How to Make an Offer on a House: What Smart Buyers Discuss with Their Agent

Writing an offer is an exciting and crucial step in buying a home, but it's more than just picking a purchase price.

From fees and timelines to contingencies, the offer (also known as the Residential Purchase Agreement, or RPA) includes many details that can make or break your chances. Here's what goes into an offer and the key points to discuss with your agent before putting pen to paper.

1. The Purchase Price

This is the number everyone focuses on, but it's not always as straightforward as it seems. Some buyers are laser-focused on getting a deal and prefer to offer below asking. Others are up against a tight deadline and willing to pay over asking to secure the home quickly.

• Discuss market conditions. Is the home in a competitive area where offers go above asking? Or is there room for negotiation?
• Consider appraisal. Make sure your offer aligns with the likely appraised value to avoid issues with financing.

2. Deposit and Earnest Money

Your earnest money deposit (EMD) is your way of showing the seller you're serious. It's one of the first steps after your offer is accepted and officially kicks off the escrow process. In most cases, you won't be able to begin inspections until the escrow company receives your EMD.

• How much? In California, the standard EMD is typically 1 to 3% of the purchase price.
• When? Be prepared to wire your deposit quickly, usually within one to three business days after your offer is accepted.

Your EMD isn't extra. It counts toward your total down payment. Then, toward the end of escrow, you'll wire the remaining balance of your down payment along with any fees you agreed to cover.

3. Allocation of Fees and Expenses

The RPA outlines who pays for what. How you structure this part of your offer can influence how it's received by the seller. Here are a few common fees and who usually pays them:

• Escrow fees: Often split between buyer and seller, but this varies by region.
• Title insurance: Protects against ownership issues. Who pays is part of the negotiation.
• Home warranty: Some buyers request the seller provide a one-year home warranty.
• Transfer taxes: May be customary for the seller to pay, but not always.
• Property reports: Includes items like the Natural Hazards Disclosure and other required disclosures.

Ask your agent: who typically covers these costs in your area? And can adjusting these terms make your offer more attractive without increasing your purchase price? Sometimes it's the fine print that makes all the difference.

4. Contingencies

Contingencies are conditions written into the purchase agreement that must be satisfied for the sale to proceed. These protect the buyer and ensure time to investigate the property, secure financing, and make an informed decision.

Common contingencies in the California RPA:

• Inspection contingency. Allows you to conduct inspections and walk away or renegotiate if major issues are discovered.
• Appraisal contingency. Ensures the property appraises at or above the purchase price.
• Loan contingency. Protects you if you're unable to obtain the loan needed to complete the purchase.
• Disclosures contingency. Gives you time to review the seller's disclosures and cancel if something doesn't align with your expectations.
• Sale of buyer's property contingency. If you're selling your current home to finance the next one, this allows you to proceed only if your existing home closes first.

5. Timelines and Deadlines

Timing matters in real estate. If you have specific dates you need to stick to, be upfront with your agent so they can help you craft an offer that aligns with your schedule while still appealing to the seller.

• Move-in deadlines. Do you need to be out of your current home by a certain date or time your move with a job relocation or lease ending?
• Home sale contingency. Are you relying on the sale of your current property before closing on your new one?

6. Personal Property and Inclusions

If there's something in the home you love and want included in the sale (appliances, light fixtures, window treatments), make sure it's written into the offer.

Be specific. Don't assume anything is included just because you saw it during the showing. If it's not in the contract, it may walk away with the sellers. Rule of thumb: if it's not fixed to the house, it's generally not included. But it never hurts to ask.

7. Additional Considerations

Letter to the seller. In competitive markets, a heartfelt letter can help humanize your offer, especially when price and terms are similar between buyers. It's not always appropriate, but in the right situation, it can make a big difference.

Flexibility. Sellers often appreciate buyers who are flexible with closing dates, possession timelines, or minor terms. If you can accommodate the seller's needs without hurting your goals, it could give your offer an extra edge.

Your Takeaway

Making an offer on a house is about more than just numbers. It's a carefully crafted agreement that balances your needs with the seller's. By discussing purchase price, fees, contingencies, and timelines with your agent, you can create a competitive offer that puts you in the best position to secure your dream home.

Ready to make an offer in Orange County or Long Beach? Let's work together to make yours a winning one.