In my opinion, buying a house is a lot more complicated than it really should be. Making an offer on a house plays it’s part in that complication. You’d think that making an offer on a house you want to buy would be as simple as telling the owner that you offer $xxx,xxx amount and they either accept or reject that offer. But, if it were that simple, I wouldn’t feel the need to write this article, now, would I?

Depending on your situation, the offer you make can take on many forms. When we finally found the house we wanted to buy, and decided that we were going to make an offer, we found that there are a few questions that we had to ask ourselves.

How much will you offer?

How much you offer on the house depends alot on your local market. In some places, the market is pretty depressed, so making an offer that is way below the asking price is pretty common. In other places, like here in North Dakota, the market has been pretty stable, so offering way below the price could be construed as an insult to the owner. The house we wanted was originally listed at $138,000 when we first looked at it. It had been on the market since June, and a week later, when we went to look at it a second time, the owners had just dropped the price down to $130,000. We knew that we could probably afford the $130,000, but didn’t want to jump at the asking price. We did that with our first house, and regretted it. After discussing it with our real estate agent, we decided that offering $125,000 was well within our range, and wouldn’t be so low that it would insult the sellers.

Contingencies to the offer (Only ifs)

One thing that you likely won’t think about, is the contingencies on the offer. One of these was pretty simple for us. We already owned a house, and would need to sell that house before we could afford a new one. So, one of our contingencies was that our house had to sell before we could close on the new one. If you’re going to have a home inspector inspect the house (I recommend you do), your offer should be contingent on the house passing the home inspection. There might be appliances that aren’t explicitly stated as remaining with the house. If you’d like those appliances, you can make the offer contingent on them remaining after the sellers have moved out. There might be repairs that you think should be done before you move in. You can make the offer contingent on those being completed. Think of the contingencies as negotiation factors. You’re saying “We’ll pay you this much for the house, only if you do this.”

Counter Offers

Once you’ve made the offer, the real estate agent will take it to the sellers of the house for them to approve, reject, or counter. If the seller makes a counter offer, they may accept all the contingencies, but ask for a higher price. Or, maybe they’ll accept the price, but want some of the contingencies removed. It’s all part of the negotiation.

Accepting the Offer/Counter Offer

If the seller accepts the offer the first time, then it’s on to the rest. If they counter, you’ll have to accept, reject, or counter offer their counter offer. Again, it’s part of negotiation, so be sure you understand what it is that has changed and what it is that you’re asking for. At this point, you’ll likely have a bit more paperwork to sign.

What’s next? (After the offer is accepted)

After an sales agreement has been agreed upon, several things will happen. You’ll want to start the work necessary to secure your loan. The sellers will start doing any repairs or other changes that you requested in the contingencies. If you chose to have a home inspection, you’ll want to get a list of home inspectors in your area and contact one as soon as possible to get the inspection scheduled. All of these things will have a time frame that they will have to be completed within. In our case, we wanted to have a home inspection done. We had 5 business days after the offer was accepted to schedule and have the home inspection done. Once the home inspection was done, we then had 3 additional business days to decide if there were any repairs that would need to be done to the house in order for it to have passed the home inspection. If there are repairs, you’ll have to request the fixes through your real estate agent who will deliver them to the seller. The seller can then decide whether they want to make those fixes, or not. If they choose to not do the repairs, and you don’t want to go through with the purchase, that effectively kills the deal. If you still want to go through with the purchase, you might be able to have the sellers put the funds for the repair into a repair escrow account for your use later in making the repairs. If the seller doesn’t want to make the repairs, and doesn’t want to pay for them either, you have the choice of killing the deal, or removing the home inspection contingency on the offer.

Once all the repairs are made (or negotiated out), and all the other contingencies are made, you’ll move onto the financing and closing portions of your home purchase. Be prepared. The closing process is drawn out by regulation and can sometimes take up to 90 days or longer.