The Guide to Making or Accepting an Offer on a Home

On both sides of a real estate transaction, the purchase offer is the first formal communication that leads to the final deal. The offer combines financial details with the nuances of negotiation, and it’s the first step in reaching an agreement and closing on a house.

To help you craft an offer on a home and understand the offer acceptance process, we’ve broken down the steps to both making and accepting an offer on a house. Here’s what you need to know:

— Buyers: How to make an offer on a house.

— Sellers: How to accept an offer on a house.

— How to back out of a deal.

[Fast Tips for First-Time Home Buyers]

Buyers: How to Make an Offer on a House

Making an offer on a house isn’t just about telling the seller how much you’re willing to pay. It’s also important to provide proof that you’re able to pay that amount, establish a closing date and state how additional costs will be covered and what you expect of the seller leading up to closing. When submitting an offer, be prepared to provide earnest money, which can range from $500 to 10% of the agreed-upon price and shows the seller you’re serious about buying the house.

The first step to making an offer on a house is finding the house you want to purchase within your budget. The next steps are fairly easy, especially when your real estate agent walks you through the process.

Here’s what you should know about making an offer on a house:

— Finding a property in your price range

— Knowing when to submit an offer

— Making a contingent offer

— Competing against other buyers

Finding a Property in Your Price Range

While you shop for a home, stick with properties within your budget — a lowball offer on a house likely won’t get a seller’s attention. If you’re unwilling to budge on what you want in a home, it may be best to hold off on buying and save up, says Pamela D’Arc, a licensed associate broker with Stribling at Compass in New York City.

“If I have (a buyer) who has certain criteria and they don’t have the budget to get that criteria in a quality building or neighborhood that would make them happy, I have absolutely told them to wait,” D’Arc says.

Alternatively, you may find that houses within your budget are receiving offers well above the price you can offer. In that case, you may lose out to buyers with deeper pockets. Keep looking, and perhaps widen your search to homes with different criteria.

Knowing When to Submit an Offer

Especially if you’re house hunting in a market where there are few available properties compared with the number of active buyers, submit an offer as soon as you’re sure you want to buy it. Even if you move quickly, there’s a chance you’ll have to compete with other offers.

“The first call I make when someone’s interested in a home is to reach the other agent — the listing agent — and find out if there’s any other offers that they have in hand, and if so how many,” says Jeff Plotkin, a Texas-licensed real estate agent, attorney, certified public accountant and vice president of Habitat Hunters Inc. in Austin, Texas.

While the listing price provides some insight into the seller’s expectations, the value of the property and the work needed should play a larger role in your offer.

When you’re ready to make an offer, your real estate agent will likely show you the sale history of properties nearby to help determine the home’s approximate value compared to the rest of the market. “I like to look at the last six months of houses that have sold in the same neighborhood, or very close proximity, of a similar size,” Plotkin says.

In addition to recent sales, factor in your personal needs. Consider the details this house checks off for you and the amount of work you’d have to do. Take into account details such as:

— Proximity to work, schools and shopping

— Neighborhood amenities

— Age of major systems and appliances, including the HVAC, roof, plumbing and electric

— Deferred maintenance

— Renovations that need to be done

While your agent will help you consider all the factors that lead to the offer price, you’ll have to determine the price you’re willing to offer. D’Arc says she’s learned to advise the buyer appropriately but “never give a number” to avoid making a decision the client isn’t happy with in the end.

[Read: Your Guide to the Housing Market.]

Making a Contingent Offer

Once you’ve moved past the price portion of the offer, consider if other needs and conditions will be included. If you already own a home and need to sell it to pay for the new one, an offer contingent on the sale of your house is necessary.

This offer contingency can be a sore point for many sellers, especially in a seller’s market where other buyers may not have the same constraints. If your ability to purchase the house hinges on certain factors like selling your current house, include the contingency even if you’re worried it might mean the seller declines your offer. If your situation is more flexible, talk to your agent about other ways to construct the offer so it appeals to the seller and meets your needs.

Competing Against Other Buyers

Low inventory in many housing markets in the U.S. makes competition a constant consideration for many homebuyers, particularly those who are house hunting for the first time. Many buyers are afraid of getting caught up in a bidding war and paying more than they can afford or losing out on the house of their dreams.

Standing out against competing bids may take a bit more work, but a personal touch and some strategic moves can give you an edge. Here are a few things D’Arc recommends:

— Be organized. There are many steps involved in a real estate transaction, D’Arc says, and they must be done as quickly as possible. Everything from lining up lender preapproval to getting insurance quotes will be necessary to keep your transaction moving smoothly.

— Check potential costs. You can’t know everything before your inspection, but you can be informed of many of the ultimate costs of your future home. “In these changing times, knowing about flood zones and how that will impact insurance costs is critical,” says D’Arc.

— Include quirky numbers. Rather than rounding to the nearest hundred or thousand, offer something more specific. An offer of $345,255 instead of $345,000 registers as a higher number when it’s just a difference of a few hundred dollars. If you note you’ll cover $1,905 of the seller’s legal fees instead of $1,850, the difference in dollar amount may stick in the seller’s memory. “Quirky numbers can sometimes be the difference,” D’Arc says.

— Be flexible. A good real estate agent will try to get as much information about the seller as possible from the listing agent to structure an offer around those needs. If the seller’s moving out of state, a quick closing date could be more enticing. With the closing date in particular, it can give you a leg up to express that you’re willing to meet the seller’s needs.

