7 Mistakes to Avoid When Making an Offer on a House in California

The purchase offer represents one of the most important steps when buying a home in California. This is when you, as the buyer, tell the seller how much you are willing to pay for the home. The purchase offer can include other important items as well, including the closing date, earnest money deposit, etc.

The purchase offer can also determine whether or not you get the house. So it requires careful consideration and planning.

Today, we will talk about some of the most common mistakes California home buyers make when making an offer on a house. Sometimes, the best way to learn the right path is by exploring the wrong one. So let’s talk about some of the common pitfalls to avoid.

1. Making an uninformed or ‘lowball’ offer

A “lowball” offer is one that’s significantly below the asking price of a home. While it may seem like a good way to get a bargain, lowball offers can actually hurt a home buyer’s chances of getting the house.

Sellers are often emotionally attached to their homes, and they may feel insulted by a lowball offer. This could lead the seller to reject the offer outright or to refuse to negotiate.

A lowball offer could also make the home buyer seem like they’re not serious about buying the home, or that they’re trying to take advantage of the seller.

If you’re considering making an offer that falls well below the seller’s asking price, be sure to weigh the risks and benefits. Ultimately, you have to ask yourself two questions. How much is the home worth based on current market conditions? And how much is it worth to you, as a potential buyer?

2. Failing to get pre-approved for a mortgage

Getting pre-approved for a mortgage demonstrates to sellers that you are a serious buyer who can afford the property. Pre-approval is basically a kind of financial pre-screening process. You will provide information relating to your financial situation, and in exchange you will receive a pre-approval letter from the lender.

Having a pre-approval letter strengthens your offer and increases the likelihood of it being accepted. In fact, most sellers will require such a letter from any buyer using a mortgage loan. This is common practice in the California real estate market and elsewhere across the country.

Not getting pre-approved before making an offer is a mistake that could cause the house to slip through your fingers.

3. Not considering local housing market conditions

Real estate market conditions can vary greatly, even within the same metro area. So before you make an offer on a house in California, you want to research current conditions in the area where you’re planning to buy.

Questions to ask include:

• Is it a seller’s market, with high demand and limited inventory?
• Or is it a buyer’s market, with more options and less competition?
• How much are homes selling for in the area?
• How long do they stay on the market, before going under contract?
• What’s the inventory situation like?

Understanding local market dynamics will help you gauge the level of competition and adjust your offer accordingly. In a competitive market, you may need to make a stronger offer to stand out. While in a slower, less competitive market, you may have more negotiating power.

A lack of market awareness, on the other hand, could hinder your ability to make a smart offer. You might end up overpaying for the home, for losing it to another buyer by not offering enough money. When it comes to the house-hunting process, knowledge is power.

4. Neglecting to work with a real estate agent

An experienced California real estate agent can help you navigate the complex process of making an offer. They can provide valuable market insights, suggest an appropriate offer based on their experience, and advocate for you during negotiations. Working with a reputable real estate agent can also increase your chances of securing a favorable deal.

In other words, a good agent can help you make a smart offer when buying a house in California. Without this kind of help, you might end up paying more for a home than it’s worth, or losing out altogether.

5. Getting emotionally attached or overbidding

Falling in love with a house early on can cloud your judgment and lead to overbidding. It’s better to stay objective and assess the property’s value based on comparable sales, market conditions, and your budget.

Of course, this is often easier said than done. Anyone who has purchased a home in the past knows it can be an exciting process. Even so, you have to put your emotions in the backseat when it comes to make an offer — as much as possible.

Set a maximum budget and stick to it. When you’re emotionally attached to a home, it’s easy to get caught up in the moment and make an offer that’s too high. This can lead to financial problems down the road.

6. Missing important deadlines

Pay close attention to the timelines specified in the offer. This includes deadlines for completing inspections, securing financing, or responding to counteroffers.

Failing to meet these deadlines could jeopardize the deal and result in the seller considering other offers. Maintain clear communication with your real estate agent and stay organized to ensure you meet all of the necessary deadlines.

Your agent can help you keep up with details and deadlines. But ultimately, the responsibility rests with you, as the home buyer.

7. Failing to review the contract thoroughly

A real estate purchase agreement, or contract, contains several important items that buyers should pay attention to. These include the purchase price, included or excluded items, contingencies, earnest money deposit, closing date and more.

Some buyers make the mistake of skimming over parts of the contract, thinking that it’s all just boilerplate legalese. Some of it is, but much of it requires your careful attention.

Carefully read and understand the terms and conditions outlined in the purchase agreement. Seek clarification on any ambiguous clauses or terms you’re unsure about.

If you can avoid these common mistakes when making an offer on a house in California, you’ll greatly increase your chance for success.