Money Management

If you make an offer to buy a property, it’ll be up to the seller to respond to your offer. Read on to learn what happens during this process. 

When you are buying a house, there are several milestones you have to complete along the way, like getting mortgage pre-approval so you can confirm that a lender will allow you to borrow. But, one of the most exciting steps in the process is putting in an offer, since if it is accepted, you’ll be able to move forward with making a home your own.

If you’re getting ready to put in that all-important offer, you may be wondering what happens next. Here’s what you need to know.

Sellers have a chance to review

After you have made your offer, the sellers will have time to review it and respond to it. You can specify in your offer how long it is good for. For example, you may give the sellers 48 hours to respond.

There’s no guarantee they will necessarily respond in your time frame, but most do because the offer would no longer technically be legally binding if they exceed the deadline for responding to it.

Sellers often do give you an answer quickly, but if there are multiple offers for them to review or if they are waiting for other potential bids to come in, there may be more of a delay.

You’ll get an acceptance, rejection, or counteroffer

After sellers have reviewed your offer, you will get a response. This could be an acceptance, a rejection, or a counteroffer.

If the sellers accept your offer as it is written, you’ll proceed to the next step in the buying and mortgage loan process. If they reject it, then you’ll have to start looking for a new house (or could try again to submit another offer, depending on the reason for the rejection).

If they counter your offer, they’ll send it back and propose different terms such as a different price or closing date. You’ll have to decide if you want to negotiate and come to an agreement or if you want to walk away if you’re too far apart to find consensus.

The good news is, if your offer is accepted, there’s a good chance you’ll end up buying the home. For example, Trulia data from 2016 showed that only about 3.9% of real estate contracts fell through once they were signed.

You’ll make a deposit after you come to a deal

Once you have a signed offer agreement, the next step is to make a deposit — often referred to as an earnest money deposit. This could be for any amount, depending on what you specified in your initial offer contract, but it’s common for buyers to make a $5,000 or $10,000 deposit. This deposit is usually made to a title company, real estate broker, or law firm, depending who will handle the closing.

This deposit shows you are serious and committed. You won’t get it back if you decide to walk away from the sale, unless there were contingencies (conditions) in your contract that weren’t met.

Inspection, appraisal, and a survey come next

Usually, an offer to buy a home is contingent on an inspection, appraisal, and survey. The inspection is designed to reveal hidden problems in the home, the appraisal estimates its market value, and the survey ensures there are no boundary disputes or unexpected issues with the lot the home sits on.

If the inspection, appraisal, and survey all come back without problems, you can move forward. If there are issues, such as major repairs identified in the inspection or an appraisal that comes in too low, you may have to identify fixes such as getting the price of the home lowered. If you can’t resolve the issues, you’d need to walk away.

You’ll get final loan approval and close on the home

Finally, your mortgage lender will review all of your financial details and the appraisal and will move forward with final approval of your loan. You will then go to closing on the date specified in your offer agreement, and money and ownership will transfer.

Then, all that’s left is to move in and start enjoying your new home.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Cash back rewards are the most popular type of rewards card. Part of their appeal is their simple rewards structure. Learn how to redeem them. 

Sure, travel rewards cards get a lot of hype. But according to a recent Ascent survey, cash back cards are actually the most popular option.

One of the biggest reasons many people prefer cash back cards is simply their ease of use. To get the best value from points, you often need to do a bit of math and jump through some hoops.

Cash back rewards, on the other hand, don’t require any of that. Most redemption options are simple (and math free). Here’s a look at what happens when you redeem cash back.

Redeeming for statement credit

Arguably the best — and easiest — way to use your cash back rewards is to redeem them for statement credit. This means you’ll turn your cash back rewards into a credit that appears on your credit card statement.

For example, say you have $20 in cash back. When you redeem it for statement credit, you’ll see a $20 credit added to your credit card transactions. If you have a balance, this will reduce your balance by $20. If you have a $0 balance when you redeem your cash back, your balance will be ($20).

