How to Make an Offer When Buying Your First Home in California

For a first-time home buyer in California, making an offer on a house can be a nerve-racking experience. But with research and preparation, you can make a smart offer backed by market data, while increasing the chance the seller accepts it. Here’s how to go about it.

Making an Offer on a First Home in California

The process of making an offer can differ slightly from one home buyer to the next. After all, there are many different variables involved. For example, some homes are priced realistically based on market conditions, while others might be priced on the high side. Local market conditions can also affect the offer and negotiating process.

But in general, first-time home buyers in California can benefit from taking a practical, step-by-step approach to the offer process. Below, we’ve offered some tips and strategies you can use to make a smart offer when buying your first house in California.

Step 1. Research the market and the property.

Before you start house hunting, spend some time researching the local real estate market where you plan to buy a home. Sure, it’s important to research individual properties before making an offer. But you also want to research the real estate market as a whole, with an emphasis on recent sale prices.

This kind of research will help you make a smart offer based on current market conditions. It could also prevent you from offering too much for a particular home.

You can conduct much of this research online for free. For instance, you can visit real estate websites like Zillow and Realtor.com to find out what homes are selling for in your chosen area. This kind of insight will help you understand how much house you can get for the money, and also how much to offer for a particular property.

Later, when you’ve identified a home you wish to purchase, you can research the seller’s asking price as well. If the list price closely matches similar properties that have sold recently, the home is probably price realistically based on current market conditions.

But it doesn’t always work out this way. Sometimes, a seller will list their property well above recent comparable sales in the area. The reasons for this vary are beyond the scope of this article. The most important thing is to realize that not all properties are priced realistically. And that’s where your market research will prove useful.

Step 2. Determine your budget.

When you make an offer on a home in California, you might end up in a back-and-forth negotiation scenario. This occurs when the homeowner rejects your initial offer, but makes a counteroffer with a different sale price or other adjustments.

In this scenario, you need to know what your maximum monthly budget is, so you don’t exceed it in the heat of the moment. That’s why it’s a good idea to have a budget on paper before you even start the house hunting process.

And don’t worry, we’re not talking about any advanced math here. All you have to do is analyze your current income, expenses and recurring debts, to determine the maximum amount you can spend on your monthly housing costs.

Step 3. Get pre-approved for a mortgage, if applicable.

If you’re planning to use a mortgage loan when buying a house, you might want to get pre-approved before you start shopping. Pre-approval offers many benefits. For one thing, it gives you a maximum price range to work with.

When you make an offer on your first home in California, you want to ensure you can afford the monthly payments (based on your income and mortgage financing). Getting pre-approved for a mortgage can help you identify your maximum price range.

Step 4. Use your agent’s advice, but make your own decisions.

First-time home buyers in California can benefit from working with an experienced real estate agent. Among other things, a knowledgeable agent can help you make a smart offer based on current market conditions, supply and demand, and other relevant factors.

But ultimately, you are the one who has to decide how much you are willing to offer (and pay) for a particular house. Your agent can help you validate the seller’s asking price based on recent sales data. But you’ll have to make the final decision for yourself. That’s why we stress the importance of establishing a budget and getting pre-approved for a loan.

Step 5. Understand and prepare for the negotiating process.

First-time home buyers in California tend to have a lot of questions about the offer process. And that’s only natural, considering they’ve never navigated the process before.

Here’s how the process unfolds, in a typical home-buying scenario:

1. The buyer submits a written purchase offer to the seller, which includes the proposed purchase price, any contingencies, and other terms and conditions.
2. The seller reviews the offer and may accept it, reject it, or make a counteroffer with changes to the terms and conditions.
3. The buyer and seller negotiate the terms of the sale until they reach a mutual agreement.
4. The buyer provides an earnest money deposit as a sign of good faith and to secure the property.
5. The seller and buyer sign a purchase agreement, which outlines the terms and conditions of the sale, including the closing date.
6. The buyer arranges for a home inspection and other necessary inspections and appraisals.
7. If the inspections reveal any issues, the buyer may negotiate with the seller to have repairs made or to adjust the purchase price.
8. The buyer secures financing, if necessary, and completes the mortgage application process.
9. The seller and buyer close the sale, which involves signing all necessary documents and transferring ownership of the property.

Making an offer on a house can be a nerve-wracking experience, especially for first-time home buyers. But with careful preparation, research and guidance, you can make a smart and informed offer that increases your chances of getting the home.