To make an offer on a house, get pre-approval for a mortgage, research comparable sales to determine fair value, decide on your offer price and terms, complete a purchase agreement with your agent and submit it to the seller. Include earnest money (1-3% of price), contingencies for inspection and financing, your preferred closing date and any special requests. Most offers receive a response within 24-48 hours.
Before You Make an Offer
Get Pre-Approved
Pre-approval shows sellers you’re serious and can afford the home. Include your pre-approval letter with your offer.
What pre-approval provides:
- Maximum loan amount
- Interest rate estimate
- Lender commitment letter
Research the Property
Gather information:
- Days on market
- Price changes
- Property history
- Tax records
- School district
- Neighborhood trends
Analyze Comparable Sales
Study recent sales of similar homes (“comps”):
Good comps are:
- Within 0.5 miles (urban) or 1 mile (suburban)
- Sold within 3-6 months
- Similar size (within 10-15%)
- Similar age and condition
- Similar features (beds, baths, garage)
Calculate price per square foot to compare values across different-sized homes.
Understand Market Conditions
| Market Type | Buyer Strategy |
|---|---|
| Seller’s market | Offer at or above asking, fewer contingencies |
| Buyer’s market | Offer below asking, more negotiating power |
| Balanced market | Offer near asking with standard terms |
Elements of a Purchase Offer
Purchase Price
Your offer price should be based on:
- Comparable sales analysis
- Property condition
- Days on market
- Seller motivation
- Competition from other buyers
Earnest Money Deposit
Shows you’re serious about buying:
| Market | Typical Amount |
|---|---|
| Buyer’s market | 1% of price |
| Balanced market | 1-2% of price |
| Seller’s market | 2-3% of price |
Higher earnest money makes your offer more attractive.
Contingencies
Contingencies let you back out and keep your earnest money:
Inspection contingency: Cancel if inspection reveals problems
Financing contingency: Cancel if you can’t get loan approval
Appraisal contingency: Cancel if home appraises below purchase price
Sale contingency: Cancel if you can’t sell your current home
Fewer contingencies = stronger offer, but more risk for you
Closing Date
Typical closing is 30-45 days from offer acceptance. Consider:
- Your mortgage timeline
- Seller’s moving needs
- Lease expiration dates
- School schedules
Flexibility on closing can make your offer more attractive.
What’s Included
Specify items included in the sale:
- Appliances (refrigerator, washer/dryer)
- Window treatments
- Light fixtures
- Outdoor equipment
- Furniture (if negotiated)
Seller Concessions
You can ask the seller to contribute to your closing costs:
| Loan Type | Maximum Seller Contribution |
|---|---|
| Conventional (< 10% down) | 3% |
| Conventional (10-24% down) | 6% |
| Conventional (25%+ down) | 9% |
| FHA | 6% |
| VA | 4% |
Trade-off: Asking for concessions may weaken your offer in competitive markets.
Pricing Your Offer
Factors to Consider
Market conditions:
- Multiple offers expected? Offer strong
- Property sitting? More room to negotiate
Comparable sales:
- What did similar homes sell for?
- Price per square foot comparison
Property condition:
- Updates and renovations
- Needed repairs
- Age of major systems
Days on market:
- Listed today: Less negotiating room
- Listed 60+ days: More flexibility
Seller motivation:
- Estate sale, divorce, relocation may mean motivated seller
- “No rush” seller may be firm on price
Pricing Strategies
At asking price: Standard approach for fairly priced homes
Above asking: Competitive markets, multiple offers expected, underpriced homes
Below asking: Overpriced homes, days on market, buyer’s market, condition issues
Escalation clause: “I’ll pay $1,000 more than any other offer, up to $X”
Making the Offer
Work with Your Agent
Your buyer’s agent will:
- Draft the purchase agreement
- Advise on offer terms
- Submit offer to listing agent
- Negotiate on your behalf
Purchase Agreement Contents
| Section | Details |
|---|---|
| Parties | Buyer and seller names |
| Property | Legal address and description |
| Price | Offer amount |
| Earnest money | Amount and how held |
| Financing | Loan type and terms |
| Contingencies | Inspection, financing, appraisal |
| Closing date | Target date |
| Possession | When you get keys |
| Inclusions | What stays with property |
| Disclosures | Required seller disclosures |
| Expiration | When offer expires |
Submitting the Offer
Your agent submits to the listing agent, typically via email with:
- Signed purchase agreement
- Pre-approval letter
- Earnest money check (or proof of funds)
- Any additional documents
Personal letter: Some buyers include a letter to the seller. Can help in competitive situations but may raise fair housing concerns.
