How to Make an Offer on a House in California

After years of saving and months of house hunting, you finally found the California home of your dreams. 

Now that your dream house is in your sights, it is time to place a bid on the property. But there are many steps involved in making an offer on homes in California, and missteps can lead to losing out on the one. 

The offer process requires preparation and precise language, which is why we've prepared the below how-to guide to follow when making offers on California real estate. 

Shop for mortgages and get pre-approved 

It is easy to get swept up in the excitement of searching for a home since it is easy to scroll through listings on the go. 

The California housing market is red hot, as sellers in coastal regions like Malibu and Santa Monica contend with bidding wars rife with buyers ready to offer over the asking price. Unless you are making an all-cash offer, the first step to getting prepared to make offers in California is getting pre-approved for a loan. 

Making an offer with a pre-approval assures sellers you can finance the transaction based on your income, credit, and assets. Plus, buyers can compare rates and products with multiple mortgage lenders to get the best terms.

When it comes time to place your purchase offer, it should contain what type of loan you will use, how much of a down payment you are making, and the expected interest rate. Many California buyers add financing contingencies saying that the buyer must qualify for a new mortgage before moving forward with a deal. 

Partner with a local buyer's agent

Californians equipped with a pre-approval letter in hand can confidently search through listings and make an informed offer. But placing bids without the expert guidance of a buyer's broker can result in missing paperwork nuances or making more significant mistakes. 

Brokers refine searches by unearthing details about properties, help select escrow and title companies, and connect buyers with a selection of home inspectors. Licensed Prevu agents provide comp reports covering pending sales, recent sales, and active listings in your ideal slice of California.

They also know where to get the best bite to eat in town! 

Once you are ready to place a bid, an agent can help write up the purchase offer, including key details like the financing terms, contingencies around financing, appraisal, property investigation inspections, ensure the seller passes over a clear title, and create timelines to start negotiations. 

But do not just work with the first agent you meet. Interview multiple agents and ask if they provide new homeowners with a commission rebate at closing. Unlocking a commission rebate is a powerful tool, as the agent passes a portion of the broker fee back to the buyer. 

Prevu Real Estate offers the highest commission rebate in California, totaling up to half of the buyer's broker commission. 

Terms included in an offer in California

• Purchase price
• Property address
• Contingencies
• Concessions 
• Target closing date

Prepare a purchase offer 

After securing an agent and finding the ideal sun-soaked NorCal or SoCal home of your dreams, it is time to write up a purchase offer for the house. 

Purchase offers require the offer price, financing terms, address of the property, relevant contingencies, and a target date for closing the deal. Your purchase offer also needs data around inspections, appraisals, the number of days around a contingency, and what a buyer’s strongest offer is. 

Make sure to include any purchase contingencies, such as selling your home to finance the new one. Some offers have financing contingencies around qualifying for a mortgage, which is why sellers prefer buyers with a pre-approved mortgage. 

Most common offer contingencies in California

• Financing
• Appraisal
• Inspection
• Contingent sale

Once an offer is accepted and in contract, you can begin negotiating on repair concessions. Prevu agents are experts on contingencies and will write them in a manner that helps the buyer exit the deal if the criteria of the contingencies are not met. Buyers can waive inspections and assessments, but most brokers advise buyers not to bend on these protections. 

But buyer beware, California real estate is a competitive market, and each concession or contingencies in your offer may put you at a disadvantage against other buyers. Time is of the essence for most sellers, and an offer at or above the asking price with a high down payment is more attractive than an offer filled with contingencies. 

Your agent can help you craft an offer and help you understand both the benefits and risks of waiving contingencies.

How to process disclosure forms

It is easy to get swept up in the excitement of writing up a purchase offer on a Hollywood Hills dream home, but buyers must remember to pore over property disclosures first. 

These disclosures paint a picture of the wear and tear on a home, and your buyer's agent can inform you if the deal is worth it or not. California law requires sellers to provide buyers with a history of damages and renovations known as the Transfer Disclosure Statement and the Seller Property Questionnaire. 

Keep a sharp eye out for sustained flood or fire damages and the associated repairs, as it may mean the home is in an unsuitable region. Buyers will want to review when the seller installed new fixtures like oil heaters, roofs, and appliances. 

It is the responsibility of the buyer to have inspections done on the property, but a buyer can ask a seller for repair concessions before the close of escrow. But sellers do not need to answer these requests, providing an opportunity for buyers to leave a deal without breaking the contract. 

If all of these features and events are in order, buyers then sign off on the home disclosures and are ready to enter the final stages of the closing process and are in-contract.  

What to do once your offer is accepted

Following several highs and lows of making offers and competing in bidding wars, you finally got an offer accepted and received a fully executed purchase agreement signed by the seller.

But now that the seller chose your bid on a Post-modern compound overlooking the Pacific Ocean in Santa Monica, it is time to finish the deal. After providing proof of funds and a binding earnest money deposit, buyers must get the home inspected and appraised if they write these contingencies into the offer. 

Inspections and appraisals give a buyer peace of mind beyond the home disclosure form, knowing for themselves that a property has a clean bill of health and is worth the asking price. Unless you make an all-cash offer, the mortgage broker can not start underwriting the loan without the purchase and sale agreement. 

So long as the property checks out and diligence on the buyer’s creditworthiness is acceptable, the lender issues the buyer a mortgage commitment letter, kicking off the closing process.

Closing and final walkthrough

Once a buyer gets through negotiations, inspections, and mortgage underwriting, it is time to close the deal.

Before securing the keys to your new California home, buyers typically tour the grounds to ensure no damage occurred during moving and that all the appliances and other included items are still there. It is now time for final signatures, which can take a while depending on the buyer's financing. 

But after the bank approves the final funding, the transaction closes, and you are now the new owner of a California home. 

​​Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.