Step 7 to Buying a Home: Making an Offer on a Home

CONGRATULATIONS! You’ve found the home that's right for you and want to put in an offer. Before we can put an offer in on a home, there is some information that we will need from you:

Full legal name(s): We will need your full legal name, as it will appear on your loan application (your lender will likely require that it match your legal identification, i.e., your driver's license or passport). We will need this information for every person who will be on the loan application (or for every person who will appear on the title, if you are paying all cash for the home).

Initial offer price: We will discuss with you the recent sales that are comparable to the home you'd like to make an offer on. Once we have discussed that data, we will need to know: what initial price do you want to offer for the home? We will also give you as much information as we can, based on those recent sales, as to whether you should expect to pay below asking price, asking price, or above asking price based on today’s market. We give you our promise to be transparent with you in this discussion, as it will help you to write the best starting offer.

Your walk-away price: Usually, your initial offer price is just that: an initial offer. It’s extremely rare for a seller to accept your initial offer without some negotiating back and forth, so we want you to expect that there will very likely be a counteroffer from the seller. For that reason, in addition to deciding what offer you want to put in to start, you should decide now how much you’re ultimately willing to pay for this property and what your walk-away price is before thing get heated and emotional.

Closing date: It is typical in Atlanta for closing to take place as quickly as 30 days from the date your offer is accepted. Sometimes, closings can stretch to as long as 60 days from contract acceptance, depending on the seller's circumstances, the buyer's situation, and what is negotiated. Closings only take place on weekdays -- Monday through Friday; they cannot take place on weekends or bank holidays when the banks are closed. 

If you want or need a faster closing, and if the seller is amenable to that, some local lenders we use can do closings faster (usually 21 days is the fastest a closing can be done with a mortgage), but most lenders can’t close that fast and need 30 – 45 days.  If you want to close faster than 30 days please let me know as we’ll need to direct you particular lenders in town who are capable of closing quickly. Additionally, we will need to make certain that the lender can deliver, as we do not want to commit to a closing date, in writing, and then not be able to deliver.

If you’re not getting a loan and are paying 100% cash, you can close as quickly as 14 days -- perhaps even faster, if the seller is open to it, if the closing attorney can act faster, and (generally) if there is no Homeowner's Association involved.

Before putting in an offer, please email me what exact date you want to close on the home (remember, it has to be a weekday). We don’t recommend closing on a Monday as Monday closings increase your chances of wire fraud issues.  Usually we cannot specify a specific time for the closing as that depends on the closing attorney's calendar, though we can call to schedule the time as soon as the day of acceptance. Closings can take place anytime from 10 AM – 5 PM (depending on the closing attorney) and take an average of 90 minutes or so -- though they can go longer, depending on the mortgage lender. You should plan to attend closing in person, as most lenders will not allow an absentee closing for buyers; however, if circumstances dictate that you cannot be there, we will need to know 2 to 3 weeks in advance in order to try to work that out with the lender, get permission for you to give Power of Attorney to a family member, and work through those details.

Earnest money: Earnest money refers to, as the name suggests, that amount of money that you put down with the contract to show that you are making an offer "in earnest," in other words to show that you are serious. This is different from your downpayment; however, your earnest money will be credited to your downpayment at closing, so you will see that money again. Your earnest money is typically due when the contract is written and will be deposited into a trust account. It's fairly typical in the Atlanta market to put approximately 1% of the purchase price down as earnest money. 

For example, if you're purchasing a house for $250,000 and putting 20% down, your downpayment would be $50,000. If you put down $2,500 for your earnest money, then the amount of downpayment you would bring to closing would then be $47,500.

There are some circumstances in which your earnest money may be more than the typical 1%; for example, if you are in multiple offers and you want to show the seller that you are more serious, you may make your earnest money substantially higher, or if you are purchasing new construction, the builder will have their own requirements for earnest money. We will discuss earnest money in detail when writing your offer.

Down payment and other loan terms:  For the contract, we need to know how much you’re going to put down for your down payment. This is the amount that you have discussed with your lender and is related to how much money you are financing for your mortgage loan. Depending on how long you've been searching for your home, we may also need to request an updated copy of your preapproval letter from your lender -- the letter should state the type of loan for which you're applying and the prevailing interest rate for which you have been preapproved.

Closing cost credits: If you want to ask the sellers to pay any of your closing costs, we will need to include that request in your initial offer. In Georgia, the buyer is responsible for the bulk of the costs associated with closing. In many cases, we may be able to negotiate that the seller contribute to those costs; however, this should not be an expectation. It is not a guarantee that the seller will agree to contribute to your closing costs, so we should be prepared for that to be an out-of-pocket expense for you at closing.

Home warranty: One of the concessions we can ask the seller to provide at closing is a home warranty on the property. If the property doesn’t have multiple offers, we always recommend asking the seller to provide you with a one-year home warranty (and the seller may already be offering one).Depending on the type of property you’re buying, this usually costs the sellers between $500 – $800. You also have the option to purchase a home warranty for yourself -- there's nothing that says that only the seller can provide it. If the seller says no or if we are in multiple offers and need to ask for as little as possible, you can always purchase one for yourself. Here’s more information on what a home warranty is.

Other seller concessions: There are other things that we can ask for in the initial offer, if we are not in multiple offers

Review of the seller's disclosures: In most cases, the seller will have filled out disclosures (about the house, about the homeowner's association, if applicable) prior to listing their property, and we will have requested a copy before the showing. We will need you to review the seller's disclosures, which you will sign and we will attach as part of your initial offer. This is the time to ask any questions about the disclosures -- some questions we may be able to answer for you; others we may need to put in writing as part of the offer (i.e., a formal request for explanation or additional disclosure). 

Contingencies:  Are there any other contingencies we need to be aware of? Do you need to sell your current home before we can buy this home? Is your financing contingent on an inheritance or other form of funding that may take longer than traditional financing? Are there other decision-makers involved that may have a say in whether or not you can go through with this purchase? Now is the time to disclose these things, if you haven't already, so that we can do our best to protect you, protect your earnest money, and get you to the closing table.

Understanding what you've signed: Buyers sometimes want to know what happens if the contract is accepted and they have a change of heart or the inspection reveals a huge problem. Read here for information on getting out of a signed contract

Want to review the contract in advance? Click here to review the Georgia REALTORS Purchase and Sale Agreement.

Once we’ve talked through all of the above and answered all of your questions and you’ve emailed us your answers, we’ll write the contract and have you sign it via a secure electronic signature platform.

We’ll then submit it to the seller’s agent; typically, we give the seller 24 hours to respond back, though sometimes depending on their circumstances, the seller may ask for more time (and in other circumstances, we may choose to give less time that that -- we'll discuss our strategy with you when we are writing the offer!). While negotiations sometimes go quickly, be prepared that it often takes 2-4 days to negotiate the purchase price and terms of the contract. Every seller is different: some people can make decisions quickly, whereas others need time to think things through. Patience is the name of the game once an offer has been submitted; we don’t want to look too eager as it could weaken our negotiating position!