Keep in mind that even if you lose out to competing buyers once or even a few times, eventually your offer will be the right one. Don’t get discouraged, and don’t shy away from making an offer on a house because you think you’ll lose out to another buyer. “Most people will still take their best shot — it doesn’t cost a thing to make an offer,” Plotkin says.

Sellers: Accepting an Offer on a House

If you’re a home seller, as long as your property is priced within the range of similar houses in the area and has been prepared for the market, you should attract serious buyers.

Whether you live in an area where multiple offers the first day on the market are common or you have to wait a few weeks, it’s important to be prepared and work with your listing agent as much as possible. You want to be sure your asking price, curb appeal and home’s interior attract serious buyers and make them remember the property while they’re touring houses.

Here’s how you can make your property desirable and work toward a successful transaction once you’ve found a buyer:

— Establishing an offer deadline

— Knowing your limit

— Selecting the best offer

— Negotiating

— Accepting the offer

Establishing an Offer Deadline

For the sake of organization and to help drive interest to your property, your listing agent may recommend establishing an initial deadline for offers when it goes on the market. An offer deadline should be just a few days in the future, so buyers don’t have enough time to find another property.

This works best in a seller’s market when your agent expects there to be more than one interested buyer right off the bat. If you receive strong offers, accept the one that appeals to you most — don’t try to incite a bidding war.

Knowing Your Limit

When you’re determining asking price for your home, you should have the same conversation with your real estate agent that a buyer would: Based on recent sales of similar properties, how much is this home worth?

Weigh the estimated home value with the amount you need to pay off your mortgage, be able to buy another property or simply feel like it was a worthy deal. Expect to receive offers below your asking price, and know how low of a price you’re willing to accept to move on with a deal. Factor in other details based on your needs, such as the closing date, and set your limits ahead of time to avoid making a decision based on emotions rather than logic.

Selecting the Best Offer

Once you’ve received an offer — or more than one — you have a lot to consider. The offer price is certainly a major factor, but you also have to look at other costs and expenses, the financial security of the buyer and whether the timeline works for you.

Calculate the bottom line for the deal. If the buyer offers $500,000 for your house but asks you to cover all closing costs, you’d likely take home $5,000 to $25,000 less than $500,000, and that’s not accounting for the real estate agent commission, which could be $30,000.

If sentimentality matters to you, consider a personal letter a buyer writes, but also be sure you’re not basing your decision on bias against a protected class. The Fair Housing Act prohibits discrimination based on race, color, religion, sex, disability, familial status or nation of origin. If it’s believed you turned down a would-be buyer for any of those reasons, you could face a lawsuit.

[Read: The Guide to Understanding Your Home Value.]


You may have an offer you like, but that doesn’t mean you have to accept every term. Here’s where negotiations come into play — whether you make a counteroffer, request a different closing date or offer to make some, but not all, of the buyer’s requested changes to the home.

It’s important to be cordial and keep the buyer’s preferences in mind. Even in a seller’s market, offending the buyer could put you back in square one with your property still on the market.

In Manhattan, for example, D’Arc notes the market has cooled compared to a couple of years ago, and buyers have more power in negotiations. “Properties are on the market for longer now, and there’s generally more negotiability, and so buyers expect that,” she says.

Accepting the Offer

Once the seller and buyer have reached an agreed-upon price and terms, it’s time to move forward with the deal. The next step is to go under contract and start the due diligence process.

Both parties will need to sign documents noting their intent to move forward with the transaction, along with the established closing date and any other terms or conditions necessary to complete the deal.

Real estate law varies from state to state, so ask your real estate agent for guidance on any other nuances specific to your area. In New York, for example, the due diligence period takes place prior to both parties signing the contract. In most other states, the due diligence period takes place during the first 10 days the home is under contract.

Backing Out of a Deal

Moving past the offer and negotiation doesn’t guarantee the deal will go through. In the roughly 30 days or so it takes for most transactions to close following an offer, a lot of information can come up that requires additional negotiation and may lead one party to back out.

For buyers, the biggest factor is finances. Be sure to have your finances in order before you place an offer on a house, and be forthcoming with your lender about your income, any debt or other issues in your credit history. Getting preapproved for your mortgage before you start touring homes can help speed up the approval process because the lender will have already confirmed your credit history and financial background. Even with preapproval, however, avoid making any major purchases until after you close on your house.

The appraisal can also be a potential issue. If the property appraises for lower than the agreed-upon asking price, you may have to come up with additional cash or renegotiate the price with the seller.

For sellers, defects in the property discovered during the inspection can cause a lot of problems. A prelisting inspection allows you to learn about and make needed repairs before you put your house on the market.

At the end of the day, the under-contract or escrow period serves as time for the buyer or seller to discover everything necessary for the deal to take place. The earnest money submitted by the buyer typically goes back to the buyer if the deal falls through with cause on either side, like a low appraisal or major cracks in the foundation, though rules may vary based on state laws.

If you’re experiencing buyer’s or seller’s remorse, now is the time to express your misgivings and determine if the deal isn’t right.

More from U.S. News

4 Tips to Make Buying a Home Together Easier

The Fastest-Growing Places in the U.S. in 2024-2025

What Can Small Town America Offer Homebuyers?

The Guide to Making or Accepting an Offer on a Home originally appeared on

Update 06/04/24: This story was published at an earlier date and has been updated with new information.

Federal News Network Logo
Log in to your WTOP account for notifications and alerts customized for you.

Sign up