Insights

You’ve been house hunting for months, and you've finally found the “perfect home.” A rush of excitement comes over you, and then, a sudden feeling of anxiety – how do you make an offer and ensure you’ll get your dream home?

While there are no guarantees, here are some tips to help improve the odds that the seller will accept your offer. Your real estate agent can be an excellent resource to guide you as well.

When to make an offer

As soon as you find a home that you would be happy to buy, you should at least consider making an offer on it. It’s tempting to wait and view a few more properties just in case a better home is out there, but this can be risky.

A good rule of thumb is that if you would be devastated to have another buyer snatch up this home, you should make your offer immediately.

If current conditions indicate a “seller’s market,” where homes stay listed for a very short period before going under contract, you should try to make an offer the day you see the property. That is especially true if the home has just gone on the market. On the other hand, if it’s a “buyer’s market,” where there is a large inventory of homes that have been on the market for a while, it is probably safer for you to take some time and view some other homes first.

Factors to base your offer on

Start by having your real estate agent run a comparative market analysis, which pulls information about recent sales of properties that are similar to the one you want to purchase. These comparable properties (often called “comps”) should be in the same neighborhood, have a similar number of rooms and be of a similar size. Your real estate agent can help you adjust these sale prices to account for differences between the property you are looking at and the ones that sold. Differences could include the age of the home, number of bedrooms or bathrooms, condition and home improvements.

You’ll also need to look beyond the hard facts of the home to get a sense of broader factors affecting your offer. For example, in a seller’s market, you may need to make an offer higher than the asking price because you are potentially competing with other buyers. You can also consider anything you know about the seller’s level of motivation to sell. For example, sometimes a listing will advertise that a seller is relocating, which lets you know they are likely to accept a lower offer.

Five key ways to make your offer more appealing

  1. Get prequalified for a mortgage or submit a cash offer. Sellers want assurance that you will be able to come up with the money you have offered for the home. The absolute best way to do that is to make a cash offer, but that is not possible for most buyers. The next best thing you can do is to get a lender to prequalify you for a mortgage. The lender will review your financial documents and credit report and give you a letter stating that they have qualified you for a mortgage of a specific amount.
  2. Put up a hefty deposit. Your deposit, or earnest money, is the money you submit along with your offer to show the sellers that you are serious about following through with the deal. Once you and the seller have both signed a contract, the contract and your state laws specify the circumstances in which you could get your deposit back. Otherwise, if you back out, the seller keeps your deposit. If you put up a high amount, the seller will know you are in a strong financial position and that you fully intend to go through with the purchase.
  3. Limit the contingencies in your offer. You can write several contingency clauses into an offer that give you the flexibility to back out without penalty. For example, you can make an offer contingent on the sale of your current home by a specific date or contingent on a clear inspection by a third-party property inspector. The fewer contingencies you include, the more confident a seller will be that the deal will go through.
  4. Be flexible with timing. Unless you need to be in the home by a specific date, it can be helpful to indicate in an offer that your timing is flexible. While you do need to write in a closing date on the offer, you could include a note that you are willing to adjust the date to be sooner or later depending on the seller’s needs. A seller might want more time to find a new home or might already have another home under contract, in which case they’ll want a quick sale date.
  5. Write a personal letter to the sellers. While a purchase offer is a legal document, it does not hurt to add a personal touch in some cases. Write the sellers a letter telling them about yourself (and family, if applicable), what you like about their home and neighborhood, and how much you are looking forward to taking care of the home that they more than likely have grown attached to. This personal touch can go a long way in helping sellers feel good about you and your offer.

Want to get prequalified?

Get an idea of how much home you can afford, before you ever start house shopping. While prequalification isn't a commitment of credit, it provides an idea of how much you may be able to borrow. The process is quick and easy. Just talk to one of our mortgage lenders.




This content is not intended to provide legal, tax, accounting, financial or investment advice or indicate the suitability of any product or service for your unique circumstances. You are encouraged to consult with a qualified legal, tax, accounting, financial or investment professional based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
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