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Fulton Bank
Fulton Bank

8 tips to make a winning offer on a house

While inflation is starting to cool and the job market is heating up, buying a home is still highly competitive because it’s still a “seller’s” market. That means there are more homebuyers looking to buy a home than actual homes for sale.

This is where knowing how to write an offer for a house becomes important. The purchase offer is your opportunity to convince the seller that they should sell their home to you rather than another buyer.

Sellers are looking for an offer that creates a clear path to selling their home, with minimal obstacles or complications. Knowing how to write your offer could give you an edge over other homebuyers so yours gets accepted. Use these tips and always consult with a real estate professional to write an offer that gets noticed.

Steps to Write an Offer

Once you find a property you want to buy, and draft your purchase offer, consider these things that could convince a seller to accept.

1. Make sure the price is right.

Home prices have gone up 11.2% in the last year and with a shortage of homes, you’ll likely need to set your price at or slightly above list price to attract a seller’s attention. If you're going above the list price, be clear about where you're going to draw the line. Otherwise, you could end up buying a home that's outside your budget.

2. Show proof of pre-qualification.

A mortgage pre-qualification means that a lender has done a cursory review of your finances and pre-qualified you for a home loan. In a seller's market, a letter of mortgage pre-qualification shows a homeowner that you're serious about buying.

If you haven't gotten pre-qualified for a home loan yet, consider checking that off the list. In addition to helping your offer get accepted, it can help you determine what you can afford to buy.

3. Offer more earnest money.

Earnest money is essentially a good faith deposit toward the purchase of a home. A typical earnest money deposit is 1% to 3% of the purchase price. In a hot market, you may choose to increase this to 5% or higher to stand out among the sea of buyers.

A seller may prefer a buyer that's willing to offer several thousand dollars as a deposit in lieu of a buyer who's only offering a few hundred dollars. Take care, however, to understand when this deposit may or may not be refundable to you if you choose not to move ahead with the purchase.

4. Waive certain contingencies.

Contingencies are clauses you can include in a home offer that set certain conditions for the purchase. For example, you may include a clause that the purchase is contingent on the home inspection or the appraisal.

These kinds of contingencies are typically standard, but when the market is competitive, you might choose to waive some of them to get on a seller's good side. Your real estate agent can help you decide which contingencies to waive.

Keep in mind that this can be risky. If, for example, you waive the appraisal contingency and the home appraises below the asking price, it'll be up to you to make up the difference in cash.

5. Include an escalation clause.

If you're worried about being outbid on a home, including an escalation clause could help. This type of clause automatically increases your offer price, up to a maximum amount, if another buyer outbids you.

Again, it's important to be clear on how high you're willing to go. While an escalation clause could help persuade a seller to accept your offer, it could lock you into a pricier home.

6. Limit your asks for extras.

If you're serious about getting your offer accepted on a house, avoid padding it with fluff. For example, don't ask for them to throw in furniture as part of the deal or nitpick over small repairs that you could handle yourself once you move in. Keep the offer clear and concise, so the seller doesn't view you as a potentially problematic buyer.

7. Be agreeable to the seller's needs.

Knowing a little about the seller and their reason for selling could help with how to write an offer for a house. If you know, for example, that the seller won't be able to move out for another three months, you could agree to set the closing date on a timeline that's convenient for them. Or you may agree to speed up the closing if they need to move quickly.

Of course, before you agree to these types of things, be sure that it's not going to create issues for you. If you're still renting or trying to sell the home you're currently living in, your timeline might not be flexible.

8. Be polite.

A good offer letter for a home is friendly and polite and doesn't make unreasonable demands of the seller. This is true in any type of market but observing basic etiquette can go a long way when there are lots of other buyers vying for a seller's attention. If you'd like to add a personal touch, you can also include a handwritten note explaining what you love about the home.

What you can do next

Just because it’s a “seller’s market,” doesn’t mean you can’t come out a winner. For starters, you’re going to need a seasoned real estate agent or mortgage loan officer to help. He or she can help you understand your local market, what types if homes are moving and at what price, and will guide you to ensure you’re writing the best home offer you can.

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