Buyer Step by Step November 20, 2018

Step 7: Make an Offer on a Home You Love

You’ve found the perfect backyard and want to put in an offer.


In today’s market, we need to put your offer in asap, ideally within a few hours. Before we can put an offer on a home, there are a few things we need to get from you:

Full legal name: If you haven’t already done so, please provide us the full legal name of anyone who will be on the contract as well as their phone number and email address.

Offer price: What price do you want to offer for the home? Let’s have a discussion about the sale-to-list price ratio in the neighborhood. It will tell you a lot about whether you should expect to pay below the asking price, asking price, or above the asking price based on today’s market.

Your walk-away price: Don’t expect to pay your initial offer price as it’s rare for a seller to accept your initial offer without some negotiating back and forth. That’s why it’s called an initial offer. In addition to deciding what offer you want to put in to start, we need you to decide now how much you’re willing to pay for this property and what your walk-away price is before things get heated and emotional.

Closing date: Typically, in Indiana, closing takes place 30 days from contract acceptance. Sometimes you can ask for a later closing date depending on the seller’s needs, but we wouldn’t expect it. Therefore, if you want to move around July 1, plan on putting in offers at the beginning of June. If you’re paying 100% cash you can often close faster than 30 days (around 21 days), but 30 days is usually the required minimum if you’re using a mortgage to buy the property. If you are getting down payment assistance, we’ll likely need 45 days as there are typically more details to address.

Earnest money: Earnest money is essentially a good faith payment showing you are serious about moving forward with the purchase. How much earnest money are you comfortable putting down on this property? Typically, contracts in Indiana ask for 1% of the purchase price as earnest money. Earnest money is due within two days of contract acceptance. The earnest money is part of your down payment. For example, if you’re planning on $40,000 for a down payment and you’re paying $15,000 in earnest money, at closing you would owe an additional $25,000 for the remainder of the down payment.

Down payment: Depending on your particular loan program the down payment could be anywhere from 0% up. Personally, I like to see the buyer put down at least 5% (20% is ideal) unless you are doing a special loan program like a VA or FHA loan. The more you are putting down, the higher the chance that your loan receives approval.

Closing cost credits: Do you want to ask the seller to pay for part of the closing costs? If so, how much?

Home warranty: If you haven’t purchased a home warranty, do you want to ask the seller to provide a home warranty?

Contingencies: Any other contingencies we need to be aware of? Do you need to sell your current home before you can buy this home, for example?

Lastly, 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. If the inspection reveals a huge problem (aka defect) I can help you navigate through that for a reasonable outcome (see lines 214 through 223 of the Purchase Agreement for an explanation of defects and how to handle them). If you have a change of heart and decide not to go through with the purchase, you must consult a real estate attorney for advice.

Want to review the contract in advance? Click to see a blank Purchase Agreement.