First Tuesday Real Estate Online Practice Exam

Your ability to bid on a home comes from what you can actually pay, both cash and financing. The maximum price you can offer is effectively set by the amount of money you have available after you’ve paid all upfront costs. These acquisition costs include the down payment you choose, loan origination and many other closing costs, plus any prepaid items. Whatever funds remain after covering those costs is the portion you can apply toward the purchase price, with the rest being financed through a mortgage or other loan. Keep in mind that lenders typically won’t finance more than the appraised value or the agreed purchase price (whichever is lower), so offering a price above appraisal would require you to cover the difference in cash. The seller’s willingness to negotiate and the listing price influence the deal, but the ceiling on what you can offer is driven by the cash you have left after upfront costs.