How To Make an Offer on a Home

Taking out a home loan

You found the home you absolutely love and you want to make an offer to purchase that home. If you are with a Real Estate agent, the process is easier than if you make an offer on a home for sale by owner. Many of the steps listed below will still apply, but you have to be much more cautious. The following steps are those you would use when you are working with an agent and not when you are dealing direct with the home's owner (the seller).

Step 1

Most Real Estate firms use a standard "offer to purchase form." Please take the time to read ALL the information on the form to make sure there is nothing listed that is objectionable to you or your significant other. Most of what you read is standard boiler plate, but it is still important to read it.

There are several types of properties that can change the type of offer to purchase form you will be using -- buying a condo, a farm, zero lot line property, single family residence. We will concentrate only on the single home purchase.

Step 2

You are making an offer on a single family home. Satisfied that the standard form is okay for your needs, and having decided the price you are going to offer on the property, ask the agent to provide the necessary information, such as address of the property and property description (i.e. half acre lot, square footage, etc.). You will be required to make a deposit, usually a check, in an amount ranging from $500 dollars and up. Discuss with your agent how much you should make as a deposit. Your objective is to make as small an amount as possible, and yet show the seller how serious you are about puchasing their home.

Step 3

The most important portion of the offer are the "contingencies" or "conditions of sale" section. Contingencies of sale are vital to your personal protection in buying your selected home. I will list several that are most important to make your home purchase a pleasure for many years to come.

Make your contingencies state as "SUBJECT TO:"

  • SUBJECT TO: Having a home inspection by a person or company or your choice.
  • SUBJECT TO: Your financial conditions, i.e. obtaining mortgage financing at a specified rate. If you want a fixed rate mortgage or adjustable rate, state it here. Limit your choice to three financing sources you wish to contact, if you have not been pre-ceritfied by a lending institution already.
  • SUBJECT TO: Your review of the deed covenants (if the agent has not already provided you this information). These covenants are restrictions placed on a deed to protect the value of the home. Covenants may be things such as, "no fences allowed", "no businesses run out of the home", and many other items.
  • SUBJECT TO: Your review of the title to the home looking for liens placed on the home by contractors or companies for unpaid labor costs. Also, you can see this information at the county clerk's or recorder's office, as it is public information. Your agent may have already reviewed this for you; if so, don't list it here.
  • SUBJECT TO: Easements on the property by utility companies. Again, if you have a good agent they will have already informed you of these. If so, then don't include them here.
  • SUBJECT TO: Property is zoned for residencial living. Again, you will probably be aware of this from your agent and if so, don't list it here.

These are not the only items you may want to include. For example if you want a quick closing (less than 30 days), or if you need 45 days to close and take possesion, seller's disclosure list to be provided, list it here. Think about the serious items that are important to you and should be included here. Again, your agent will guide you as to how important the issues are that you may bring up.

Take your time in developing this list. Even before you start looking for your new home, make a list of these items so that when you make an offer, you have everything at hand when you are in the agent's office. When you are actually writing the offer with your agent, you may forget something that is important and could cost your deposit and put you in a less than satisfactory situation with the new home.

The offer to purchase is an important document and you will be putting a cash deposit with the offer which you don't want to lose if you should decide you can't buy the home. Most purchase agreements have the following wording: "The seller may retain all or a portion of the earnest money deposited herewith as liquidated damages if the Purchaser(s) refuse(s), or otherwise fails to perform in accordance with this Contract of Sale."

It is always best if you visit a Real Estate lawyer, prior to looking for a home, and have them review the standard offer to purchase for your state. It will be money very well spent.

Ron has been a licensed Real Estate Salesperson, Licensed electrician, Director of Finance for a local non-profit, Systems consultant for Ameritech and Digital Equipment Corporation. View more detail at:
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Sorry about taking so long to answer. I don't usually go back and read my previous postings. When you receive multiple offers and you want to determine which price is best, you normally think the highest price offer is the best. Not always the case. In my view I would look at all the offers and try to determine which offer has the best chance to get financing. It may not be the high offer. A significant item is if the potential buyer is preapproved by a lending source. If you are in a hurry to sell, then this may be your best choice however also, consider the contngencies the buyer has listed. Some might be expensive for you to meet. e.g. Replace water heater, etc.

In order of priority, I would consider 1. financial strength of the buyer (preapproved), 2. sale price offerred, and 3. contingencies to offer. The ideal offer would be best price, preaproved financing, and few or no contingencies.

By Ron Ambler

It is harder when you are faced with multiple offers. How do you determine what price is best?

By Mary Norton