The homebuying process can seem intimidating and opaque, especially if you’ve never done it before – but investing in homeownership is one of the best ways to build wealth, and I want to help you get there! This is the third in a 4-part series geared toward informing you about what to expect as you buy a home (check out Part 1: Getting Started and Part 2: Showings). A big part of my role as your Realtor® is making sure that you understand and are comfortable with the process – that you feel informed and in control at each step.
Last time, we covered showings – but what happens when you find the house you want to buy?
Part 3: Writing an Offer
Step 5: Comps
Is it really worth that price? For any house you want to make an offer on, I will run comps – short for comparable sales or properties. This means that I look at similar sales (or pending sales) in the past 6 months. Ideally, we’re looking at same house style, same neighborhood, and similar stats (beds/baths/etc). We look at these properties and compare them to the one you’re offering on to determine if the list price is reasonable. Based on the comps, we may want to offer under list price (especially if it has been on the market for a while or there are some obvious issues) or over list price (especially if there’s a lot of interest). One thing to keep in mind is that a list price is simply a starting point – and the market is constantly moving. Just because a similar house sold for less 1 month ago doesn’t mean that your under-list offer will get accepted.
Step 6: Making your offer!
Once we have a price in mind, I do a few things:
Write up your offer! I like to go over the Contract to Buy and Sell with you before this very moment, when it can feel a bit overwhelming to read through 20 pages of legalese and when we might have some tight time constraints. The contract contains the details of what you are offering the seller – purchase price, deadlines, inclusions and exclusions.
Talk to your lender. I let them know the price you will be offering, and they provide a fresh pre-qualification or pre-approval letter for the exact purchase price.
Talk to the seller’s agent. I let them know to expect an offer and ask that they loop me in if they receive any others in the meantime.
On that note:
🗝️ Communication is key! 🗝️
If you are even considering making an offer, I get and stay in close communication with the seller’s agent. I want to find out a number of things:
Do they have any offers yet? If so, I want to find out whatever they can tell me about those offers – price, terms, etc.
Are there any specific terms or deadlines that would make our offer stand out? E.g., do the sellers need a rent-back? Do they need to close before or after a certain date?
Having this information puts you in the best possible position to submit a winning offer!
How do I make my offer more attractive to the seller?
Some of these elements can be completely subjective to the seller, but a few common things that can make an offer sweeter are:
Limiting what inspection items you may ask them to fix. I often write contracts limiting an inspection objection to health, safety, and structural concerns.
Appraisal gap coverage. If you are offering over list price, it is a good idea to offer this. Your lender will only lend up to the amount an appraiser determines the property is worth. If that number is lower than the purchase price you’ve offered, bringing some extra cash to cover the difference can make the seller more comfortable accepting your offer.
Quick close. A standard closing period in Colorado is 30 days. Many lenders can get you clear to close in less time, and if you are paying cash, you can likely close much quicker.
Seller rent-back. If the seller needs to find a replacement home, they may want to rent the home from you for a short period after closing. The feasibility of this depends on your circumstances and constraints, but in any form, it can be an incentive to the seller.
Then what?
Once we submit your offer, I call the seller’s agent to confirm they’ve received it and to reiterate your interest. Often, the lender will also call as a gesture of good faith and rapport-building, and to attest to your qualifications as a borrower. We often give the sellers 24 hours to respond to the offer (though this can be longer if specifically requested by the seller). The sellers can do one of three things:
Accept. Yay!
Reject. Boo.
Counter. This means the seller is proposing some change to the terms you offered – this could be price, deadlines, inclusions, some combination, or something else entirely – and if you agree to the new terms, the offer is accepted.
Want to know more about the contract? You can review a blank one here; if you have questions or want to go over it line by line, let’s connect!
Coming next: What happens once my offer is accepted?
You can also peek at the whole timeline below:
