Once you've found a house you like, you must make a written offer to buy it. What form that offer takes depends on what state you live in. In some states, the offer is a bare-bones statement that "I'll take the house for $X," after which the seller writes up a draft contract. In other states your offer must be so complete that the seller could sign it and you'd have a contract right there.
The seller will either accept your offer, make a counteroffer with one or more changes, or reject it outright.
Deciding How Much to Offer
The advertised price of a house is just a starting point. It's up to you to decide how much the house is really worth, based on such factors as:
- how much comparable houses have recently sold for
- whether the local real estate market is hot (demand for houses is high, and prices are going up) or cold (prices are dropping)
- the seller's needs, such as to move quickly or to be reassured you've got the financial resources you say you do
- whether the house is uniquely valuable to you, for example if you need an in-law unit or art studio, and
- what you can afford, after a careful examination of your budget.
Adding Contingencies to Your Offer
Real estate offers almost always contain contingencies -- events that must happen within a certain amount of time (such as 30 days) or else the deal won't become final. For example, you may want to make your offer contingent on your qualifying for financing, the house's passing certain physical inspections , or your ability to sell your existing house first.
For more information, see Contingencies to Include in Your House Purchase Contract.
Counteroffers
Whether it's the only offer, or the first of many, a seller usually doesn't have to accept any particular offer. If a bid is way out of line pricewise, the seller is likely to reject it on the spot. But even with very attractive offers, the seller is likely to respond with a written counteroffer accepting some or most of the terms, but proposing changes to the:
- price -- if the seller wants more money than offered
- closing date or occupancy date -- if the seller needs more time to move out
- contract contingenies -- if the seller doesn't want to wait for you to succeed in selling your current house, or wants you to schedule the inspections more quickly.
You can accept the seller's counteroffer, reject it, or present a "counter counteroffer." Then, the negotiations will continue until either a deal or an impasse is reached.
A contract is formed when either the seller or the buyer accepts all of the terms of the other's offer or counteroffer in writing within the time allowed.
For a more detailed analysis of how to decide the right price for a house, craft an offer tailormade to your and the seller's needs and interests, and negotiate the final contract, see Nolo's Essential Guide to Buying Your First Home, by Ilona Bray, Alayna Schroeder and Marcia Stewart.
Copyright 2008 Nolo