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7. Placing the offer and negotiating

After doing the comps search and estimating true costs of home ownership, discuss with your real estate agent about competitive offer options. Knowing what the seller is looking for can help you make your bid competitive. It is not always about the highest price offer, since your seller might value other things like closing dates, your risk of not getting a loan approved, and so on. An experienced agent should help you craft a competitive bid based on your input and come up with a counteroffer that does not stretch your budget. There are many contingencies (home inspection contingencies, mortgage contingency and so on) that a first-time homebuyer needs to discuss with the buyer’s agent.

Note that you will need 3 things to place an offer:

  1. Offer letter (written contract) drafted by your real estate agent/attorney.

  2. Pre-approval letter.

  3. Earnest money deposit check (typically around $1,000) to show that you are serious about buying the home. This money is typically held in escrow, usually by the seller’s attorney or a listing agent’s office.

  4. (Optional) Some sellers ask for a personal letter similar to a cover letter along with the offer.


  • It’s natural to get very anxious during this process, but in a competitive seller’s market you should treat homebuying like a numbers game. If on average a house gets more than one competitive offer, that means you are most likely going to have to place multiple bids on homes before you secure one.

  • When you are overbidding on a house, think about the additional hidden costs of owning a home since they add up quickly!

  • Read the offer letter at least 3 times so you have dotted all your i’s and crossed all your t’s.

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