Once you find the home of your dreams, it’s time to make an offer—but don’t rush in! Making an offer on a house requires research, planning, and discussion with your real estate agent to optimize your chances of a seller accepting.

Let’s say you’re a first-time homebuyer, and you’ve just come across the house of your dreams. Maybe it’s got that front porch you’ve always wanted, or a big bay window that lets in lots of light, or a to-die-for soaking tub in the master bath. Or maybe you’ve already owned a few homes and are just looking to downsize, but find yourself forgetting big steps or little details.

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Making an offer on a house

The best offers are based on research. From knowing a home’s particular history to understanding the local market conditions and comparable properties in the area, it takes planning to find that sweet spot offer that satisfies both buyer and seller.

An experienced real estate agent will help gather information and conduct negotiations, but knowing the basics as a buyer will allow you to make greater contributions throughout the process of securing the home of your dreams. Let’s dive in.

Step 1: Get preapproved for a mortgage (and find an agent)

First, you’ll need to get preapproved for a mortgage before you can start looking at homes. While preapproval isn’t a mandated part of the process, it’s pretty standard for a couple of reasons:

Preapproval is your mortgage lender’s way of letting you know how much house you qualify for, based on things like current income and credit history

Sellers prefer buyers with preapproval

Once your lender has run your numbers, you’ll receive information back about the amount of mortgage you qualify for, the interest rate on the loan, the purchase price you qualify for, and more. You’ll also get a preapproval letter, which you can give to sellers along with your offer.

Make sure you get a preapproval as opposed to a prequalification. While real estate agents sometimes use these terms interchangeably, they’re actually two separate things—unlike preapproval, a prequalification doesn’t require a credit check and can’t verify all of your information, making them less reliable (especially in the eyes of the seller). Once you’ve been preapproved, you’re ready to start browsing the market, going on tours, and attending open houses!

Step 2: Decide how much to offer

So, you’ve gotten preapproved, spent some time searching, and think you’ve landed on the perfect property! You may be eager to make an offer and secure the home of your dreams—but before you rush in with a number, it’s important to do a little more research to answer the following:

How long has the home been on the market? The longer a home has been listed, the less competition there typically is. You may have stronger negotiating powers if the house has been sitting for a while. Alternatively, if it’s new to the market you may be facing higher competition from potential buyers.

How long has the current owner lived on the property? Long-time homeowners may be more selective or less compromising on a home they feel attached to.

Has the home been renovated or expanded? Knowing this answer can help you set a more informed offer price. To find out, you can ask your realtor for the seller’s disclosures and/or check with the city’s permitting office.

Is the home in need of repairs? As with prior renovations or expansions, knowing if the home has repairs needs can also impact the price you offer. You may choose to request the seller takes care of these repairs and any other concessions as a part of your offer.

What are similar homes selling for? Look into comparable properties listed in the area—or “comps”—with similar features to see how they compare in price. Knowing what local comps have recently sold for can guide you toward the perfect offer.

What’s my competition? Higher competition for a home means higher stakes—but don’t let the possibility of a bidding war intimidate you. Discuss with your agent how much other buyers are offering, and what you can do to set your offer apart.

What’s my budget? It’s important to keep your budget in mind throughout the process Preapproval lets you know how much you qualify for, but that’s not always the same as how much you can afford. It’s never a good idea to offer your entire preapproval amount, as this removes your ability to negotiate or make any necessary repairs or desired renovations to the property.

What about contingencies?

This is also a good time to think about whether you’ll be adding any contingencies to your offer. These are essentially failsafes that protect you from legal and financial repercussions if the transaction falls through.

However, by protecting you, contingencies add greater risk to the seller, which is why some buyers may opt to waive certain contingencies to make their offer more appealing. It’s crucial to consult with your real estate agent before deciding to waive any contingencies, as doing so leaves you vulnerable should the deal go south.

There are the five common contingencies included in home offers:

Home inspection: Home inspections are typically done before closing and help ensure the condition of the home. This contingency allows you to renegotiate or back out of the deal if the home inspection reveals serious issues with the property.

Appraisal: An appraisal will confirm the fair market value of the property. This contingency enables you to renegotiate the deal if the appraisal returns a lower number than what you’ve offered.

