Episode 5: Making an Offer
You’ve been shopping for a house with your agent, and you already have your financing figured out, and you’ve found a house you love! The next step is to make an offer. Here we will go over the components of an offer and some considerations when you’re making an offer.
Here are some important terms and components of an offer:
Sales Price: This is the total amount of the offer, and the aspect people think most about. You will be pre-approved by your lender for a certain amount so keep that in mind when making your offer.
Earnest Money: Earnest money is basically a deposit held until closing. Usually it is 1% of the sales price, and is attributed towards your total deposit at closing.
Close Date: Often the close date is 30 days after the contract is executed, but can potentially be adjusted forward or backward a bit.
Taking Possession: Usually a buyer will take possession upon closing, but sometimes that is not the case. Sellers sometimes require a leaseback, so they can stay in the home for a certain time past closing.
Option Period: The option period length and payment is negotiable. The longer the option period, the more you will pay. It gives the buyer flexibility to terminate the contract for any reason, but they have to pay for that ability.
Who Pays for What: The title policy, survey, home warranty, closing costs, etc. all need for somebody to pay for them. These are negotiable as are all parts of your offer so strategize with your agent about what you should do.
When making your offer, understand that each one of these is negotiable and that you have options. Offering the seller more earnest money can allow you to pay less for your option period. Or perhaps a shorter option period is what pushes your offer over a competitors. Think about each of these variable and how they effect your offer.
