A pre-approval can give you an advantage over other potential homebuyers because it proves to sellers that you've got financial backing through your lender. Pre-approvals are supported by official documentation, and when approved, you'll receive an official letter of commitment. Your pre-approval letter signals to the seller that there will be few, if any snags to the purchase – and that the whole process will be more seamless if they accept your offer.

In a competitive market, a pre-approval is a must.

2. Determine an appropriate price with your real estate agent.

One of the many benefits of working with a real estate agent is that they can help you determine a home’s worth based on similar homes in the area and market conditions. Keep in mind: a real estate agent won’t explicitly tell you what to offer, but they will guide you toward what they think a successful offer looks like. As a group, you’ll need to factor in several things including budget constraints, any necessary repairs, and potential competition for the home.

3. Know when it’s time to walk away.

There’s no doubt that the home buying process is deeply personal – and in the midst of emotions, it can be easy to make impulsive financial decisions. However, remind yourself that to love your home also means to be able to live comfortably with your monthly mortgage payment. That’s why it’s important to have a set price range that you’re willing to pay and stick to it. And if the sellers aren’t willing to go below that, it’s okay to walk away and know there will always be another house for you.

4. Write a check for the earnest money deposit.

An earnest money deposit, generally 1 to 3 percent of the purchase price, is a good faith payment you make along with your offer. If you were to win the offer, the deposit is typically due within a few days of signing the purchase agreement. If you were to lose the offer, the check is nullified. The deposit is typically held by an escrow company or the attorney handling the settlement, and then may be applied to the homebuyer’s closing costs.

5. Work with your real estate agent to submit your offer.

Almost there! Now it’s time to submit your offer, which will be contained in a document known as a purchase agreement. This legal document includes aspects of the offer such as the price you’re offering to pay, your proposed settlement date, and finance details. Your agent will submit the offer for you, and then all you can do is sit and wait until the seller has made their decision.

Keep in mind: If you’re in a competitive market, don’t be surprised if a counteroffer is made. Here, you will work with your real estate agent to see what the seller would like to negotiate (price, contingencies, closing date, etc.), and then it’s up to you to decide what you’re comfortable with counteroffering.

As we stated above, if you’re in the market for a new home, a pre-approval is a smart first step toward putting an offer on a house. Reach out to one of our loan officers today to get your pre-approval started!