Most people don’t propose on their first blind date. For the same reasons, it’s rare (and not well-advised) for a buyer to fall in love with the first home they view and purchase it immediately.

Look at a wide range of homes before making a decision to buy. If you’ve been waiting and saving a long time, don’t let your eagerness to be a homeowner tempt you into a hasty decision! Make sure to look at enough homes in the neighborhoods you like to get a feel for real estate values or prices.

Then, once you've narrowed down the choices, do your homework. Research factors like:

  • Taxes
  • School system
  • Cost of utilities
  • Quality of community services (such as fire and police)
  • Anything else that will affect your life once you own the home

When you find a home you really like, take some time to think about it before making an offer. In some markets, you may have to act quickly if there aren't many homes for sale in the area but there are a lot of buyers (known as a seller’s market). Still, think about your purchase carefully: you’re making a big investment.

Once you've found and researched the home you want, you're ready to make an offer.

Making the Offer to Purchase

Typically, when you’re ready to make an offer, you’ll meet with your real estate agent and complete the Offer to Purchase form together. You may also want to write your offer with the help of an attorney. Although you can prepare an offer yourself, it’s not recommended.

An Offer to Purchase includes detailed, complex information. If you try to write an offer by yourself, you may make mistakes, omit or include items that would put you at a disadvantage relative to other buyers or trap yourself into an agreement that’s not in your best interest.

When you’re ready to make an offer, get a copy of your state's form from the real estate agent and look it over carefully. Have either the agent or an attorney thoroughly explain every item on the form so that you understand exactly what you are committing to before you actually write an offer. There are many factors that may influence the amount you would offer for a home:

  • How much you can afford
  • How badly you want the house
  • How many other buyers are interested
  • How motivated you think the seller is
  • How much work might need to be done on the house
  • How the property compares with other similar properties

Contingencies

Contingencies are conditions that must be satisfied or you won’t be required to go through with the purchase after your offer is accepted.

Most buyers make an Offer to Purchase contingent upon their ability to obtain satisfactory mortgage financing. Without this contingency, you could risk losing your earnest money (or worse) if you can’t get a mortgage loan.

Other common contingencies include:

  • Getting a satisfactory home inspection within a specified period of time
  • Obtaining a termite inspection
  • Obtaining satisfactory well and septic tests
  • Requiring evidence that the property meets building and safety code requirements
  • Obtaining an appraisal with a value not less than the offered price
  • Getting a satisfactory attorney review of your Offer to Purchase (if the offer was not prepared by an attorney)

Getting an attorney

Depending on your situation, other contingencies may be appropriate. That’s why it's a good idea to have an attorney look over your offer before you present it to the seller. If any contingencies specified in the Offer to Purchase are not met, you have the option of not going through with the purchase.

Make sure when you are deciding upon the contingencies that you are adequately protected – but at the same time, be realistic. Consider the situation in your market and make sure your offer terms and price are fair.

Earnest money

When you submit an offer, you'll likely be asked to make a deposit, often referred to as "earnest money." It's given to the real estate agent to be held in an escrow account as a show of good faith on your part that you’re sincere about your offer.

If the sale goes through, your earnest money will be deducted from the amount you owe the seller at closing. If the seller rejects your offer, or the sale falls through because one of your contingencies is not satisfied, your earnest money should be returned.

Counteroffers

Once you make an offer, the seller has the option to accept it as-is, reject it or make a counteroffer proposal. If the sellers want to change some of the terms of the offer, they’ll make a counteroffer.

A counteroffer might include:

  • A higher sale price
  • Change or removal of some of your contingencies
  • The exclusion of a piece of personal property that you wanted included in the sale, such as appliances

If you receive a counteroffer, you have the option of accepting or rejecting it — or making another counteroffer. This is the negotiation process that leads to a final offer that both parties agree upon.