Buying a house is a dream come true for most people. It is an opportunity to invest in a long-term asset that can yield higher returns if you decide to sell it. However, the whole home-buying process is coupled with some challenges, including how to present your offer and address legal requirements set by each state. These requirements can easily push you back as a new home buyer, but you can hire a real estate agent to do the legwork for you.

What if you cannot afford a reputable real estate agent? In this case, you will need to understand what goes into a good offer before you get started. Here is a look at how to make a winning offer as a first-time homeowner.

What to do before making an offer.

Making an offer is an overwhelming process that comes with a mix of fear and emotions. For instance, you can be afraid the seller might reject your offer or accept it. So, before you write the offer, ensure you have the following:

Plan for your finances and know how much you can afford for a new home. Even with numerous mortgage facilities, it is crucial to stick to your budget depending on your income to avoid getting into huge debts.

Going alone can save you extra costs, like paying buyer agent fees. However, at some point, you may need an agent to guide you on how to handle legal matters like property transfer tax, home appraisal, and other hidden taxes. Buyer agents also understand the market well and can help you reach the best home, even those not on listings.

Getting mortgage preapproval is the first step in a home-buying process. It determines how much you can borrow, your monthly repayments, and the estimated home price you can afford. When completing the pre-approval process, your lender will ask for your income and credit information and preferred home price range. Once approved, you will receive a pre-approval letter that you can include in your offer.

Together with your real estate agent, you can now begin the home search to identify the right home that matches your mortgage qualifications. You can use active or expired listings and for sale by owner (FSBO) homes not in the market listings. You should consider the following factors when looking for the best house to buy:

? What is its listing duration? Homes that have stayed in the listings for long attract fewer buyers. This offers more room for negotiation.

? Possible past renovations. Ask if the seller has ever renovated the home, and if

possible, ask for property disclosures. The cost of renovation will affect your buying

price.

? The neighborhood. A home in a good and safe neighborhood will attract a higher

price. Always check the home’s proximity to amenities. Also, consider recent home

sales and the average home price when calculating how much to include in your offer.

? How long has the seller lived in it? Sellers who have lived in the home for a long

time may have an emotional attachment to the house. Hence, they may be selective of whoever buys the home or accept only high-value offers.

The amount you set aside for a down payment depends on the price of the home you wish to buy. In most cases, you will need to save at least 20% of the home price as your down payment. You can also pay less than 20% as the down payment, although most lenders will ask for mortgage loan insurance to finance your home purchase.

With the above requirements in place, it is now time to make your offer on a home. Here is a step-by-step guide on how to present your offer.

Deciding on how much you can offer as a buyer revolves around three primary factors:

? The home history. You can determine the home history from the data you collected during home hunting. You can also ask around to know vital information that the seller might hide.

? Market dynamics. Know how the home compares to others within the same market. You should also know if you are buying in a buyer’s or seller’s market.

? Your budget. Don’t be tricked with your mortgage qualifications. Always quote the price depending on how comfortable you can handle other purchase and maintenance

expenses.

Contingencies are clauses that allow you to back out of the deal without losing your earnest money. They include home inspection, appraisal, financing, home sale, and title. These clauses allow you to walk out of the transaction legally free if you are not happy with any issues in the home. For example, if a home inspection reveals any serious problem, you can request your earnest money and end the deal.

Earnest money deposit is the upfront amount you pay as the initial purchase. The amount varies within the market, but in most cases, it is between 1% and 2% of the home price.

Although the amount goes to the escrow account and is applied to your down payment, it lets the seller know you are a serious buyer. This increases your likelihood of reaching the closing table.

Your buyer agent can do most of the paperwork, including writing an initial offer letter for you. However, if you are working alone, make sure your offer has the following:

? Name of the seller.

? Address and legal description of the property.

? Your name and anyone else who will be on the title with you.

? Your purchase price and down payment.

? Your earnest money deposit.

? Your contingencies.

? Any concessions you would like to get from the seller

? Your desired closing date.

? Your preferred move-in date.

? A deadline for a seller to respond to your offer.

After submitting the offer, the seller is likely to accept, reject, or respond with a counteroffer.

If the seller accepts your offer, you can proceed with the earnest money, down payment, and other purchase tasks like home inspection and appraisal. Sometimes, the seller may also reject your offer because you lowballed it or they are not ready to sell. If this happens, you can look for another home.

In most cases, a seller will make a counteroffer, which lets you decide if you want to proceed with the deal or not. If you love the counteroffer, you can schedule negotiations with the seller to weigh what they want against what you can offer. During the negotiation process, always remember these points:

? You can remove some or all the contingencies, change the closing date, and offer a lease back to the seller.

? Understand the seller’s pain points. Why are they selling the house? Do they need more time to look for new places? Do they need cash?

? You can write a home offer letter, which lets you explain to the seller why you need the home.

You can now close the deal and sign the purchase and sale agreement once both parties agree on the final price and terms. Your lender will also use the signed contract to finalize your mortgage process before you become the new homeowner.

Making a good offer and reaching a closing table should not be a rough road anymore. All you need is to work with someone who can guide you on how much to offer, your down payment, and mortgage preapproval. Also, remember that there is no crime in making a lowball offer as a beginner. With these steps at your fingertips, you can easily draft an offer that attracts the seller.