Making an Offer on a Home

Work with your agent to pull a comparative market analysis (CMA) — a summary of what similar homes in the same area have sold for recently, usually within the past 90 days. Use this data to anchor your offer price to market reality rather than the listing price alone.

In a buyer's market, you may have room to offer below list price. In a competitive seller's market, coming in at or above asking — sometimes with an escalation clause — may be necessary. Your agent can advise on local conditions.

Contingencies are conditions that must be met for the sale to proceed. If a contingency isn't satisfied, you generally have the right to exit the contract and recover your earnest money. The three most common contingencies are:

• Financing contingency: Protects you if your mortgage loan is not approved.
• Inspection contingency: Allows you to negotiate repairs or withdraw if the home inspection reveals significant issues.
• Appraisal contingency: Protects you if the home appraises below the agreed purchase price.

Additional contingencies — such as the sale of your current home — may apply to your situation. Discuss all options with your agent before drafting the offer.

Earnest money is a good-faith deposit that accompanies your offer, signaling to the seller that you're a serious buyer. It's typically 1–3% of the purchase price, though amounts vary by market and local custom. The funds are held in an escrow account — not released to the seller — until the transaction closes.

If the deal closes successfully, earnest money is applied toward your down payment or closing costs. If you back out for a reason covered by a contingency, you generally receive it back. If you back out without a covered reason, you may forfeit it.

Your agent will prepare the formal purchase agreement (also called a purchase offer or sales contract) using a standardized state-approved form. This document includes:

• The offered purchase price
• Earnest money amount and how it will be held
• All contingencies and their deadlines
• Proposed closing date
• Any personal property included in the sale (appliances, fixtures, etc.)
• Your pre-approval letter as an attachment

Read every line before signing. In some states, an attorney-review period is standard — check whether that applies in your area.

Your agent submits the signed offer to the seller's agent, typically with a response deadline of 24–72 hours. The seller may:

• Accept your offer as written
• Reject it outright
• Counter with different terms — price, closing date, contingencies, or inclusions

A counteroffer restarts the negotiation. You can accept, reject, or counter again. Your agent will guide you through each round. Stay focused on your maximum budget and don't let negotiation momentum push you past it.

An offer is not binding until both parties have signed the same version of the agreement. Once you receive a fully executed (signed by all parties) purchase contract, the formal transaction timeline begins — inspection periods, financing deadlines, and the closing date all start from this point.

Keep copies of all signed documents. You are now officially under contract. For a broader view of what comes next, see the full homebuying process walkthrough.