When you’ve found a home that you’re interested in, it’s time to make an offer. We’ll draw up a formal contract reflecting your offering price and terms. If your offer is accepted by the seller, this contract will become a legally binding agreement.
In addition to an offer contract, you’ll need to provide earnest money and a letter from your lender confirming your ability to complete the purchase.
Earnest Money is typically between 1% to 5% of the property purchase price, but in competitive markets, we routinely see much more than 5%. You won’t be at risk of losing your earnest money as long as you don’t default on the agreed upon terms of the contract. There may be several contingencies that we can put in place within the contract to protect your earnest money from default. We’ll explain these to you when we put together your purchase contract.
As a buyer, you will be in a better negotiating position if:
- You’ve been pre-approved for a mortgage, better yet if you’ve been pre-underwritten
- Your offer is not contingent on the sale of another property you currently own
- You haven’t loaded your offer with time-consuming or extraneous contingencies
- You have an understanding of how to structure your offer to win if there’s competition
When you make an offer on a house, you should be prepared for the negotiations to go back and forth a bit before both parties agree to the terms. You may also have to compete with other interested buyers. We’ll discuss winning strategies with you so that you can put your best foot forward!
After agreement has been reached on all of the terms in the contract, and both you and the seller have signed the offer, we have a legally binding contract. This is called “Mutual Acceptance.” Your file will be sent to the escrow company. You’ll contact the escrow company directly to arrange the delivery of your earnest money deposit. Please note that due to increasing fraud in the industry, you should always confirm wiring instructions directly with your bank and with your escrow contact.
Learn more about what escrow’s role is and what title insurance is in our section on Escrow & Title.