How to Make an Offer on a House

BY The Lenders Network

how to make an offer on a house

So you’ve found the perfect home and now it’s time to make an offer.

Your offer needs to be complete, you may be competing with multiple offers so make sure you bring your best one if there’s competition.

The offer is very important, once it’s accepted it’s very difficult to change the terms.

Any incentives, seller paid closing costs, or any other items need to be agreed upon.

In this article we’re going to explain how to make an offer on a house and make sure you get the best deal.

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Making an Offer on a House

Some first-time homebuyers make the mistake of not hiring a real estate agent in an attempt to save money. However, it’s important to note that the buyer does not pay the agent, the seller does and it’s already included in the price.

You really should have an experienced real estate agent in your corner when shopping for a new home.

It is important you get your own agent, do not use the listing agent, as they are representing the sellers and will not have your best interest at heart.

Your real estate agent will be able to help you with making the offer.

The list price of the home is the price the seller is hoping to get. You can offer to pay list, or make your best offer on the home. All real estate contracts and purchase prices are negotiable.

You should take a look at the comparable homes in the area and the price they sold at. Use this list to get an idea of how much to offer. If your offer is too low, you run the risk of insulting the seller and losing the home.

The Home Offer Process

You shouldn’t use any do-it-yourself templates to submit an offer because they aren’t legally binding. Your agent will use a Residential Purchase Agreement to write up your offer.

  1. Submit your written offer
  2. The seller will either accept, decline, or makes a counter offer
  3. If accepted, then you proceed through the mortgage loan process
  4. If you receive a counter offer, you must accept, decline, or counter
  5. If denied, you can make another offer, or look for another house

Included in a home offer:

  • The legal address of the property
  • Pre-approval letter from a mortgage lender
  • Purchase amount and terms
  • Earnest money amount (if applicable)
  • Date of the final walk-through
  • Estimated closing date
  • Home offer expiration date
  • Any clauses or contingencies you wish to include
  • Amount of closing costs you want seller to pay (if applicable)

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What Is a Contingency?

A contingency is something that needs to be done, or met in order for the deal to be completed. Adding contingencies to your written offer is a way to protect yourself and gives you a way of backing out of a contract in certain situations.

A real estate contingency is something that must be met or done in order for the contract to hold up. If the contingency is not met you can back out of the contract at any time.

Common Types of Contingencies


The home offer should include a financing stipulation that states you are able to back out of the contract and receive your earnest money back if your financing falls through.

Selling Your Current Home First

This contingency is used if the buyer has a home they need to sell before they can complete the purchase of a new home. In this scenario the closing date may be to be determined at a later date because the buyer needs to sell their home first.

As you can imagine sellers are not very eager to accept these types of offers in a competitive sellers market. However, if it is a buyers market and home sales are slow, a seller may be tempted to accept an offer with this contingency.

Home Appraisal Contingency

A home appraisal is a professional’s evaluation of a property market value. Mortgage lenders use the home appraisal to determine the loan-to-value ratio. Lenders will not lend more money than a home is worth.

This contingency allows you to renegotiate the purchase price if the appraisal comes back lower than the agreed upon purchase price.

Free and Clear Title

The title, or deed, is a document that shows the current and previous owners of a property. The title company will perform a title check to make sure their are no liens, or other issues that could derail the purchase. This contingency gives you a way to cancel the contract if there are any title issues.

Home Inspection Contingency

A home inspection is not always required to get a mortgage on a house. However, this is a good contingency to add to your offer allowing you to withdraw your offer if there are any unexpected issues or potential issues with the property.

Important Items to Include in Your Home Offer

Earnest Money Deposit

Earnest money is a deposit given to seller to show good faith that you will purchase the home and honor the agreement. The money is usually put into an escrow account or given to a third party, such as a title company or attorney.

Typically, you can expect to pay 1% of the purchase price in earnest money.

You must set the terms and conditions of the earnest money and situations in which the earnest money will be returned.

Closing Costs

Most mortgage loans allow the seller to pay a portion of the closing costs on behalf of the buyer. If you do not ask for seller paid closing costs in your original offer it is unlikely the seller will agree to pay them at a later date.

Closing Date

The estimated closing date is usually set to 45-60 days from the date the offer is accepted. You want to make sure you have enough time to close on the home on or before the settlement date in the offer.

The average home loan takes 46 days from start to finish. Be sure to be pre-approved with your lender of choice before submitting an offer.

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