how to make an offer on a House
How to Submit An Offer on a Real Estate Investment
So now that you’ve found a property… What do you do? You make an offer, Boo! I know what you’re thinking. You might be scared. You might think you’re not ready.
But, crush that voice in your head and keep in mind that you have nothing to lose by making offers. The seller can only say YES, NO, or give you a COUNTER OFFER.
How does a real estate offer work?
If you’re using a real estate agent, then remember to use an agent that has investment experience themselves. It will make the transaction so much smoother and they will not be intimidated to make low offers for you.
This will also make it a lot easier for you since they can submit the offer on your behalf and give you advice. Most agents do not charge the buyer a fee so you really don’t have anything to lose by using an agent.
Give this image a name including a targeted keyword
If you’re not using an agent, then it’s important that you submit your offer using the proper forms for your state. Some states will take proposal to purchase forms as an offer, while others want a full sales agreement. Be sure to check with your local ordinances to see how it works and consult with an attorney for any questions that you have.
You will need to submit proof of funds. Unless you are getting seller financing – then you must have cash, credit, or partner with someone who does. Don’t freak out! I will go over in another blog post on creative ways to do financing (without cash or credit).
You will usually need to put down a deposit. Some areas use personal checks for the deposit, but other states require it to be certified funds. Note to self: Try to put down as little as possible!
As a buyer, you always want to put down as little as possible. As a seller, you always want to get the most. (But, we’ll talk about that later…).
Some bank owned properties (foreclosures) will require a 10% deposit (as in 10% of the sales price). So if you make an offer for say $100,000 then they would want $1000 down.
Always, always, always include a time period for the seller to respond by. Time is everything so I like to put that the seller must respond within 2 days.
Contingencies are your BFF! Use them to your advantage. As a new investor, you will want to make the property contingent on getting the financing and getting the home inspection.
This way if your financing falls through, then you can get out of the deal and get the deposit back. Or if some major repair comes up on the home inspection (that the seller will not fix or give you a credit for), then you can get out of the deal and get your deposit back. Worst case, you are out $500 for the home inspection (or whatever it costs, usually between $300 to $500).
Also, another one that is recommended is that you elect the insurance contingency. This way if you cannot get insurance on the property or you find out that it is located in a flood zone or something, then you can get out of the deal and get the deposit back.
Make sure that your offer includes how long that it will take you to close (Hopefully, get the keys to the property and sign the deed). Will it take you 30 days? 15 days? 45 days? Make sure that you give yourself enough time to do your due diligence (inspections), get your financing together, and do a title search (to make sure that you get the property free and clear of any liens).
Lastly, the offer should include any fixed items that you are asking for. I know you’re like… What’s a fixed item? It is something that is attached to the property that you’d like to include in the sale. Such as a stove, refrigerator, curtains, chandelier, etc.
If you’ve read this much, then you are legit serious about buying a property! Cheers to your success and good luck on getting the offer accepted.
They say mom knows best. Growing up, my mom always told me to marry a rich man, like a doctor or lawyer.Read more