You’ve done your homework, you’ve shopped around, and you think you’ve found The One.
Congratulations! Every single step of the home-buying process can be arduous and overwhelming, so getting this far is a big deal. But now that you’ve got your heart set on a house, you want to make sure you can beat out the competition and actually get the thing when you make a purchase offer, especially considering the competitive housing market we’re in.
So how do you stack the odds in your favor when it comes to writing an offer letter?
What should I have prepared before I submit an offer letter?
First things first: before you even get to the “writing an offer letter” part of the process, what should you already have in the bag?
For starters, it’s a really good idea to already have your mortgage pre-qualification ready to go. Along with helping you figure out how much house you may be able to actually afford, a pre-qualification letter may also signal to the home seller that you’re a serious prospective buyer, ready to make the big move if they accept your offer.
Additionally, of course, you’ll have wanted to save up enough money for your down payment as well as closing costs. Depending on your lender, some or all of those monies may be gifts from close friends or family, but the money may still need to be “seasoned,” which is to say, have spent a given amount of time in your bank account — so be sure you’ve got all your ducks in a row before you get down to business with your offer.
What common mistakes should I avoid while making an offer?
If you’re ready to write a real estate offer letter, here are some common mistakes worth avoiding to help ensure it’ll be a winner.
Don’t low-ball. While negotiation is certainly part of the home-buying process, if you make an offer that’s way lower than asking price, the seller may not take you seriously and dismiss your offer out of hand.
At the same time, you don’t want to offer everything you can afford, either. Say you’ve been pre-qualified for $350,000. If you offer the full amount, you’ve run out of wiggle room in negotiations, and if interest rates change — which they do all the time, until the purchase agreement is drafted and the closing date agreed upon — you may no longer be able to afford that amount.
In addition, be careful with your contingencies. As part of the offer-writing process, you’ll have the opportunity to include a few contingencies, such as a clean home inspection and accurate home value per appraisal, in order for the offer to go through. But if you include a whole slew of contingencies, you may be shooting yourself in the foot; in a seller’s market, the seller will likely have a less-complicated offer they can take advantage of. Work with your real estate agent or REALTOR to help ensure you’ve included a protective amount of contingencies without going overboard.
Speaking of which…
Hire your own real estate agent. If you rely solely on the listing agent or the seller’s agent, you won’t have a professional involved whose job it is to protect your interests — which is a very nice thing to have, indeed. Additionally, a real estate agent will know enough about the local real estate market to help you effectively negotiate and write a winning offer letter with insider knowledge. It’s very hard to research fully as a layperson.
Finally, include a personal touch. While keeping emotion out of it may be a common piece of advice for homebuyers, making an emotional connection with the seller could help you stand out from the crowd in a bidder’s war. While a personal letter might not save you if someone else can make a more compelling financial offer, it may still be worth adding in a few narrative elements to help appeal to the current homeowner.
Writing a winning offer letter is one of the key components of getting into your dream home — but for most buyers, choosing a mortgage is a big part of the process, too.
While homebuyers have many different lenders to choose from, Quontic offers a wide range of mortgage programs, including our Community Development Loans (CDLs)1, which are specifically geared towards non-traditional buyers, such as small business owners and foreign nationals. We work with first-time homebuyers as well as investors or those looking to refinance an existing real estate holding: we value all potential buyers, regardless of your specific circumstances. Our holistic approach to qualifying borrowers may be able to help you get the loan you deserve, even if your paperwork looks a little different from most homebuyers’ — and our mortgage loan origination is standing by to help every step of the way.
1All lending products are subject to approval. Rates, program terms & conditions are subject to change without notice. Not all products are available in all states or for all amounts. This does not represent an offer to enter into a loan agreement. Other requirements, restrictions & limitations apply. Information is accurate as of December 23, 2021.