How to Make an Offer

Offer to Closing

Negotiate price and terms, spot potential problems and complete your purchase. The Offer to Closing guide explains key points and pitfalls of each step, so you can be your own best advocate.

When you make an offer, you commit to one home. You sign a contract to purchase, which is legally binding if the seller accepts. You also write out your first big check for a good-faith deposit, which you can apply to the down payment at closing. The more carefully you research the market, the neighborhood, comparable homes, and current property values, the more quickly and confidently you can decide what price to offer.

Focus on the facts:

• Are you making an offer that you can afford?
• Have there been, or are there, any other offers?
• What is the apparent condition of the property?
• What contingencies, or conditions, do you need?
• If seller comes back with a counteroffer, what's negotiable?

It's important to keep your perspective during negotiations. Negotiations should be friendly and progressive. Other basics to keep in mind:

Start with your best offer - That means a realistic price based on market conditions and comparable listings. The closer you are to reality, the closer you'll get to closing.

Save room to maneuver - Don't put everything on the table right away. For example, you may be willing to pay a higher price to close sooner, but that's a negotiating point to save for the counteroffer.

Avoid obsessing about a small price difference - It may seem like a lot to you now, but over the life of your mortgage, that extra $1,000 is negligible for a house you really want.

Include an inspection contingency in your purchase contract. Many lenders now require at least a termite inspection as a condition for making a loan. You may also want to have the house inspected for property defects, lead, radon or other environmental hazards. Think of these evaluations as quality control. A trained professional may take several hours and charge several hundred dollars to do a detailed home inspection, but it will save you grief and money down the road. Some sellers have their homes inspected before putting them on the market, and make the report available to you.

Once your offer is accepted, it can take days to finalize your purchase, or close on the property. During that time:

• A third party takes over the paperwork.
• Your lender approves your loan.
• You and the seller satisfy contingencies in the contract, such as inspections and clear title.
• You arrange for title and homeowners' insurance (a condition of the mortgage).
• You decide how to hold the title (as a sole owner, as a joint tenant or as a partner).
• You review closing costs with lender.
• You and the seller schedule closing day.
• You hire an attorney if you need or want one to represent you on closing day.
• You arrange for final walk-through inspection.
• You organize and schedule your move.

Now the real work and the real joy of home ownership begins. If you organized your move to coincide with closing day, be sure you allow enough time (several hours) between the closing and the movers' arrival. If you have several days between closing and moving in, this is the time to paint, re-carpet, and make any minor repairs not covered in your transaction. Then start getting settling in your new home and planning for the future. The most important thing you can do is to start rebuilding your finances:

Try not to accumulate new credit debt. - You've just taken on a mortgage. If you need to refinance, the lender will scrutinize your credit record again.