Possible Responses
Acceptance
Seller signs your offer as-is. You have a contract!
Next steps:
- Deposit earnest money
- Schedule inspections
- Begin mortgage process
Rejection
Seller declines your offer entirely. Options:
- Make a new, stronger offer
- Move on to other properties
- Wait and try again if property doesn’t sell
Counteroffer
Seller responds with different terms:
- Different price
- Different closing date
- Changes to contingencies
- Different inclusions
You can: Accept, reject or counter back
Multiple Counters
In competitive situations, seller may counter multiple buyers simultaneously. Best counter wins.
Negotiation Tactics
For Buyers
Start reasonable: Lowball offers may offend sellers and kill negotiations
Know your maximum: Decide your walk-away price before negotiating
Respond quickly: Delays signal hesitation and may lose the property
Focus on what matters: Trade things you don’t care about for things you do
Be flexible: Closing date, inclusions, minor repairs—flexibility makes deals
Understanding the Seller
Their motivation:
- Why are they selling?
- How quickly do they need to move?
- Are they buying another home?
Their situation:
- Multiple offers?
- Specific needs (timing, inclusions)?
- Emotional attachment?
Common Concessions
You might give:
- Higher price
- Faster closing
- Fewer contingencies
- Flexible possession date
You might get:
- Lower price
- Closing cost credits
- Repairs
- Inclusions
- Home warranty
Competitive Markets
Making Your Offer Stand Out
Pre-approval vs pre-qualification: Pre-approval is stronger
Larger earnest money: Shows commitment
Fewer contingencies: Inspection and financing contingencies are standard; waiving is risky
Flexible closing: Match seller’s preferred timeline
Clean offer: Simple terms, no unusual requests
Cash or higher down payment: Signals financial strength
Escalation Clauses
“I offer $400,000 but will beat any higher offer by $2,000 up to $430,000.”
Pros: Automatically competitive without overpaying
Cons: Seller knows your maximum, may not be accepted
Waiving Contingencies (Risky)
Inspection waiver: Very risky—you accept unknown problems
Appraisal waiver: You cover any gap between appraisal and price
Financing waiver: You close even if loan falls through (need cash backup)
Better alternative: Shorten contingency periods rather than waive entirely
After Offer Acceptance
Immediate Steps
Within 24-48 hours:
- Deliver earnest money
- Confirm with lender
- Schedule inspection
Within contingency periods:
- Complete inspection
- Negotiate repairs if needed
- Complete appraisal
- Finalize loan approval
Key Deadlines
Track all dates in your contract:
- Inspection period (typically 5-10 days)
- Financing contingency deadline
- Appraisal contingency deadline
- Closing date
Missing deadlines can void your contingency protections.
Frequently Asked Questions
How much should I offer below asking price?
Depends on market conditions, days on market and comparable sales. In seller’s markets, offers below asking rarely win. In buyer’s markets or for overpriced homes, 5-10% below asking may be appropriate.
Do I need an agent to make an offer?
Not legally required, but highly recommended. Agents draft contracts, work through negotiations and protect your interests. Without an agent, you may make costly mistakes.
How long does the seller have to respond?
Your offer should specify an expiration time (typically 24-48 hours). Sellers can respond anytime before expiration. You can withdraw before they accept.
Can I make offers on multiple houses?
Yes, but be careful. If multiple sellers accept, you could be obligated on multiple contracts. Withdraw offers on other properties once one is accepted.
What if there are multiple offers?
Seller may choose the best offer, counter all offers or ask for “highest and best.” Make your strongest offer upfront in competitive situations.
How much earnest money should I offer?
1-3% of purchase price is standard. Higher earnest money strengthens your offer in competitive situations. Only offer what you’re prepared to potentially lose.
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David Thompson
Former Bank Underwriter, 20+ Years in Lending
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