How do you prepare to write an offer on a home? It takes quite a bit of work and planning to be fully prepared to write an offer. There are five things every buyer should have done before writing their offer. They are:
- A CMA (market analysis) for the desired property
- Proof of funds for the deposit (or full purchase price of cash offers)
- A completely signed disclosure package
- An offer strategy (particular important with multiple offers)
- A pre-approval letter (for borrowers)
The CMA is important because that’s what tells you how much is a reasonable offer for the property. You can lowball it or pay full price but whatever you offer should be based on the comparable sales.
Proof of funds is critical because it assures the seller you have the money to make the transaction happen. This is really important with multiple offers because the more confident the seller is of your ability to pay, the more likely they’ll accept your offer.
The completely signed disclosure package means you’ve done all your basic research on the home. Doing this tells the seller you’re serious and means you know what you’re buying. If you want to get more inspections, go ahead.
An offer strategy is all about knowing what you’ll offer and understanding what the seller is likely to respond with. They may accept your offer or counter it or ignore it. You have to think it through in advance. It’s like playing chess – only more important.
A pre-approval letter is an absolute “must” for buyers with financing. It shows you can afford the home and a lender sees you as credit-worthy.
There are always additions to this list and exceptions. Cash buyers don’t need a pre-approval letter but they do need proof of funds for the entire balance of the transaction. Another “must” for buyers with an existing home is a plan to sell that property. Contingent offers will work in some markets but not all so be prepared by either getting the home on the market (and requiring a rent-back) or some other means of getting from one home to another.