When you’re thinking of making an offer on a home, sometimes the logistics seem as elusive and confusing as a secret handshake. Closing costs? Contingencies? Contract clauses? How is a buyer supposed to keep up?
Thankfully, RealtorsⓇ know the step-by-step process of making a solid offer on a home. They’ve got that “secret handshake” experience that can make an offer go smoothly, even in a competitive market.
Courtney Kattengell has been a licenced RealtorⓇ in the New Orleans area since 2006. She says:
“Having a buyer’s agent means you’re going to have somebody looking out for your best interest and keeping you on track. They’ll be making sure you’re shopping within your budget, making sure that you’re shopping within the criteria of your loan product, and helping you get preapproved with a reputable lender. A good RealtorⓇ is going to check all those boxes for you.”
What is a RealtorⓇ?
A RealtorⓇ is a licensed real estate agent and a member of the National Association of Realtors (NAR).
NAR holds its members to a code of ethics, which helps clients trust the safety and integrity of the agent. Most real estate agents (which are licensed individually in each state) are also RealtorsⓇ –– but not all of them! As you’re looking for a real estate agent, you may want to inquire about their membership status in NAR.
How to make an offer on a house with a RealtorⓇ
Step 1: Find the right RealtorⓇ for you
Listing sites where you browse homes for sale usually have a sponsored agent pop-up that will lead you to a real estate agent. But not all agents have the same experience and expertise. Choosing the right RealtorⓇ should begin with some focused research.
In addition to being members of NAR, RealtorsⓇ may also have additional qualifications or certifications.
For instance, as you search for RealtorsⓇ within the HomeLight platform, you may see designations such as Certified Residential Specialist, Accredited Buyers Representative, Seller Representative Specialist, Military Relocation Professional, Accredited Land Consultant, Seniors Real Estate Specialist, and more. You may want to work with someone who carries a certification that aligns with your needs.
Kattengell says it’s also important to look for an agent who is active in the market.
“A full-time RealtorⓇ is going to have their finger on the pulse of what’s going on in the area. We pour our whole heart into it. It’s our entire income, so we take it very seriously.”
You also want to make sure that your RealtorⓇ has experience negotiating offers on homes similar to the one you’re looking for. Townhouse deals are different from land purchases; condos are different from single-family homes. Look for an agent who is comfortable with the type and price range of property you want.
When you agree to work with a RealtorⓇ you enter into a fiduciary agreement, which means that the agent is obligated to represent your best interests. Sometimes an agent will ask you to fill out paperwork that states the nature of your representative relationship, but oftentimes you will work together in good faith.
Usually, there is no RealtorⓇ fee or payment incurred by buyers. The agent’s commission is normally a part of the seller’s closing costs.
Step 2: Get preapproved for a mortgage
If you plan to get a mortgage loan, you should get preapproved by a lender prior to making an offer. Sellers will likely request to see a preapproval letter as a way to determine if you’re a serious buyer. Preapproval letters also give the seller an indication that closing can happen in a timely manner.
It’s best to shop around for the right lender and loan products. Your RealtorⓇ can help direct you toward lenders if you’re not sure where to start.
Keep in mind that mortgage preapprovals are not binding, and you can always switch to another lender later, if necessary. But doing the research upfront can help make life easier once your offer is accepted.
Step 3: Identify the target of your offer
This is just a fancy way of saying “find your house.” A RealtorⓇ can definitely help with this stage!
Work together to determine a list of must-haves, including location, size, and features. Your RealtorⓇ will search the multiple listing service (MLS) to find available homes that fit your criteria. You can also browse online listing sites to give your agent an idea of what homes appeal to you.
After narrowing down your search online, you’ll likely want to visit a few properties in person. According to NAR, buyers look at an average of nine homes in their search for the perfect one. But once you’ve found it –– hooray! You’ve got your target!
Step 4: Determine whether you can make it work
Your preapproval limit may be much greater than what you actually want to spend. Now’s the time to crunch the numbers and see how much you can really afford.
First, you’ll want to determine how much you want to contribute as a down payment. The minimum down payment you’ll need depends on your credit score and loan type. The more you put down upfront, the lower your monthly payment will be.
You’ll also want to set aside money for closing costs. Closing costs for the buyer are typically between 2% and 5% of the purchase price. Your RealtorⓇ can help you determine a closing cost estimate in your area prior to making an offer; your lender will give you a much more accurate number on your Loan Estimate document after you make an offer and apply for a mortgage.
