Step 6: Making an Offer on the Home

Ten Steps to the Successful Completion of the Home Buying Process

Once you have found a home you are interested in purchasing, the time is right to make an offer on the property. If you are interested in the property, the buyer basically has the burden at this point in submitting an offer on the property that will satisfy the seller’s terms.

This is the key point where the value of an experienced and knowledgeable REALTOR® will make the difference since the REALTOR® knows the community, is knowledgeable about the market value of homes in the area and has experience in negotiating with sellers for the purchase of the property.

No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. An experienced and knowledgeable REALTOR® will advise you on the market value of the home and will help you negotiate with the seller to obtain the home at the best possible price and on the most favorable terms.

In working with your REALTOR®, you will be able to access a list of forms that have been prepared by an attorney that are appropriate for a real estate transaction in your community. Such documents include numerous conditions on the purchase that protect both the buyer’s and seller’s rights. If you are uncertain about any of the language used in any of these forms, you should review them very carefully and have them reviewed by an attorney if you have any questions.

Prior to the submission of the offer, your REALTOR® will explain the general negotiation process in your community and provide you with more explanation on his or her role in helping you negotiate the purchase of the property. While much of the attention surrounding the offer is devoted to the purchase price, an offer to purchase the property includes many other terms, which can represent very large costs for either the buyer or the seller.

If you have any questions about any of the terms in the offer, then you should ask your REALTOR® to review this information in more detail with you. If the offer is accepted by the seller, you will be bound by the terms of the offer and you should ensure that you are comfortable with these terms.

In terms of negotiating the purchase price, you sometimes hear in popular culture that the amount of your offer should be so much less than the seller’s asking price or so much less than what you are willing to pay for the property. In practice, the purchase price contained in the offer will depend on many variables and your REALTOR® will be well positioned to provide you with advice in this area.

If many buyers are competing for the home or the seller is not motivated to sell, then the seller will be less likely to accept an offer that is not for the full asking price. If demand for the home is weak or the seller is very motivated to sell, then they may be more likely to accept an offer that is much lower than their asking price.

Based on a review of current market conditions and knowledge of past real estate transactions in your community, your REALTOR® will be able to provide you with advice on how to approach the negotiation process. Depending on market conditions, the REALTOR® will advise you on the likelihood of the seller accepting a proposed purchase price.

Although the process of making offers varies around the country, your REALTOR® will present the offer to the REALTOR® representing the seller and the negotiation will begin. The seller, in turn, may either accept your offer, reject it outright or choose to make you a counter-offer.

Because counter-offers are very common in real estate transactions (any minor change in an offer can be considered a "counter-offer"), it is very important for you to remain in close contact with your REALTOR® during the negotiation process so that any proposed changes can be reviewed quickly. Throughout this process, your REALTOR® will serve as a trusted guide in advising you on how to proceed with the negotiations.

Once both the buyer and seller have agreed to a defined price and a list of terms for the purchase, both sides will enter into a real estate sales contract to formalize the agreement. With this step completed, both parties will follow the terms of the contract towards the conclusion of the transaction, which is known as the “closing.”