How to Make an Offer on a House

When you find a house that meets your needs, you can make a formal offer to the seller, outlining the terms under which you’re willing to buy the home.
A strong purchase offer includes the price you're willing to offer, information on any financing, details about your earnest money deposit, strategic contingency stipulations, and a proposed closing date.
Your offer could be accepted as written, or the seller could propose a counteroffer with changes to certain terms. In some cases, such as multiple offer situations, sellers may deny an offer without a counter-proposal.

Whether you’re just starting your home search or you’ve already found one you’re ready to pursue, you may be wondering, How do I make an offer on a house?

Making an offer requires careful consideration of your financial situation and objectives for the purchase. It is important to get the details right because your purchase offer becomes a legally binding purchase agreement once the seller accepts your terms.

In this article, you’ll learn how to make an offer on a house, including:

How to prepare your finances before making an offer;
Components to include in your offer;
How to determine a fair offer price; and
Tips for making your offer stand out in a competitive market.

How to Make an Offer on a House: A High-Level Overview

Making an offer to buy a home (sometimes referred to as “putting in a bid for a house”) requires a written purchase offer. This is because the Statute of Frauds requires all American real estate contracts be in writing and signed by both the buyer and the seller.^[1]

You can write your proposed purchase terms into a boilerplate purchase offer template, perhaps with the help of a real estate attorney or real estate agent. This written offer is then presented to the seller for consideration.

Possible Responses to Your Offer

Once the seller receives your home purchase offer, they have three options:

Accept it. If the seller accepts your terms, they sign the purchase offer, and it officially becomes a purchase contract. At this point, the deal is said to be under contract.
Deny it. Sellers might deny an offer in some situations. For example, if they receive multiple offers, they may accept one and deny the rest. They may also deny an offer with an offensively low purchase price.
Make a counteroffer. If the seller wants to work with you but disagrees with some of your terms, they can counter with terms of their own. If you receive a counteroffer, you can choose to accept, deny, or counter. This process can repeat until the buyer and seller come to an agreement on all terms.

Preparing Your Finances Before Making an Offer on a House

As we will see in the next section, multiple components of the purchase offer relate to finances. So, it is important to have your finances in order before making an offer.

Getting pre-approved for a mortgage loan is a solid starting point for any homebuyer requiring financing to complete the purchase. Mortgage pre-approval involves having a lender review your finances to determine your eligibility for a home loan and the amount you can qualify to borrow. You can start with a preliminary pre-approval, which streamlines the process for a faster decision by reducing the documentation requirements. Preliminary pre-approvals don't impact your credit score, because they use a "soft pull" on your credit rather than a "hard pull."

Knowing how much you can borrow helps you determine how much house you can afford. You can set your maximum purchase price early in the process and focus on homes within your budget.

A pre-approval letter also increases your leverage when you’re ready to make an offer on a house. Sellers may be more likely to accept offers from pre-approved buyers, knowing that they can qualify for the funding needed to close the deal.

Components of a Home Purchase Offer

A strong home purchase offer includes the following:

Buyer and seller information: Full legal names and contact details of both parties.
Property details: The complete address and legal description of the property, as well as any included fixtures, appliances, furnishings, or additional structures.
Purchase price and payment terms: The proposed price and information on any financing, including the specific type of mortgage loan the buyer will use.
Contingencies: Conditions that must be met for the sale to proceed. For example, a financing contingency allows the buyer to back out of the deal if they cannot secure the loan needed to complete the purchase. There are several types of contingencies, including those related to appraisals, home inspections, and clean titles.
Earnest money deposit (EMD): The amount the buyer puts down as a good-faith deposit. This section should also outline how the EMD is to be handled and the situations under which it is either refundable to the buyer or forfeited to the seller.
Closing timeline: The proposed closing date (the date when ownership officially transfers to the buyer).
Default and dispute resolution: Information on how any disputes may be handled, such as mediation, arbitration, or court proceedings.
The offer’s expiration date: A deadline for the seller to accept or deny the offer. This avoids stalling tactics and never-ending negotiations.

Additional Considerations

Nearly every detail of a real estate transaction is negotiable. You may have leverage to make additional requests from the buyers, particularly if you are purchasing a home during a slow buyer’s market (when there is less demand than supply).

For example, you could request:

A financial concession to help you cover your real estate agent’s fees.
Repairs to make the home move-in ready.
An early occupancy date that would allow you to move into the home before the deal officially closes, perhaps paying rent to the seller for that period.
That the deal be contingent upon the sale of your current home, which would provide the funding to close on your new home.

It is worth noting that these additional requests could cause the seller to deny your offer, especially in high-demand markets, where additional offers are likely.

Working With Real Estate Professionals

A skilled real estate agent can be an invaluable resource in your journey to your new home. Real estate agents provide critical services to homebuyers, including:^[2]

Finding properties that meet your needs.

Arranging home tours.
Advising you on offer prices and terms, based on current market conditions.
Drafting purchase offers, reviewing counteroffers, and negotiating on your behalf.
Resolving any concerns about inspections or appraisals.

When you hire a buyer’s agent, you can leverage their experience, industry knowledge, and network of contacts to streamline the buying process, avoid common pitfalls, and confidently move forward with your home purchase.

While buyers are responsible for compensating their real estate agents, many sellers are willing to offer a financial concession to help you cover this expense.

Determining How Much To Offer

It is important to understand that the list price (also known as the asking price) is not necessarily a reliable indicator of the property’s value.

Some sellers list their property for more than it’s worth, either to “leave room to negotiate” or in the hopes that a buyer will either accept the list price as a fair price. Other sellers put a low price on their listing, hoping to generate a bidding war that drives up the price.

Rather than relying on the listing price to inform your offer price, look at the sales prices of similar properties in the area that have sold recently. Real estate agents often run a Comparative Market Analysis (CMA) that calculates the fair market value for a given property based on recent home sales. Ask your buyer’s agent to provide you with a CMA for the property you want to make an offer on. If you don’t have an agent and don’t plan on hiring one for the transaction, you may want to reach out to a local agent or broker and ask if they will provide you with a CMA for a fee.

Once the property is under contract, you’ll be able to hire an appraiser to conduct a home appraisal, which confirms the value of the property. Having an appraisal contingency in your purchase offer allows you to back out of the deal if the appraisal comes in lower than the agreed-upon purchase price.

Making Your Home Purchase Offer Stand Out

There are several ways to make your purchase offer stand out to home sellers and increase the chances of having your offer accepted, including:^[3]

Offering above-asking. If you are willing to pay more than the asking price to increase your chances of securing the home, a higher asking price could make your offer more appealing.
Incorporating an escalation clause. An escalation clause automatically increases your bid to exceed any competing offers up to a predetermined maximum price.
Waiving contingencies. You can waive your right to protections like the home inspection contingency or appraisal contingency. This is appealing to sellers because it presents fewer hurdles to closing. However, this can put you in a precarious position if the home inspection uncovers major issues or the appraisal comes in too low, so proceed with caution.
Offering all-cash if possible. Sellers typically favor all-cash offers because it reduces the risk of a deal falling through due to financing issues.

Offsetting requests with a higher offer price. If you need to request something from the seller (such as a concession to cover your buyer’s agent’s fees), consider increasing the purchase price to account for this request.

Prepare To Make an Offer Today

Making a strong, well-prepared offer is a crucial step toward securing your new home. By understanding market conditions, structuring your offer strategically, and working with a skilled real estate professional, you can increase your chances of getting your offer approved.

Start preparing today so you’re ready to make an offer when the right home comes along. Learn more about mortgage pre-approval and start your online application today!