sign contract

The offer is arguably the most important part of the home purchasing process as it is the first impression the seller will have of you and can set the tone for the duration of the transaction. Offers are also extremely important during multiple offer situations (which are common in seller’s markets).

When thinking about an offer, buyers typically focus on the purchase price. While the purchase price is extremely important for a lot of reasons, all of the other components can make or break a deal as well.

Purchase Price

As noted above, the purchase price is an important offer component. You should work with your real estate agent to determine what a fair price would be for the property and whether or not it would appraise for that price. Additionally, it is important to consider your comfort-level with the price–just because the market deems the price fair, it does not mean that you would be comfortable with paying that price for the property. To help my clients determine their comfort-level, I always pose the question, “What is this home worth to you?”

Due Diligence Fee

In short, the due diligence fee protects your earnest money deposit during the due diligence period. This allows you time to perform all inspections, appraisals, obtain conditional approval and to negotiate any repairs. The due diligence fee is kept by the seller and the earnest money gets returned to you if you decide to walk away for any reason or no reason at all during the due diligence period. The good news is that when you make it to closing, the due diligence fee is credited back to you toward your closing costs.

Sellers view the amount of this fee as the amount of “skin” you have in the game—basically, how serious you are about the property. The amount of due diligence has won contracts in many multiple offer situations.

If you want more information about the due diligence period, check out my blog post about it.

Earnest Money Deposit

The Earnest money deposit is used to represent a buyer’s good faith and to help demonstrate the buyer’s willingness to follow through with a home purchase. The only time the earnest money is at risk, in North Carolina, is after the due diligence period ends. If a buyer walks away for any reason after the due diligence period ends, they stand to lose both their due diligence fee and their earnest money deposit. Conversely, if the make it to the closing table, both the due diligence fee and earnest money deposit gets credited back to them.

Earnest money, like the due diligence fee, can be used to demonstrate house serious a buyer is about the property but is less impactful initially since it can be returned if the buyer walks away during the due diligence period.

Due Diligence Date

The due diligence date determines the length of the due diligence period which, as noted above, allows you time to do all of your inspections and confirm you want to move forward with closing on this property.

This can be leveraged to show the seller how aggressive you are willing and how quickly you are able to move. This also shows the seller that you are willing to put both deposits at risk sooner which usually is a sign that the deal is unlikely to fall through (and there be a need to put the property back on the market).

Closing Date

The closing date determines the length of the contract (from contract date to closing date) and shows the seller how quickly you can close. Right now, the banks need an average of 28 to close a loan. Quick closings are usually attractive to sellers, but it may behoove your agent to ask the seller when an ideal closing date would be.

Personal Property Requested

This refers to any items that are not affixed to the property that the buyer would like to stay with the property at no additional value. Items that are typically requested are the refrigerator, washer, and dryer as they are the only appliances that do not automatically convey with a property

Whether you need to sell another home in order to purchase (contingent)

Contingencies are covered in another post so I will not spend too much time on this topic. Seller’s see buyer’s with out property to sell as more attractive and less risky. Therefore, if you have the ability to purchase without selling or if you have the ability to sell or at least get your home under contract prior to putting an offer—do it.

How you plan to purchase the property

Are you paying cash, using a conventional loan, using an FHA loan, or using a VA loan? How much money are you putting down on the property?

The answers to these questions aid sellers in making a decision on whether to move forward with an offer or when comparing two competing offers. Cash deals are typically the most appealing to a seller as there is a higher likelihood that the sale will close, and cash deals can generally close faster. However, pre-approvals have gotten much stronger since the 2008 recession and many lenders will even do initial underwriting prior to putting in an offer which makes loans much stronger competitors than they once were.

Additionally, sellers typically view conventional loans as more appealing than FHA or VA loans since there is less red tape and conventional borrowers are generally putting more money down which is a strong indicator that the loan will close.

Closing Costs Requested

The buyer has an opportunity to request seller paid closing costs as part of their offer to purchase. For some people, this may be necessary in order to close on the property (if they don’t have enough cash readily available for closing) but for others, it may just be a tactic to keep some of their cash liquid. Either way, the seller typically looks at the net purchase price when deciding on an offer (purchase price minus seller paid closing costs and home warranty) so that should be accounted for when deciding whether or not to request closing costs.

Home Warranty

As part of the offer, buyers can choose to request that the seller provide a home warranty as part of the sale. The average home warranty, costs approximately $550. The nice things about home warranties are that they give buyer peace of mind during their first year of home ownership, especially since they have the large financial burden that comes with purchasing a property. On the flip side, if there are competing offers, a home warranty could be the difference between the two. It may make more sense in the latter scenario for the buyer to purchase their own home warranty after closing.

As you can see, there are a lot of pieces to think about when thinking through and drafting an offer to purchase on a property. All of them are important in their own right and can each be leveraged based on your position as a buyer or the seller’s priorities (which may or may not be shared by the seller).

You may have noticed that I skipped discussing contingencies in depth because that is worth of its own post!

Interested in more information about how to compost a strong offer? Contact me for more information 919-335-5268 or

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