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Dan Green

Since 2003, Dan Green has been a leading mortgage lender and respected industry authority. His unwavering commitment to first-time home buyers and home buyer education has established him as a trusted voice among his colleagues, his peers, and the media. Dan founded Homebuyer.com to expand the American Dream of Homeownership to all who want it. .

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How to Make an Offer on a House in 8 Simple Steps

Making a great offer is essential to buying the home you love.

An experienced real estate agent helps a lot, but understanding the process of making an offer on a house is important. Consider home buyer education if you’re a first-time buyer to hit the ground running.

Here is everything you need to make the best offer on a house.

Step 1: Get Pre-Approved for a Mortgage

A pre-approval is a dress rehearsal for your mortgage. It uses your actual income and credit info to calculate how much home you qualify for and provides proof that you’re qualified to buy the home.

The first step to making an offer on a house is to get pre-approved for your mortgage.

To get pre-approved, you’ll provide some basic income and credit information, as well as the estimated purchase price you’re looking at. Once the lender reviews the numbers, you’ll receive details like interest rate, closing cost estimates, monthly payment amount, and the purchase price you qualify for. You’ll also get your pre-approval letter.

Always include your pre-approval letter when making an offer on a house. This shows sellers that you have the financing necessary to follow through on your offer.

Make sure you’re getting a pre-approval and not a pre-qualification. Pre-qualifications don’t require a credit check, making them inaccurate and unreliable.

Most sellers only entertain offers that include a pre-approval letter.

Get pre-approved now.

Step 2: Find the Right Home for You

Once you’re pre-approved, it’s time to begin the home search. Start by browsing listings online, setting up listing alerts on various real estate platforms, and working with your real estate agent to schedule tours and attend open houses.

When you find a home you’re interested in, dig deep into the data. To make the best, most competitive offer, you’ll want to know:

  • How long it’s been on the market: Typically, the longer a home has been listed, the less competition there is for it. This could mean more negotiating power.
  • How long the current owner has lived there: Long-time homeowners may have an emotional attachment to the home making them less likely to accept a lower price or be more selective of the person who buys the property.
  • If it’s been renovated or expanded: Ask your agent for the seller’s disclosures on the property, and check with the city permitting office to see if renovations or expansions were made. Depending on what you find, this could affect your offer price.
  • What the neighborhood is like: Have a good handle on the neighborhood, including its amenities, location, proximity to stores and businesses, and its school district. Look at recent home sales in the area, too. This can help guide you toward an appropriate offer price.

The more informed you are about a property, its location, and its history, the better your offer will be. Remember, you’re not alone in this. Your real estate agent is an expert in this area, so allow them to guide you along the way.

Step 3: Calculate How Much to Offer on a House

Determining the right price to offer can be a challenge, and there are a few things to consider.

Research the home and its history

Understanding how long the seller has owned the home and how long it’s been listed can help you. Typically, if the house has been on the market for a while, the seller will be more eager to sell. This could mean more room for negotiation. If the home was recently listed, the seller is more likely to hold out for the highest price.

You can find a lot about a home in its listing and public property records. If you attend an open house, you can also ask questions there. The listing agent or someone from their brokerage will be on site.

Know the local market and home comps

Have your real estate agent gather sales data from other homes in the area. This will give you an idea of what similar properties are selling for and point you in the right direction.

Also, consider the local housing market. Ask your agent if it’s a buyer’s market or a seller’s market to get an idea of how much room you have to negotiate.

Stick to your budget

You get pre-approved for the purchase price you can qualify for, but that’s not always the amount you can afford. That decision is up to you.

Put together a detailed budget using your take-home income and all monthly expenses. This will make it simple to determine how much home you want to buy.

Once you know your budget, stick to it. This will ensure that you’re comfortable with your competitive offer.

A mortgage pre-approval can help you set a budget.

Step 4: Decide Your Earnest Money Offer

An earnest money deposit is an amount of up-front cash you put into the transaction that you forfeit to the seller if you back out of the deal for reasons that aren’t covered in your contingencies.

This money comes from your down payment funds, so it’s not extra cash you need to save.

Earnest money deposits can vary but are typically in the 1 to 2 percent range. This can help your offer stand out from others and will show the seller you’re serious.

Step 5: Consider Your Contingencies

Contingencies are clauses you put in your offer to protect yourself. They allow you to back out of the transaction without losing your earnest money deposit or facing legal issues.