And finally, you’ll need to be prepared with cash for the earnest money deposit. Earnest money is a good-faith deposit that will be due a few days after your offer is accepted and counted as a credit toward your closing costs or down payment (or both). It shows the seller that you won’t back out of the contract –– if you do, you’ll lose the earnest deposit.
An average range for earnest money is between 1% and 3% of the purchase price, but the norms vary by locale. Talk to your RealtorⓇ about the standards in your area.
Step 5: Discuss the price with your agent
Once you’ve determined if you can afford the home, you’ll need to determine if the home is priced right. Your agent will run a CMA (competitive market analysis) and pull comps (comparable recently sold home sales) to determine whether the asking price is fair.
When looking at similar home sales, you’ll want to make adjustments for the condition of the home, its time on the market, any differences between the homes sold and the home you want to buy, and the current market reality. Your RealtorⓇ will give you advice in these areas, then help you create an offer price that’s in your best interest.
Step 6: Talk through any contingencies
Your RealtorⓇ will need to know what types of contingencies you need in the offer. Once signed, your offer to purchase is legally binding, so if there’s any reason you might need to back out of the deal, that needs to be addressed upfront in the form of a contingency.
Normal contingencies might include provisions for financing, an appraisal, inspections, or the sale of your current home. Ask your RealtorⓇ what a typical offer looks like in your market, and talk through what contingencies will mean in your particular situation (though some, like the financing contingency, may be unavoidable if you’re using a mortgage). In some markets, it’s typical for buyers to waive certain contingencies, and you’ll need to know that going in if you want to make the strongest possible offer.
Step 7: Write out the timeline
Your RealtorⓇ will also help you create a timeline prior to making an offer, mostly because some of the key dates will need to be documented in the offer paperwork.
Together, you’ll need to determine your ideal closing date –– this is tied to how quickly your lender can be ready to close the loan. You’ll also need to talk through the inspection period, the earnest money deposit date, the walk-through date, the date of possession, and any other contingency periods.
Step 8: Sweeten the pot, if you can
In hot seller’s markets, it might help to include a personalized letter to the seller. If the seller is receiving multiple offers, they may be won over to accept yours if you appeal to their emotions.
Highlight the reasons why you love their home and create a mental picture of how you’ll use the space in the future. Your RealtorⓇ is well-versed in these types of letters and can guide you in verbiage that could seal the deal.
Another RealtorⓇ “trick” in seller’s markets might include an escalation clause. This allows you to make the offer at the price that you prefer, but it will then automatically escalate your offer price to match or exceed the highest offer by a certain amount.
Good escalation clauses are always written with limits so you’re not on the hook for a purchase price outside of your means.
Step 9: Put it all together
There’s more to an offer than simply naming a price. A complete offer to purchase should include the following, at minimum:
- The property address
- Names of the seller(s) and buyer(s)
- The offer price and earnest money amount
- All contingencies, including any that are being deliberately waived
- Any requests for credits (such as closing costs, updates, or known repairs)
- Who will pay for inspections, appraisals, and title insurance (your RealtorⓇ will be able to tell you what’s normal in your area)
- How long the offer will be valid (usually 48 hours to give the seller an opportunity to think about it and counter)
- The closing timeline and closing date
The offer to purchase (or purchase agreement) is official once it’s signed, so it’s important to have all these “ducks in a row” before presenting it to the seller.
Step 10: Submit the offer to the seller
At this point, the offer is out of your hands! Your agent will give it to the listing agent, who will deliver it to the seller. All you have to do now is wait for the seller to respond.
Step 11: Negotiate
The seller has three options once they receive your offer: accept, reject, or counter. Every deal is different, so it’s impossible to predict how much back-and-forth will be needed in your situation. But rest assured that your RealtorⓇ will be able to walk you through the negotiation process every step of the way.
Kattengell adds one final thought: “In today’s hyperactive market, having a RealtorⓇ is gonna put you above the competition. If you don’t have someone acting as your eyes and ears, you’re putting yourself at a disadvantage.”
If you’re ready to make an offer with a RealtorⓇ by your side, consider connecting with a top-performing agent in your area through our buyer’s platform.
Header Image Source: (antoniodiaz / Shutterstock)