When you find the home, it’s time to make an offer. In industry jargon, you want to get it under contract—reach mutual acceptance—before someone else does. But you don’t want to be hasty.

This is where the caliber of your real estate agent starts to become apparent. Negotiations are complex. There are many axes, and therefore many potential points of failure. Emotions run strong on all sides. There’s a very human element, and how you approach negotiations directly impacts the outcome. Going back to the principal-agent relationship, this part of the process provides a clear rationale for why you need an agent.

Before You Make Any Offers

1️⃣ Ask your agent to walk you through the offer process.

They should share and explain a sample offer package. It will include all the main documents, addenda, and supporting documents that you’ll be signing.

Familiarity will enable you and your co-buyer(s) to make quick decisions when you find the right home and decide to make an offer.

2️⃣ Ask your agent to walk you through what happens after your offer is accepted.

Your agent should explain how things work in your jurisdiction:

→ Earnest money, the deposit made by homebuyers to demonstrate genuine interest in a purchase. They’ll explain how much money is involved, how it works, and other details.

→ Due diligence, the research and investigation co-buyers undertake to assess the condition, value, and legality of a property before finalizing the purchase. As part of this, you’ll cover the property inspection, appraisal, and title search.

→ Milestones in the closing process, including timelines for acquiring possession, and when the transaction becomes officially closed.

→ Title, and the role of the Title company in your transaction.

→ Escrow, and the role of the Escrow company in your transaction.

🌎 Real World Example

We worked with a CoBuy group of four that included two couples in their 30s. For the most part, they did their homework and were prepared. But they kicked off the home search early, found a home, and fell in love with it.

The home had just come on the market and it received multiple offers the day they viewed it. They rushed to submit an offer through their RE agent and later reported that it was difficult and stressful to review documentation they had never seen before under pressure in just a few hours.

They hadn't followed advice around process, and didn't review the Sample Offer package before making offers. Everything worked out, but it doesn't always.

💡 Pro Tip

Review the sample Purchase and Sale Agreements at the end of this section. The format varies by state, but you'll get a good idea of what's involved. Your real estate agent can share a current version that is relevant to you.

Making Offers

Your agent will “write up” the initial offer when you’re ready and submit it to the listing agent on your behalf.

The format and contents of an Offer vary by state. They usually include:

• Buyer names
• Participation on Title
• Offer price
• Earnest money amount
• Financing terms
• Contingencies
• Closing costs
• Home inspection
• Proposed closing date
• Proposed possession date
• Deadline to respond

The listing agent is a gatekeeper. Be aware that they exert influence over the seller. Their assessment of you and your offer informs how they present it to the seller, and nearly always figures into the seller’s decision on whether to accept your offer, counter your offer, or flat-out reject it.

What the listing agent needs to feel to be “sold” on your offer:

This is a solid, dependable offer that will come through. The co-buyers aren’t going to get cold feet or back out, and they’re motivated to close promptly. Most likely, my client is going to get paid, and so am I.

It boils down to money, but optics and emotion are important, too. The strength of an offer—and therefore the likelihood the seller accepts it—depends on multiple factors.‍

Factors that influence whether your Offer gets accepted by the Seller
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Other tactics you can use to improve the appeal of your offer:

✔️ Flexibility: Some sellers may need to stay in the property after the sale. Offering a rent-back agreement can make your offer stand out.

✔️ Love Letter: A personal note to the seller can create an emotional connection. Describing you, your background, and why you love the home and will take care of it can sometimes strike a chord.

✔️ Professionalism: A well-prepared, clean offer signals to the seller that you're a serious buyer.

✔️ Waiving Contingencies: In competitive markets, you might consider waiving certain contingencies like financing, especially if you're confident in your mortgage approval. This can make your offer more compelling.

✔️ Escalation Clause: In a bidding war, this clause allows your offer to increase up to a certain limit automatically.

Strategic Considerations

Your agent can be your secret weapon.

Good agents:

✅ Will ask questions of listing agents, gather info, and learn everything they can.

✅ Leverage their deep local market knowledge. They know the ins and outs of how things work, traditionally, in your market. They know people who know people. They command respect from those to whom they're known and those they’ve never met.

✅ Understand the importance of financing and will move mountains to present a united front with your Loan Officer.

✅ Respect that real estate is a team sport and a human business.

Transparency wins the day.

This is a double-edged sword you can leverage to your advantage.

1. Be transparent with your co-buyers, your agent, your loan officer, and any professionals you enlist or other stakeholders on the home team. Lead by example, demand the same from all of these folks and vocalize your emphasis on transparency to everyone on your side.
2. Recognize that transparency is not the default mode for parties outside of your home team. Be clinical, not cynical. But understand that the listing agent, seller, and others have their own incentives. Lapses in communication and transparency with you are likely—they’re looking out for themselves.

💡 Heads Up

Caveat Emptor applies here (“buyer beware”). Recognize that listing agents employed by the seller are supposed to disclose facts and circumstances surrounding the property, but they don’t always do so properly. Why?

• Sometimes they don’t know
• Sometimes they’re being duplicitous
• Sometimes they don’t think details matter

It’s not a hypothesis. We’ve witnessed instances of the above first-hand many times. Internationally renowned economist Steven D. Levitt, author of the best-seller Freakonomics, has published research on the topic, too.

Be cautious, don’t take things at face value, and verify.

Recognize Deal Heat, Fight It‍

Buying a home is an incredibly emotional process. This creates ideal conditions for confirmation bias, which clouds decision-making. An extension of this is an even stronger phenomenon: co-buyers often experience a sense of urgency to move forward with a purchase due to emotions, FOMO, or other cognitive biases. We call this deal heat.

Deal heat is natural. It’s commonly triggered when you view an attractive home, perceive competition, or experience home search fatigue.

Know that deal heat is a thing. Discuss it with your co-buyer(s), and remind each other to work together to resist impulsive decision-making. It is important to be ready to move quickly. But intentional efficiency and impulsive decisions based on deal heat are different. Deal heat leads to buyer’s remorse: regrets about your purchase. According to a recent study, 93% of recent buyers say they have regrets.

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