There are five types of contingencies:

  1. Home inspection: You’ll want to get a home inspection performed on the property before closing. This contingency allows you to renegotiate or back out of the deal entirely if it reveals serious issues.
  2. Appraisal: This contingency allows you to renegotiate or exit the transaction if the home’s appraised value is less than what you’ve offered.
  3. Financing: This contingency lets you back out if your mortgage loan falls through.
  4. Home sale: This one is for buyers who are also selling their current property. It says that you agree to buy the seller’s house, but not until your existing home sells.
  5. Title: Under this contingency, you can leave the deal if there are issues with the property’s title.

Since contingencies mean more risk for the seller, waiving some of them can make your offer more competitive. Make sure you talk to your agent before doing this, though. Waiving contingencies is seldom recommended and could have serious repercussions.

Step 6: Write Your Initial Offer

Next, it’s time to write up your offer. Your real estate agent will do the heavy lifting here, but you’ll need to look it over and sign it before submitting it to the seller.

Your offer should include:

  • The name of the seller
  • The address of the property
  • The names of anyone who will be on the title, including yourself
  • The purchase price you’re offering and down payment
  • The earnest money deposit
  • Any contingencies you’d like to include
  • Any concessions you’re requesting from the seller
  • A complete list of fees and closing costs
  • The dates you’d like to close on the home
  • Your preferred move-in dates for the home
  • A deadline to respond to the offer

Real estate contracts vary by state, so there may be other items required where you live. Regardless, make sure you review it closely and ensure all info is correct and nothing is left blank. Your agent or a real estate attorney can help ensure your offer complies with local laws and regulations.

Step 7: Negotiate the Price and Terms of the Sale

How To Negotiate Your Purchase Agreement

After you’ve submitted your offer, the seller can either accept it, reject it, or make a counteroffer.

If the seller accepts your offer, then congratulations!

If the seller rejects your offer, it’s time to start looking for another property. Use this experience to help guide your next offer.

When a seller gives a counteroffer

You have a few choices should the seller make a counteroffer. You can accept the offer as-is, make your own counteroffer, or decline the counteroffer and move on.

If you decide to negotiate and make a counteroffer, know that it’s not uncommon to go through several rounds of negotiations before reaching an offer that both parties are happy with.

Keep in mind that you can negotiate more than the price. You can remove contingencies, change your closing date, or offer a lease-back, which means the seller can rent the home back from you while they search for a new property.

These negotiations are where your real estate agent will shine.

Step 8: Finalize and Sign the Contract

Once you and the seller agree, you’ll finalize the contract, and both parties will sign it.

Then you’ll send this contract to your mortgage lender to continue the mortgage process where your pre-approval left off. Your lender will order the appraisal, and you can set up your home inspection.

FAQs About Making An Offer on a House

How much should you offer on a house?

The right offer depends on several factors, including how competitive the local housing market is, how long the home’s been on the market, and the number of other buyers interested in the property. Comparable sales can give you an idea of what a home may be worth, but make sure to stay on budget and never offer more than you can comfortably afford.

How do you make the best offer on a house?

Knowing the local housing market, the seller’s situation, and the home’s history can all help you craft the best offer possible. Do your research and work closely with your real estate agent to get all the info you can. Your agent can also consult with the seller’s agent to get more information about their motivations and ideal timeline.

What do you need to make an offer on a house?

To make an official offer on a house, you’ll need:

  • The seller’s name, home’s address, and the name of everyone you intend to sign the deed
  • The price you’re offering
  • Your down payment amount
  • Your earnest money deposit amount (which will be put in escrow)
  • Your mortgage pre-approval letter
  • Any contingencies you want to include
  • Your preferred closing and move-in dates
  • A deadline to review the offer

Your real estate agent or attorney can draft the offer on your behalf, but they will need your input on price, down payment, earnest money, and other details.

The funds will all be handled by a title company when the offer is accepted.

Is it rude to lowball an offer on a house?

If the offer is based on research, data, and comparable sales, it’s not rude to make an offer lower than the home’s listing price. Just be prepared for a counteroffer or, in some cases, a rejection.

If you make an unjustifiably low offer that isn’t based on local data, you may offend the seller and see your offer rejected or ignored.

Our Advice: Know your budget and stick to it

If you want to buy a house, follow our top three tips:

  • Work on your budget
  • Know what you can afford
  • Get pre-approved for your mortgage loan

Making an offer on a house may be a new experience, but it’s not hard. Once you have a budget and a mortgage pre-approval, you’ll be ready to submit a competitive offer as soon as you find a house you love.

Happy homebuying.

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       Making a great offer is essential to buying the home you love. An experienced real estate agent helps a lot, but understanding the process of making an offer on a house is important. Consider home buyer education if you’re a first-time buyer to hit the ground running. Here is everything you need to make the […]

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