Key Decisions When Making an Offer

You just went to see a FANTASTIC new listing -- and you are EXCITED to make an offer.  But... it's the first offer you will be making... so what do you do next... and what decisions will you need to make?

Here's a summary of the main things you'll need to decide when making an offer on a house...

Offer Price - What price will you be offering on the house?

Escalation Clause - If it's a new listing and if there are multiple offers, you might want to include an escalation clause, effectively increasing your offer price to compete with other offers.  If you choose to do so, how high do you want your escalation clause to potentially increase your offer price?

Deposit Amount - In our market, buyers often make an earnest money deposit of roughly 1% of the purchase price.  That will seem low to anyone in another market, and a larger deposit can make your offer appear stronger.  This deposit is credited towards what you bring to closing - and would typically be returned to you if the transaction does not proceed to settlement based on an agreed upon contract contingency.

Personal Property - What personal property will convey with the house, such as the kitchen appliances, clothes washer, clothes dryer, etc.?

Financing Contingency - Unless you have cash to make the purchase, you'll need to include a financing contingency.  What percentage of the purchase price will you be financing?  You will -- of course -- also need to provide a lender pre-approval letter with your offer.

Inspection Contingency - Do you want your offer to be contingent on a home inspection?  I recommend this, but including this contingency may make your offer less competitive if there are competing offers.

Radon Test Contingency - Do you want your offer to be contingent on a radon test?  I recommend this, mostly if you have a basement with living space, but including this contingency may (again) make your offer less competitive.

Appraisal Contingency - Do you want your offer to be contingent on an appraisal?  Again, this may make your offer less competitive - though depending on the loan-to-value ratio of your mortgage, the house might have to appraise at/above the contract price for your loan to be approved.

Home Sale Contingency - Do you need to sell another house in order to buy the house you want to buy?  Of note, this is not a contingency that home sellers typically consider these days in our market.

Financing Deadline - By what date will you have loan approval?  It is typically reasonable for this to be 21 to 30 days after the contract date.

Closing Timeline - On what date will you propose to close on your purchase of the home?  It is typically reasonable for this to be 30 to 45 days after the contract date - but consider asking the seller about their preferences.

And... that's about it.  We can talk through all of these items in general before we see a house of interest... but when you are ready to make an offer on a house, these are the offer terms we'll need to discuss in order to put together your offer on the house you'd like to buy!