How to Make an Offer on a House: Dos, Don’ts, and Negotiation Tips
What Goes in a Purchase Offer
A purchase offer is a formal document, not a casual “I’d like to buy your house” conversation. Every offer letter includes specific elements that define the terms of the deal. Missing any of these pieces can weaken your position or create legal headaches down the road.
Here’s what every solid offer includes:
- Purchase price — Your proposed price, based on market data and comparable sales.
- Earnest money deposit — A good faith deposit showing you’re serious. Typically 1-3% of the purchase price.
- Contingencies — Conditions that must be met for the sale to go through (inspection, financing, appraisal).
- Proposed closing date — When you want to finalize the sale and take ownership.
- Inclusions and exclusions — What stays with the house (appliances, light fixtures, window treatments) and what the seller takes.
- Financing details — How you plan to pay: conventional loan, FHA, VA, cash, etc.
- Expiration date — How long the seller has to respond before your offer expires (usually 24-72 hours).
Your real estate agent will draft the offer using your state’s standard purchase agreement form. Read every line before signing. This is a legal contract, and once both sides sign, you’re committed to those terms.
How to Determine Your Offer Price
Picking the right number is part science, part strategy. Too high and you overpay. Too low and the seller ignores you. Here’s how to land on a price that makes sense.
Use a Comparative Market Analysis
Your agent should pull a CMA — a report showing recent sales of similar homes in the same neighborhood. Look at homes that sold in the last 90 days with similar square footage, bedrooms, bathrooms, lot size, and condition. This is the closest thing to an objective property value you’ll get.
Pay attention to the price per square foot of recent comps. If similar homes sold for $180-$195 per square foot and the listing is priced at $210, you have room to negotiate. If comps support the asking price or exceed it, you’ll need to come in at or above list price.
Check Days on Market
A house that’s been listed for 5 days is in a completely different position than one sitting for 60 days. The national median days on market hovers around 30-45 days. Anything well beyond that range signals potential problems with the price, condition, or both.
If the listing has been active for 60+ days, the seller is likely more flexible. If it just hit the market and already has multiple showings, you’ll need to be more aggressive.
Read the Seller’s Situation
Ask your agent to learn what they can about the seller’s timeline. A relocating seller who needs to close in 30 days values speed. An estate sale might prioritize a clean offer with fewer contingencies. A seller who already bought their next home is under pressure and may accept less than asking.
This context helps you craft an offer that’s appealing beyond just the dollar amount. Sometimes offering the seller’s preferred closing date wins over a higher-priced competitor.
Factor in Competing Offers
If the listing agent says there are multiple offers, you need to adjust your strategy. In a multiple-offer situation, you’re not just competing against the house’s value — you’re competing against other buyers. We’ll cover this in detail below.
Earnest Money: How Much and How to Protect It
Earnest money is your “skin in the game” deposit. It tells the seller you’re committed, and it gives you something to lose if you walk away without a valid reason.
The standard amount is 1-3% of the purchase price. On a $350,000 home, that’s $3,500 to $10,500. In competitive markets like Denver, Austin, or Raleigh, buyers sometimes put down 3-5% to stand out.
Your earnest money is deposited with a neutral third party — usually the escrow or title company — within 1-3 business days of the seller accepting your offer. It’s not handed directly to the seller.
Protect your deposit by keeping your contingencies intact. If you include a financing contingency and your loan falls through, you get your money back. If you include an inspection contingency and the inspection reveals a cracked foundation, you get your money back. The contingencies are your safety net.
You lose earnest money when you back out for a reason not covered by your contingencies, or when you miss a contractual deadline. Read every date in that contract and put them all on your calendar.
Contingencies to Include in Your Offer
Contingencies are the “if-then” clauses of your offer. If the condition isn’t met, then you can cancel the contract and get your earnest money back. Here are the three most common:
Inspection Contingency
This gives you 7-10 days to hire a home inspector and review the results. If the inspection uncovers serious problems — structural damage, failing systems, safety hazards — you can ask for repairs, request a credit, or walk away entirely.
In hot markets, some buyers waive the inspection contingency. This is risky. A better approach is to get a pre-inspection before submitting your offer, so you know what you’re dealing with. That way you can waive the contingency with confidence instead of blind hope.
Financing Contingency
This protects you if your mortgage falls through. Even with a pre-approval letter, loans can get denied during underwriting due to a job change, new debt, or appraisal issues. Without this contingency, you’d forfeit your earnest money if your lender pulls out.
Unless you’re paying cash, keep this contingency. Period.
Appraisal Contingency
Your lender will order an appraisal to make sure the home is worth what you’re paying. If the appraisal comes in lower than your offer price, you have three options: pay the difference out of pocket, renegotiate the price down, or cancel the contract.
The appraisal contingency lets you cancel or renegotiate if there’s a gap. In competitive markets, buyers sometimes offer “appraisal gap coverage” — a commitment to cover the difference up to a set amount — as a compromise between waiving entirely and keeping full protection.
Negotiation Tactics That Work
The price on your offer isn’t the only lever you can pull. Smart buyers use multiple tactics to make their offer attractive while protecting their interests.
Escalation Clauses
An escalation clause says: “I’ll beat any competing offer by $X, up to a maximum of $Y.” For example, you might offer $340,000 with an escalation clause of $3,000 over competing offers, capped at $360,000.
This prevents you from overpaying in a multi-offer situation while staying competitive. The downside: you’re showing the seller your maximum number. Some listing agents don’t accept escalation clauses, so check with your agent first.