Some issuers will let you use redeemed cash back to cover all or part of your minimum payment, but others may not. Check your card’s terms and conditions to see what is allowed.

Redeeming as an electronic deposit

Another option for some cardholders is to redeem your cash back as an electronic deposit into a connected checking or savings account. This is most often an option if you have a bank account with the same bank that issues your credit card.

For example, say you have a Chase bank account and a Chase credit card. You could redeem the cash back from your credit card into your Chase bank account. So, if you redeem $20 in cash back as an electronic deposit, you’ll see a $20 credit added to your bank account balance.

This can be a nice way to redeem cash back if you don’t think you’ll use your card anytime soon. The downside to this redemption method is that it can take several days for your cash back to show up in your bank account.

Redeeming at checkout

One increasingly common redemption option for many types of rewards cards, cash back included, is to redeem your rewards at checkout with popular retailers.

For example, if you connect your rewards card to your Amazon account, you may have the option to redeem cash back to cover your Amazon purchase. The option will show up as a payment method on the Amazon checkout screen.

While this might be convenient, I strongly suggest against it. Instead, I prefer to redeem my rewards for statement credit, and use my credit card at checkout. Why? Because then I earn purchase rewards on the purchase, rather than missing out on rewards by using the cash back directly.

Other redemption options

Depending on your card company, you could have additional options for redeeming your cash back. One of the most common options is for digital gift cards. Many issuers have gift card portals where you can choose to turn cash back into a gift card for a variety of retailers.

My opinion on the gift card option is the same as the redeeming at checkout option: It should be avoided in most cases. Occasionally, you’ll see an offer to get more than $0.01 per point on gift cards redemptions. In this case, it could make sense. But often, you’ll be missing out on purchase rewards by using a gift card instead.

One option offered by some issuers that might be good to explore is redeeming cash back toward a charitable donation. Which organizations you can donate to will vary by issuer, but if you’re short on cash and want to give to a good cause, this could be a workable option.

All in all, every redemption option will have its pros and cons. But if you want to keep it as easy as possible, it’s hard to go wrong with statement credits.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com and JPMorgan Chase. The Motley Fool has a disclosure policy.

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Experts recommend owning a home for at least two years before selling, but I sold earlier. Read on to learn how it worked for me. 

When you buy a home, there are a few rules of thumb you’ll generally hear about. One of the most important is that you shouldn’t purchase a property if you don’t plan to stay in it for a while. Specifically, it’s usually recommended that you remain in the home for more than two years before selling it.

I did not do that. I just sold a home that I had owned for only 18 months. There were some good reasons why I did that, and I was lucky that it turned out fine. But it only worked out for me because of some very specific circumstances.

Here’s why I broke this important rule

I ended up having to sell my house after just 18 months because my family decided we were not happy in the home.

It was meant to be a place that we lived in temporarily for about three to five years until we were able to move forward with building a house a few minutes away. But we ended up hating the area due to an extreme, excessive amount of traffic at all times. Plus, when we had a second kid, it turned out that the house was way too small for us to live in even temporarily.

We found a different area that we really loved, which we wanted to move to and we were going to wait it out for two years. Unfortunately, the homeowners association dues were scheduled to go up on the home soon and we were afraid that would make it more difficult to find a buyer, so we decided to sell ASAP even though it had been less than two years since we bought.

Here’s why it turned out OK

There are a few key reasons why you’re usually supposed to stay put for at least two years before selling. The first issue is that you often won’t make your money back if you don’t do that, since there are a lot of transaction costs associated with a home sale. The second issue is that if you do make a profit, you’ll end up having to pay short-term capital gains taxes.

Fortunately, things still turned out OK for us despite facing these problems. Since property values were still going up in our area, we managed to get a reasonable offer for our home. We also sold the property ourselves rather than working with a real estate agent, so we cut our commission payment in half and significantly lowered our closing costs. We had also not used a mortgage loan to buy the property in the first place, so our closing costs when we initially bought the house were lower than they otherwise would have been.

