What Happens After You Make An Offer On A Home?
Making an offer on a house, much like a marriage proposal, is equally exciting and anxiety-inducing. After spending quality time browsing listings, hitting up open houses, and obsessively fiddling with mortgage payment calculators, you’ve finally found the house you want to spend the rest of your life with. You and your realtor put together your offer, aiming for the perfect dollar amount and closing terms. Maybe you even included an offer letter to show you're really committed. Your agent submits the offer, but what can you expect next? Work with your Realtor® to present as clean an offer as possible and let the seller see that you are going to be a great buy. Remember, just like a marriage proposal, you just hope they say yes!
In reality, once you submit an offer, one of three things can happen: your offer is accepted, your offer is rejected, or the seller counters your offer. OK, so then what?
If Your Offer Is Flat-Out Rejected
The seller might decide the amount you're willing to pay is lower than what she's willing to accept. If this happens to you, moving on may be the way to go, as it's likely there's too large a gap between you and the seller on what you think the home is worth. Remember, it’s not personal, it may just not be the one for you!
If Your Offer Is Countered
if the seller counters your offer—coming back to you with a dollar amount that’s slightly higher than yours—you have another chance to find a price and terms that you are both happy with. You can either agree to the terms of the counter or re-counter with your terms modified slightly. That back-and-forth goes on until either the seller accepts an offer or one of you decides to walk away.
Will the counter be on price only?
Not necessarily. For example, it could ask for a shorter inspection period, longer or shorter escrow, or deny certain items you asked for. It is not always about the money for the seller. They want to know that escrow will close and that problems are kept to a minimum.
Don’t be offended by a counteroffer. You should be pleased that you received one because it means that the Seller is taking your offer seriously. Look at the terms being requested and consider them carefully. The seller may require a longer escrow period, they may not agree to the amount of the home warranty you requested, maybe they will do the termite inspection but not the clearance. They also will more than likely be asking you to meet a specific price, or ask for your “best and final” offer. If a counter is presented to a buyer, the buyer can either accept the terms of the counter or negotiate their own terms with a counter of their own.
How will you know if there are other offers on the same property?
If there is, you will receive the counter on a multiple counter form which is different from a single counter form. When you see this you will know you are in competition and will need to make your best offer. The seller may counter each buyer differently, depending on their original offer, or it may be the same for all. You will not know. However, if you see the term “highest and best”, it’s likely that all buyers were countered the same.
Can you counter the counter? Yes, but in a multiple counter situation, this would not be advisable. You don’t have the luxury of time as another buyer may accept their counter.
Ask yourself, how much do you want this home? At what price are you willing to lose it? It’s very important to know what your limit is. You and your realtor absolutely must be on the same page so together you can pull out all of the stops to get your offer accepted.
The offer may expire
Sometimes the offer may expire. Maybe the seller was out of town, the listing agent has been unable to get together with them to discuss the offer, or there are other offers pending. This happens often in our market and the counter offer, if and when it comes, will include verbiage extending the original offer. So don’t worry if the expiration date has come and gone. The offer is not dead. However, if the offer is accepted after the expiry date you do not have to move forward if you no longer want to.
If Your Offer Is Accepted
Once you reach the point of an accepted offer, things really get exciting. You will need to start your financing, schedule a home inspection, and satisfy all contingencies in your contract moving forward toward your closing. This is what your punch list should look like.
Get your financing in order. Most likely you went into the home-buying process with at least a ‘pre-approval’ for a mortgage (Unless you happen to be paying cash). Now is the time to move forward with your lender towards being approved for the loan. Most lenders need to see a mountain of paperwork before giving you the thumbs-up on your approval. Work together with your mortgage broker to get what they need to be pulled together. Your lender will also equire an appraisal by a licensed appraiser as part of this process, and will usually let you know when that needs to happen.
Have the home inspected. An inspection isn't required by most lenders, but it's a really, really good idea. There will be a limited time period when you can make changes to the deal based on the inspection. Depending on what the inspector turns up, you might want to negotiate and ask the seller to make some fixes, ask for a concession, or you may decide you no longer want the home.
Find homeowners insurance. Almost every lender will require you to have signed up for homeowners insurance before approving your loan. Shop around and don't be afraid to negotiate. You can save money by bundling your homeowner’s insurance with any other kind of insurance you have, like auto insurance.
Move toward closing. While all of this is happening, your lender will be preparing your loan.
One escrow transaction could involve over 20 individuals, including real estate professionals, buyers, sellers, attorneys, escrow officers, escrow technicians, title officers, loan officers, loan processors, loan underwriters, home inspectors, termite inspectors, insurance agents, home warranty representative, contractor, roofer, plumber, pool service, and so on. And to complicate matters even further, one transaction can often times depend on another.
When considering the number of people involved, you can imagine the number of opportunities for delays and mishaps. While your experienced real estate professional, escrow, and title team can’t prevent unforeseen problems from arising, they can help to ensure as smooth a closing as possible.
During this period, most of the work happens behind the scenes, with someone on your team—Realtor®, lender, title agent—popping up to ask for a document here and there. Your primary job is to make sure you have your down payment ready.
When everybody gives the green light and your loan is approved, it's time to fund/close escrow and officially buy your home. Usually, you'll do a final walk-through of the property with your real estate agent a day or two before closing to ensure nothing has been damaged and that all changes specified in the contract were completed. Sign on the dotted line, and you're done! Now you can focus all your energy on moving into your new home.
