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How Buying a House Works


Negotiating a Purchase Price
Making an offer on a house doesn't make it yours just yet – prepare to negotiate.
Making an offer on a house doesn't make it yours just yet – prepare to negotiate.
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Unless you live in an extremely depressed housing market, a seller rarely accepts an initial offer at face value. You can almost always expect some sort of counter to your offer and at least one round of negotiations. The obstacle may be strictly related to price or it may be the fact that you want the porch swing and washer and dryer included in the deal. Either way, prepare for some haggling.

It's extremely important that you stay true to your mortgage pre-approval letter throughout the negotiations. It is very easy to fall in love with a house, especially if you've been looking for a long time or feel pressured to leave your current place. Don't let your heart or your emotions prod you into making a potentially disastrous financial decision. Failure to make house payments can resort in foreclosure, bankruptcy or worse. If the seller doesn't accept your best possible offer, you have to walk away and wait for the next opportunity to come along.

With persistence and some luck, you and the seller will arrive at a fair price for the home. Depending on the real estate laws in your state, the offer letter itself might become the contract or you will need to draft and sign a separate document. If you haven't already deposited earnest money, you will do so now. Even if you sign the contract, you can still back out of the purchase, but you will lose that deposit.

Once the purchase contract is signed, both you and the seller will need to follow through on the contingencies of the contract, starting with the home inspection. More about that on the next page.