Because of all of these factors, we ended up making about a $4,000 profit after accounting for all of the expenses associated with the transaction. Now, we would ordinarily have to pay higher taxes on this money due to the fact we didn’t live there for two years and so couldn’t avoid capital gains taxes. However, we have some capital losses we can use to offset the gains, so we won’t face this problem.

This won’t be the case for everyone. If you have to use a real estate agent, your property doesn’t go up in value substantially, and you don’t have capital losses, then breaking the cardinal real estate rule and selling too quickly is usually going to backfire on you.

But, my situation does show that sometimes breaking the rules isn’t the worst thing in the world if conditions are right. Ultimately, you need to consider what makes sense for you when you move forward with buying and selling real estate — while still remembering that the “rules” are there for a reason.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Starting a small business can be an exciting and rewarding experience. Read on for some ideas to try out. 

Starting a small business can be one of the most fulfilling things you’ll ever do. But before you dive in headfirst, it’s important to have a solid plan in place. Whether you’re an entrepreneur with a big idea or someone who’s looking for a way to turn a hobby into a business, there are plenty of opportunities out there. We’ve rounded up five of the top small business ideas that don’t require spending too much money upfront and breaking the bank.

1. E-commerce store

Over the past few years, the e-commerce industry has grown by leaps and bounds. It’s a great time to start your own online store and sell products that you’re passionate about. You can choose to sell your own products or source inventory from vendors. All you need is a website, hosting plan, and payment processor like PayPal.

Setting up an e-commerce store is relatively easy, thanks to platforms like Shopify and WooCommerce. You can also choose to sell on sites like Amazon or eBay. You could even opt to dropship, which means partnering with suppliers who ship the goods out for you. That way, you don’t have to worry about managing inventory or dealing with shipping costs.

Best of all, you can run an e-commerce store from anywhere in the world, as long as you have an internet connection.

2. Freelancing

If you have a talent for writing, graphic design, web development, or any other in-demand skill, you can turn it into a business by offering your services as a freelancer. Thanks to the internet, freelancing has become more accessible than ever before.

You can easily find clients on platforms like Upwork, Fiverr, and Freelancer. Other valuable skills that are increasingly popular are things like scheduling, data entry, and bookkeeping. As more businesses are turning to remote work opportunities, freelancing even as a virtual assistant can be a great way to make extra income from home.

3. Pet care services

People treat their pets almost like their children, which has given rise to pet services businesses. Pet owners spend a considerable amount of money on their furry friends. You could consider offering pet grooming, pet walking, pet sitting, or even pet training.

You can create a free account on apps like Rover and Wag! so you can instantly be linked to those looking for pet services. Offering exceptional services can lead to loyal customers, which means recurring income.

4. Blogging

Do you love writing? Consider creating a blog about topics that interest you and so you can share your knowledge. There are many ways to make money with a blog. You can monetize it through affiliate links, selling ads, or by selling products such as e-books and digital downloads. Best of all, you can start one for free!

5. Whatever you want to do!

While small business ideas may seem endless, the best small business to open is one that you genuinely want to do and can make money doing it! When starting a small business, it’s important to follow the “4 P” rule: Passion, Profit, Pre-eminent, and Purpose.

These four principles are crucial for any successful endeavor, and they can be applied to just about any industry, from retail to tech startups. With passion at the forefront, you’ll be able to fuel your engine, putting in the long hours and sacrifice necessary to see your vision come alive.

The profit aspect ensures that your efforts are worthwhile financially and is sustainable. The pre-eminent principle demands that you’re the best in the game. Finally, your business should align with your purpose and be meaningful to you.

Write down the list of all business ideas you are interested in, regardless of industry or type. Then narrow them down and choose the best idea that is at the intersection of these four principles.

Starting a small business can be an overwhelming process, but it doesn’t have to be. Finding the perfect business opportunity is all about knowing yourself, your market, and your consumers. These five ideas can help guide your decision-making process and inspire you to create a business that is both fulfilling and profitable. Remember to conduct sufficient research, develop a business plan, and seek help from mentors before launching any new venture.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon.com and PayPal. The Motley Fool recommends the following options: short June 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.

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