Making an offer on a home is a major milestone — and once the seller accepts it, the document becomes a legally binding contract. Your offer outlines the price you’re willing to pay, how much earnest money you’ll put down, who pays closing costs, and the contingencies that must be met before the sale can close.
Your real estate agent (and, in some states, an attorney) will prepare the official purchase and sale agreement. But you decide the strategy behind it, including your offer price, terms, and negotiable items. Understanding each piece upfront helps you write a strong, competitive offer that still protects your interests.
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How does making an offer on a house work? Below we’ll break it down into five important steps (plus some prep work beforehand):
- Get a mortgage preapproval
- Decide on a purchase price
- Figure out your deal breakers
- Write an offer letter
- Negotiate and sign
Step 0: Before you make the offer
A strong offer starts well before you sign any paperwork. Before you submit anything to the seller, make sure you’ve completed these steps:
- Collect proof of funds for your down payment and closing costs
- Research recent comparable sales to understand a fair price
- Review local market conditions (competitive? slow?)
- Estimate your total costs, including inspection fees, appraisal, and closing costs
- Clarify your must-haves vs. deal-breakers, so your offer reflects your priorities
- Talk with your agent about local norms for earnest money, deadlines, and seller concessions
This prep work helps you move quickly and write an offer sellers take seriously.
Step 1: Get approved for a mortgage
A mortgage preapproval increases the likelihood that a seller takes your offer seriously. Ideally, you'd be preapproved before starting house hunting.
Once you have a specific home and price in mind, your lender can estimate the cost of property taxes and homeowners insurance. Those figures can help you determine the maximum sales price you can afford, giving you an upper limit on your offer.
Can you make an offer without a mortgage preapproval?
While you can make an offer without a mortgage preapproval letter, your offer might not be competitive without one.
Most sellers will ask to see your mortgage preapproval. They could reject your offer outright without one, even if the rest of the offer is extremely attractive.
Without a preapproval letter, your offer will stand out only if you're paying cash — that's because you're technically not getting a mortgage.
Step 2: Decide on a purchase price
The price you’re offering to pay for a home is arguably the most important part of your offer letter. Unfortunately, it’s also the hardest to calculate.
You want to hit a sweet spot between what the home is actually worth and the lowest price the seller is willing to accept. To determine that amount, your offer will depend on four main conditions:
🌟 The state of the market. In hotter markets, you’ll likely have to bid higher than the listing price in a seller’s market. For cooler or more balanced markets, you could start with the listing price or 6–7% above if you want to be more competitive.
🛠 The condition of the home. For homes that need work, you might be able to bid lower than the listing price.
🗓 The length of time the home has been on the market. The longer the home has been on the market, the more successful you’ll be in negotiating a lower price. For newer listings, you’ll likely need to offer close to the listing price.
📉 The price of similar homes in the same area. Homes that have the same bedrooms, bathrooms, and square footage will impact the value of the property you’re looking to buy.
How can a real estate agent help you price a home?
Your agent can do a comparative market analysis (CMA) to help you determine a reasonable asking price. A CMA compares the home in question with multiple recently sold properties in the same area. By knowing what similar homes are selling for, you can feel more confident bidding a price that’s relatively the same.
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Should you offer below asking?
It depends on market conditions and the seller’s motivation. Ask your agent:
- How long has the property been listed?
- Has the price been reduced?
- Are there similar homes that sold for less?
- Are there inspection issues or visible repairs?
If competition is low, a below-list offer may be accepted. In a hot market, it’s unlikely.
Step 3: Figure out your deal-breakers
Your offer includes more than just the purchase price. It also outlines your earnest money, contingencies, and closing cost expectations — all of which affect how the seller views your offer.
Earnest money
Earnest money is a good-faith deposit you pay once the seller accepts your offer. Most buyers put down 1–3% of the purchase price, though competitive markets may require more. Your deposit stays in escrow and is applied to your closing costs or down payment as long as you follow the contract.
Contingencies
Contingencies are conditions that must be met for the sale to move forward. They protect you from losing your earnest money if something goes wrong. Common contingencies include:
- Inspection contingency: Allows you to renegotiate or cancel if major issues are found.
- Appraisal contingency: Protects you if the home appraises for less than the purchase price.
- Financing contingency: Ensures the sale can proceed only if your loan is approved.
- Home sale contingency: Gives you time to sell your current home before buying the next.
Modern markets may also include:
- Appraisal gap coverage (agreeing to cover part of an appraisal shortfall)
- Inspection-limited offers, such as “information only” inspections
Closing costs
Your offer should specify how closing costs are handled. Buyers and sellers can negotiate these fees, and norms vary by state and market. Your agent can advise you on what’s typical in your area.
Step 4: Write an offer letter
Your agent will now take all your essential information and package it into a legal purchase and sales agreement and send it to you to sign.
Your letter will include the following essential information:
- Address: the address of the home you want to buy
- Names: you and whoever else will be listed on the title
- Offering price: the price you’re proposing to buy the home
- Preapproval: a copy of your mortgage preapproval letter
- Earnest money: the amount you’re willing to deposit up front
- Closing costs: expectations about who will pay which costs at closing
- Contingencies: all the stipulations you'll need to be met before closing
- Key dates: the date you want to close on the house you're buying, and the date you’d like to move out of your current home
- Deadline: the date your offer expires
Step 5: Negotiate and sign
Once a seller reviews your offer, they can do one of three things: accept, counter, or reject the offer.
✅ Seller accepts your offer
Great! You’ll deposit your earnest money in an escrow account, then move on to the home inspection and appraisal.
🤝 Seller counter offers
Counteroffers are extremely common. A seller might counter on:
- Price
- Closing date
- Contingencies
- Earnest money
- Included items (appliances, fixtures)
- Requests for post-closing occupancy
You can accept their terms, counter again, or walk away.
❌ Seller rejects your offer
If you really want the house, you could work with your agent to make your offer stronger.
Summary
- An accepted offer is a binding contract between buyers and sellers.
- At minimum, an offer letter includes the purchase price, contingencies, closing cost information, earnest money amount, mortgage preapproval letter, and a deadline.
- Your real estate agent can help you determine a reasonable asking price, draft your offer, and send it to the seller on your behalf.
FAQs about making an offer on a house
How long does it take to hear back on a house offer?
Sellers typically respond to offers within one to three days with an acceptance, counter, or rejection.
Can you make an offer without a mortgage preapproval?
Most sellers will ask to see your mortgage preapproval and could reject your offer outright without one. Without a mortgage preapproval letter, your offer will stand out ONLY if you're paying cash.
What should a house offer letter include?
An offer letter should include essential details of the sale, such as the address, your offering price, contingencies, closing cost information, earnest money amount, mortgage preapproval letter, and a deadline.
Can a seller decline a full price offer?
Sellers can (and often do) reject full price offers. But you can also negotiate with them.
Do buyers expect a counter offer?
Yes, most buyers expect a counter offer. For this reason, many buyers make an offer with wiggle room.