Are you in the process of considering whether to purchase a home? If so, you may be wondering about the steps you should take before making an offer on the house.
Let’s look at some of the key things to consider before placing an offer on a property you love. Being well prepared will put you in a better position to be successful and enjoy your housing choice.
Take time to understand the current housing market
There’s no guarantee that the property you like will be available when you’re ready to make an offer. You’ll want to be sure you understand the current market and what houses are available. Look at recent sale prices, as well as neighborhood trends.
All real estate is local, after all. Is it a buyer’s market or a seller’s market? The current real estate environment will play a significant role in what to expect.
For example, at the moment, current real estate markets favor sellers in a big way. Multiple offers and bidding wars on houses are the norm, not the exception. If your local market is like others, you could likely find yourself in the same situation.
Be prepared for doing things that make you uncomfortable
When the market is white-hot, buyers compete with many other folks. To win the house they love, buyers often step outside the box and do unusual things. Here are a few examples of what you might encounter:
- Bids are coming in significantly over the home’s asking price.
- Buyers are waiving a home inspection.
- Buyers are waiving their home appraisal or offering an appraisal gap guarantee.
- Getting rid of the mortgage financing clause in their offer
- Allowing the seller to rent back for a specified amount of time.
You may see some of these things or all of them before making an offer. Speak to your real estate agent about what to expect. It will help tailor your offer when the time comes.
It may make sense to put in a backup offer when you’re not the winning bidder. Many buyers will put in offers on homes that are contingent just in case the home of their dreams comes back on the market.
Get pre-approved for a mortgage
Before making an offer on a property, it’s important to have pre-approval for a mortgage. This will help eliminate any surprises during the homebuying process. There are very few sellers who would ever consider accepting an offer without one.
You can expect the seller’s listing agent to require it as well. This one is a biggie. Unless you have your financing in hand, you won’t be able to make an offer on the house. Your agent can help you get pre-approved for a mortgage in the current market.
If you don’t have a lender chosen, your buyer’s agent will have someone they are comfortable referring you to.
Check your credit report
Make sure you check your credit report. It is not unusual for there to be mistakes. A credit report error could be enough to change your credit score.
Credit scores significantly impact the rates and terms you’ll get from a lender. Over the life of the loan, it could translate into thousands of dollars.
Talk to neighbors
Now that you are able to make an offer on the house, make sure you perform some due diligence. Speaking to the neighbors to find out if there are any issues you’re not aware of is essential. Check the property’s title and deed records for any unusual history.
If you can’t find any information that would cause you concern, move on to the next step.
Once you have a good idea if anything is wrong with the property and have spoken to neighbors, it’s time to prepare your offer.
There are a few important things to keep in mind when making an offer on a house:
- The offer price
- The down payment amount
- The terms of the loan
- Any contingencies you want
- The requested closing date
Making an offer on a home is a significant financial step. Ensure you are comfortable doing so before moving full steam ahead. Lean on the pros you are working with to help make the process go smoothly.
Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 35 years. Bill is the owner and founder of Maximum Real Estate Exposure. For the past decade, he has been one of the top RE/MAX REALTORS® in New England.