Once you have zeroed in on a property you can envision yourself living in and toured it once or twice, it’s time to make an offer. There are a few components to an offer, but of course the purchase price is the most salient one.
To be prepared for the offer process, you will (as mentioned earlier) want to have a letter from a lender in hand. Many lenders will pre-approve you up to a certain amount, and then you can let them know when you find a home how much you need the specific offer letter to include. Hot tip: You don’t want to show your hand and let buyers know you can afford more than you are offering, so don’t use a blanket approval letter. Keep it specific to the price you are willing to offer for a house.
Inspection waivers: Take an inspector with you to the showing, and have them inspect the property ahead of time if possible. You will have to pay for this out of pocket (Ballpark of $500+ depending on house size, market, etc.), but it may be worth it to help your offer stand out as less risky for the seller.
Mortgage contingency waivers: This is a tricky one, because you’d have to be comfortable with getting the house even if your mortgage fell through. In general, this option is only a good idea for those who have enough cash to buy a home without a mortgage.
Other waivers: Depending on your unique situation, there may be other waivers you could offer the seller (appraisal, etc.) that would help your offer look stronger.
Personal Letter: If a few offers come in around the same price, you may be able to pull on the seller’s heartstrings to get them to choose you. Tell them about your background, why you love their home and want to live there, and how good of care you will take of it. These don’t always work (and won’t win you the house if someone bids way more money on asking price), but can be worthwhile in many situations.
Close Date: If your seller wants to get out as quickly as possible, and you are getting a mortgage, talk to your bank about how fast they could close. Putting in a 30-day or 45-day close could help sweeten the deal for the seller.
Good Faith Check: Many offers are submitted with a $1,000 check, to be credited toward the traditional 20% down payment. However, you can write a bigger check, say $5,000. This check will simply be torn up if you don’t get the offer, but it can show the seller you have skin in the game and really want the home.
If you decide not to go the traditional real estate agent route, you can either put the offer together yourself or lean on a service like MassRealty to draw up the offer letter (again without incurring the high traditional real estate agent fees). MassRealty’s trained real estate agents have been through this process many times and can help you navigate it. They can get very involved in the offer process and help you put in as strong a bid as you possibly can.
Keep in mind, this can be a nerve-wracking time, especially if you live in an area that has a competitive real estate market. But it’s good to keep a level head and accept that you may not get the first home you put an offer on; try to keep your emotions out of it as much as possible until it is a done deal.
Then it’s time to get back out there and start hunting again. You may need some time to dust yourself off, but don’t be daunted. It can take a while, but if you have patience and find ways to enjoy the process, odds are good you’ll eventually find a home that suits you very well.
Keep in mind, it’s not over yet! Once your offer has been accepted, it’s time to schedule an inspection (if you have not already had a private one done and/or waived your inspection contingency.) An inspector will accompany you to the home and look it over, top to bottom. This can take several hours.
After the inspection, you will need to have an appraisal done. This is where an independent appraiser comes in and assesses what the home is worth. Many banks will not back a loan if the assessed value is significantly lower than the purchase price (though this depends quite a bit on the market you are in.)
After that, the fire department will inspect the property to ensure it is safe. They’ll check that the smoke alarms and carbon monoxide alarms work, there are enough fire exits, and there are no other major safety concerns.
A typical close date is about 60 days after the purchase and sale—the agreement that you will purchase the home—has been signed, though either side may negotiate this. There are limits on how fast a bank can close, though, if you are getting a mortgage.
This is a time of much paperwork, so prepare yourself. Here are some examples of things your bank will ask for before the mortgage is finalized (it’s a good idea to get them handy before you get serious about your real estate search):
1) Tax returns
2) Credit reports
3) Bank statements
4) Other paperwork depending on your exact financial and personal situation
On the close date, you will meet with your lawyer and sign a very large stack of papers. After it’s all over, the home is yours! Congrats!