Financing: This contingency allows you to withdraw from the deal if your mortgage loan falls through. If you’re buying a home with cash, you won’t need to worry about including this one in your offer.

Title: Before closing, you should have a title search run on the property. This contingency protects you if there are problems with the home’s title, such as any liens or outstanding debts.

Home sale: If you’re a buyer who is also in the process of selling your current residence, you may want to consider adding this contingency to your offer. It sets the terms of closing on the property contingent on your home selling.

MORE: Home insurance terms you need to know

Step 3: Decide on an earnest money amount

Earnest money is a “good faith” payment that lets a seller know you’re serious and have the assets to back up your offer. An earnest money payment won’t go directly to the seller—it’s held in escrow until closing, at which time it’s applied to your down payment and other closing costs.

Although the exact amount of earnest money you should offer varies, the normal range is between 1 and 2% of the home’s value.

Step 4: Write your initial offer

So you’ve done your research, decided on an earnest money amount, and feel ready to submit an offer. You’ll want to work with your agent to craft your offer letter, but you’ll be the one to set the terms of the offer price, down payment, and other details.

When writing your offer letter, here’s what to include:

Name of the seller

Property address

Your name, along with the names of anyone else you intend to include on the home’s title, such as your spouse or a close relative

Offer price and downpayment offer

Earnest money deposit

List of all fees and closing costs

Contingencies and concessions you’re requesting from the seller

Intended closing date

Intended move-in date

Deadline to respond to the offer

Note that some states and counties have local requirements you may have to meet in your house offer—you can check with your realtor for details depending on where you live.

Making an offer the seller accepts

If you’ve got your heart set on a home and you really want the seller to accept your offer, it’s best to go in at the full price. A full-price offer lets a seller know you see the value in their property, and that you’re willing to give them exactly what they’re asking for.

If there’s heavy competition for the home, you may even need to make an offer that’s above the initial asking price. Bidding wars are infamous for driving the cost of a home far above its original listing price. If you find yourself caught in one, weigh how much you want the property alongside your budget.

Even if you don’t have a lot of wiggle room to work with, there are other ways to make your offer stand out:

Offer a generous earnest money deposit

Waive certain contingencies, such as the appraisal contingency (check in with your realtor before doing so)

Consider adding an escalation clause to your offer

Waive certain concessions or repairs

Make an all-cash offer

MORE: How to settle into a house

Step 5: Wait for the seller’s response

Once you’ve submitted an offer, there are three ways it can go:

If the seller accepts: Congrats! If the seller accepts your offer, they’re willing to move forward with you as the buyer. An accepted offer doesn’t end the home-buying process, though—next comes scheduling the home inspection, appraisal, and getting ready for closing.

If the seller rejects: If the seller rejects your offer, there’s not much else you can do—it’s time to move on to another property. While it may come as a disappointment, don’t let it get you down! It’s common to go through the process of making an offer on more than one house, and a rejection is an opportunity to take what you’ve learned and apply it to the perfect property.

If the seller makes a counteroffer: The seller may make a counteroffer to your offer. If that’s the case, this is when negotiations will come into play. As a buyer, you have a few options—you can accept the counteroffer as-is, make your own counteroffer, or decline the counteroffer altogether. Your agent should act as your liaison during negotiations, and you can ask them to gather more information on what would make an appealing offer from the seller’s agent.

Pro Tip Remember, you can negotiate with more than just the purchase price of a home! Negotiations may extend to concessions, repairs, contingencies, and more.

Step 6: Finalizing your contract

The last thing you’ll need to do is finalize the contract with the seller. Both parties will review and sign the contract, which is then sent over to your mortgage lender. Once approved, you can pat yourself on the back—you did it!

But that doesn’t mean you’re through—the home buying process moves forward once more with the scheduling of the home inspection, appraisal, closing and move-in dates, and more.

MORE: How to make a counteroffer after a home inspection

How to find home insurance

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FAQ

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

The strongest offers are based on research—although having an experienced real estate agent can also make the process go much smoother. Once you’ve gathered details and discussed with your realtor about the offer you’re willing to make, make sure to include the following in your offer letter: your name, the name of the seller, the property address, your earnest money deposit, the offer itself (including your downpayment offer), a list of all fees, any concessions or contingencies you’ve decided to include, and a list of dates (closing, move-in, and the seller’s deadline to accept).

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