Buying a house can be a stressful and time-consuming experience, so here's a guide to help you decide how much to offer, whether you should add conditions to your offer, how to deal with multiple offers and how to respond to counter offers.
Deciding How Much to Offer
Making an offer on a house is difficult because if you bid too low, others will outbid you; if you bid too high, you'll be throwing money away. Here are some things to keep in mind when making an offer on a house:
Adding Conditions to Your Offer
You should definitely add some conditions to your offer in order to protect yourself, but keep them to a minimum. Typical conditions to an offer would be that your offer depends on the house passing certain inspections, that sale of your own house be completed first or that you qualify for the loan you plan on buying the house with.
Dealing with Multiple Offers
In a hot real estate market, it can get very competitive when you're bidding against other parties. One strategy is to simply bid on multiple houses. In most states you can legally do this, but if you ever find yourself with simultaneous acceptance offers, you need to immediately revoke the offer for the house you don't want.
Another option is to make multiple bids based on how many people are competing for a house. Make a low bid on a house if you're the only bidder, a normal bid if there are only two or three other buyers and a high bid on a house with multiple bidders.
Set monetary limits before you start bidding, and put in place strict rules for when you'll walk away. Finally, consider attaching a cover letter to your offers that briefly describes you and how you plan on taking care of the house, property, etc. Sometimes owners are more interested in someone who understands the uniqueness of the house or who promises to take good care of it.
How to Respond to Counter Offers
Typically, most sellers won't accept your offer outright, but instead will provide you with a counter offer that changes the price, the closing date, occupancy deadlines, or any conditions you set forth in your offer.
You can accept, reject or present your own counter offer to the new offer. Make sure to set a time limit for accepting your new offer or offering yet another counter offer. There will be no contract formed until one side simply accepts the other's latest offer without modification.
About to Make an Offer on a House? Get a Free Legal Evaluation
Buying a house will be one of the more stressful and time-consuming endeavors of your life, but also among the most satisfying. So it makes sense to do it right and understand what you're getting into first. Consider getting a free legal evaluation from a real estate attorney today.