Housing prices are on the rise; the housing market is red hot, and the reason behind this is inflation and a shortage of houses to meet the increasing demand; if you are looking for a house in today's market, you must get help from an agent to sort out things according to your budget and requirement.

There is another way you can increase your chances of buying a house that meets your requirement: making an offer on the house you want to buy, and there are chances you will buy one.

According to a recent market analysis, almost 42% of buyers who make an offer before buying a house end up buying one. To increase your chances to land on a good deal, you need to consider multiple options and increase your chances to close a deal.

However, if you are doing it for the first time, you must take the services of a local agent who will help you make the right choice regardless of market conditions. But making an offer yourself equips you with different parameters and essentials that later become the reason for a successful deal. Here is a step-by-step guide to making an offer on the house.

Getting a Mortgage Pre-Approval

Getting a pre-approval helps you know the range or limit of mortgage you can get to buy a house; similarly, it helps you shortlist the houses for which you can qualify and later apply for a mortgage. You must use your actual income, credit information, and the estimated purchase price.

Once you provide all these parameters to your lenders, they give you the interest rate, cost estimates, monthly payment amounts, and the amount you qualify for, along with the pre-approval letter. A pre-approval letter is important, especially when making an offer for a certain house; it shows your seriousness and proof of financing to your sellers.

Finding a Right Home

After you attain your pre-approval, the next step is to find the right home for yourself; you can start by browsing online, setting up alarms on different real estate platforms, and with the help of your local real estate agent, attending open houses and scheduling home tours. After shortlisting a house, you need to analyze the data and make a most competitive offer; you need to address the following factors:

Listing Age:

The older the listing age, the higher the chances of less competition. The house cannot attract a large audience, which opens an opportunity for those looking for the same house, putting them in a better negotiation position.

Current Owner Living Duration:

How long the current owner of the house lives there matters while shortlisting a house. The longer duration of living implies that owners have a high personal attachment to the place and are likely to sell it at a higher price or be very selective with the person who buys it.

Renovation and Expansion:

Look if there is any expansion or renovation done to the property, consult with your agent and ask them to inquire about it, mostly house flippers buy a property at cheap rates and, after making renovations sell it for a higher price, check the house and see by yourself whether the expansion or renovation is worth paying for, before making any offer.

Neighborhood:

A good neighborhood is equally important as any other factor; while considering buying a house, check the amenities, location proximity, businesses, and other important facts. Explore the area by yourself and search for any recent purchases done by others; this will give you an idea about the price and makes your offer better.

Do calculations before making an Offer

A little research and calculations make you literate about the house prices in the area where you are looking to buy a house; similarly, you can also do some digging with the help of your local agent by asking them to show the real estate sales data, you can also gather the information about the market type, whether it's a seller market or buyers' market, this puts you in a better position to negotiate.

Apart from the house prices in a particular area, history, or owners living term in a particular house, another factor that you must consider is your budget; you need to stick around your budget, don't go too high; otherwise, you will end up buying a house more than it's worth.

Earnest Money

Earnest money is the amount you offer to the seller to hold the property/house for a prescribed time until you make a further payment or arrange payment, but if the deal does not go through, the earnest money is forfeited by the seller. Make sure to calculate and decide how much earnest money you can afford to lose if the deal is not done.

Contingencies Plan

Always have a contingency plan to protect yourself from losing your earnest money. The contingency planning also covers legal issues if the deal is not properly processed. You must consider these five contingencies:

• Home Inspection: A home inspection is a must before making any purchase decision or transferring funds; it allows you to negotiate or back out from the deal if some issues reveal.
• Appraisal: It allows renegotiating or backing out from the deal if the house's appraised value is less than what you have offered.
• Financing: If anything happens to your mortgage loan, for what so ever reason, this contingency provides you cover and helps in backing out of the deal.
• Home Sale: Suppose you also enlist your property for sale; you can use this contingency and bind the seller to terms that you will buy their property once you're existing home sells.
• Title: If something is wrong with the title, this contingency allows you to leave the deal unharmed.

Prepare Your Initial Offer

After researching and analyzing, it's time to prepare your initial offer; your real estate agent will do it for you mostly; you read the terms and look at it once it's done before submitting it to the seller. Your offer letter includes the following:

• Sellers Name
• Property Address
• Title Names, including you.
• Purchase price and your Offering
• Earnest money deposit
• Contingencies
• Concessions or requests made to the seller
• List of Fees and closing cost
• Closing dates for the house
• Mention of date or time of move in
• Offer Response deadline

Finalize the Deal and Contract Signing

After negotiating the price, and discussing all the points in your offer letter, once the seller agrees with the terms, it's time to sign the agreement and proceed further. After signing, you will send this contract to your lender, and they will still process your mortgage. Your lender will inspect the property after ordering an appraisal.

Final Thoughts:

Buying your place of living is considered one big achievement, but buying it is a separate story with its requirements; you need to be vigilant, do your due research and analysis and consult with the local real estate agent to shortlist properties that best suit your budget. Start negotiation with the sellers, make your contingency plan and make your initial offer to lock the deal.