Personal Letters: Pros and Cons
Buyer letters — sometimes called “love letters” — tell the seller why you want their home. They can work, especially when the seller is emotionally attached to the property. But they come with risks.
Some states restrict or discourage them because they can lead to fair housing violations. A letter mentioning your family composition, religion, or nationality could create legal exposure. If you write one, focus on the house itself and the neighborhood — not personal demographics.
Closing Date Flexibility
Ask the listing agent what closing date the seller prefers, then match it in your offer. If the seller needs 60 days to find their next home, offering a 60-day close with a rent-back option can make your $345,000 offer more attractive than someone else’s $350,000 with a rigid 30-day close.
Use our estimate your monthly payment to see how different closing dates affect your first payment timing.
Handling Multiple Offer Situations
Multiple offers are common in markets with low inventory. Here’s how to compete without taking reckless risks.
Lead with your best offer. In a multi-offer situation, you may not get a chance to negotiate. The seller might accept the strongest offer without countering anyone. Don’t hold back hoping to negotiate later.
Increase earnest money. A larger deposit signals commitment. Going from 1% to 3% costs you nothing extra (it’s applied to your down payment at closing) but shows the seller you’re serious.
Shorten contingency timelines. Instead of a 10-day inspection period, offer 7 days. Instead of 30 days for financing, offer 21 if your lender can handle it. Shorter timelines reduce the seller’s risk without removing your protections entirely.
Get pre-underwriting approval. Some lenders offer a “fully underwritten” pre-approval where they’ve already verified everything except the property itself. This is stronger than a standard pre-approval letter and tells the seller your loan is almost guaranteed.
Cover a potential appraisal gap. Offer to cover the difference between the appraised value and your offer price, up to a specific dollar amount. This removes one of the seller’s biggest fears — a low appraisal killing the deal.
What you should NOT do in a multiple offer situation:
- Waive the financing contingency if you need a loan
- Waive the inspection contingency without doing a pre-inspection first
- Offer more than you can actually afford — check with our calculate your mortgage payment
- Let emotions drive you past your budget ceiling
Set your maximum price before you submit the offer. If bidding goes higher, walk away. There will be other houses. There won’t be other chances to undo a financial mistake.
Common Offer Mistakes to Avoid
After helping hundreds of buyers through the offer process, these are the mistakes I see most often:
| Mistake | Why It Hurts You | What to Do Instead |
|---|---|---|
| Starting too low in a hot market | Seller rejects without countering | Use comps to justify your number — stay within 5% of asking in competitive areas |
| Skipping pre-approval | Your offer looks unserious compared to pre-approved buyers | Get fully pre-approved before you start house hunting |
| Including too many contingencies | Seller picks a cleaner offer | Stick to the big three: inspection, financing, appraisal |
| Ignoring the seller’s needs | Your offer doesn’t stand out beyond price | Ask the listing agent what matters most to the seller |
| Missing the earnest money deadline | Breach of contract — seller can cancel | Set calendar reminders for every contractual deadline |
| Getting emotional | You overpay or accept bad terms | Set your maximum before making the offer and stick to it |
Step-by-Step Offer Process
Here’s the typical sequence from deciding to make an offer to getting a response:
- Get pre-approved — Have your mortgage pre-approval letter ready. Sellers expect it.
- Tour the home — Visit in person. Note the condition, age of major systems, and anything that might affect value or need repair.
- Review comps with your agent — Look at recent sales to determine a fair offer price range.
- Decide on terms — Price, earnest money amount, contingencies, closing date, inclusions.
- Draft and sign the offer — Your agent prepares the purchase agreement. Read it all before signing.
- Submit to listing agent — Your agent sends the signed offer to the seller’s agent.
- Wait for response — The seller can accept, reject, or counter. Typical response time is 24-48 hours.
- Negotiate if countered — Review the counter-offer, decide if the terms work, and respond.
- Mutual acceptance — Both sides sign. The contract is binding. Deposit earnest money and begin the closing process.
Frequently Asked Questions
Can I make an offer without a real estate agent?
Yes, you can submit an offer directly to the seller or listing agent. However, working without an agent means you’re responsible for all contract language, legal protections, and negotiation. Most buyers benefit from having an agent review and submit the offer, especially since buyer agent commissions are typically negotiated as part of the transaction.
How far below asking price should I offer?
It depends on the market and the specific property. In a balanced market, 3-5% below asking is reasonable if supported by comparable sales. In a seller’s market, you may need to offer at or above asking. In a buyer’s market or on an overpriced listing, 10-15% below asking can work if you have data to back it up. As part of your home buying process, always let comps guide your number.
What happens if the seller counters my offer?
A counter-offer is a new offer from the seller. Your original offer is void. You can accept the counter, reject it, or counter back with different terms. This back-and-forth continues until both sides agree or someone walks away. There’s no limit on the number of counter-offers.
Should I offer over asking price?
Only if the data supports it. If comparable sales show the home is worth more than the listing price and you’re in a competitive market, offering above asking makes sense. Don’t offer over asking just because other people are — your offer should be grounded in what the property is actually worth.
Can I back out after my offer is accepted?
You can back out during any active contingency period without losing your earnest money. If all contingencies have been removed or waived and you back out, you’ll likely forfeit your earnest money deposit. In some states, the seller could also sue for additional damages, though this is rare. Your contingencies are what give you a legal exit.