Making an Offer on a House: What Goes Into It and What Happens Next
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A purchase offer is a legal document with real stakes. Learn what it contains, how contingencies protect you, and how sellers respond.
Key Takeaways
- A purchase offer is a legally binding document, not just an expression of interest.
- Contingencies — for financing, inspection, and appraisal — protect you if things go wrong.
- Earnest money signals commitment but can be at risk if you back out without a contingency.
- Sellers can accept, reject, or counter your offer, and negotiations can go several rounds.
- Your agent is your primary guide; never sign an offer you haven't fully read and understood.
What a Purchase Offer Actually Contains
A home purchase offer is not a casual expression of interest — it is a formal legal document that, once accepted by the seller, creates a binding contract. Understanding what goes inside it helps you make deliberate choices rather than signing on autopilot.
The core components of a standard purchase offer include:
- Purchase price: The amount you are offering to pay.
- Earnest money amount: The good-faith deposit that accompanies the offer.
- Financing terms: The type of loan you plan to use (conventional, FHA, VA, etc.) and how much you're putting down.
- Contingencies: Conditions that must be met for the sale to move forward (detailed in the steps below).
- Proposed closing date: The target date to complete the transaction.
- Personal property inclusions or exclusions: Items — like appliances or window treatments — that you expect to remain with the home or be removed.
- Offer expiration: The deadline by which the seller must respond.
For a full glossary of terms you'll encounter throughout this process, see our plain-English guide to real estate terms.
Get Pre-Approved Before You Offer
A pre-approval letter is generally expected by sellers before they take an offer seriously. It shows a lender has reviewed your income, assets, and credit and conditionally agreed to lend up to a specified amount. See our guide to what pre-approval actually means for the full picture before you start touring homes.
How to Prepare and Submit a Strong Offer
Preparation is what separates a confident offer from a reactive one. Work through the following steps with your agent before submitting anything in writing.
What you will need
Mortgage Pre-Approval Letter
Demonstrates to the seller that a lender has conditionally verified your ability to finance the purchase.
Comparative Market Analysis (CMA)
A report prepared by your agent showing recent sale prices for similar nearby homes, used to determine a competitive offer price.
State-Approved Purchase Agreement Form
The standard legal contract form used in your state to formally submit a purchase offer.
Earnest Money Funds
A good-faith deposit — typically 1–3% of the purchase price — submitted alongside the offer to show serious intent.
Review comparable sales with your agent
Before naming a price, your agent will prepare a Comparative Market Analysis (CMA) — a review of recently sold homes similar in size, condition, and location to the one you want. This data helps you determine whether the asking price is fair, inflated, or a potential bargain. Submitting an offer grounded in market evidence gives you a defensible position, whether the seller accepts or counters.
Determine your offer price and terms
Decide on the price you'll offer, your proposed closing timeline (commonly 30–45 days), and any seller concessions you'd like to request — such as a contribution toward your closing costs. In competitive markets, buyers sometimes offer above asking price; in slower markets, there may be room to negotiate below. Work with your agent to calibrate your strategy based on how long the home has been listed and whether other offers are expected.
Include your contingencies
Contingencies are conditions written into the offer that must be satisfied for the sale to proceed. The three most common are:
- Financing contingency: Protects you if your mortgage is denied. If you can't secure a loan under the agreed terms, you can typically exit the deal and recover your earnest money.
- Inspection contingency: Gives you the right to have the home professionally inspected. If significant problems are found, you can negotiate repairs, request a price reduction, or walk away.
- Appraisal contingency: Protects you if the lender's appraiser values the home below your offer price. Without this, you'd be obligated to cover the gap in cash.
Waiving contingencies can make your offer more attractive to sellers, but it increases your financial risk considerably.
Submit earnest money with the offer
Earnest money is a good-faith deposit — generally 1–3% of the purchase price — that accompanies your offer. It's held in an escrow account and applied toward your down payment or closing costs at settlement. If the seller accepts and you later back out without a valid contingency, you risk forfeiting this deposit. If the deal falls through due to a contingency you included, you should receive it back.
Submit the offer and set an expiration
Your agent delivers the signed offer to the seller's agent. Most offers include an expiration window — often 24 to 72 hours — after which the offer lapses if no response is received. This prevents you from being left in limbo indefinitely while the seller shops your offer around to other buyers.
Respond to the seller's decision
The seller has three options: accept your offer as written, reject it outright, or issue a counteroffer with modified terms (price, closing date, concessions, or contingencies). A counteroffer restarts the clock — you may accept, reject, or counter in return. Multiple rounds of negotiation are common. Once both parties sign the same version of the agreement, it becomes a legally binding contract and the transaction moves into the inspection, appraisal, and financing phases.
Never Sign What You Haven't Read
Purchase agreements can run 10 or more pages and contain provisions with significant financial consequences. Even if your agent walks you through the highlights, take the time to read the full document yourself. If any language is unclear, ask for a plain-English explanation or consult a real estate attorney before signing.
Once your offer is accepted and both parties have signed, the transaction enters the under contract phase — a period that typically includes a home inspection, lender appraisal, and final mortgage underwriting before closing day. For a full walkthrough of what follows, see our overview of the home-buying process from offer to closing.
An Accepted Offer Is a Legal Contract
Once both parties sign the purchase agreement, you are legally bound to its terms. Backing out without a valid contingency can result in losing your earnest money deposit and, in some cases, expose you to additional legal liability. Read every clause before signing and ask your agent or a real estate attorney to explain anything unclear.
This article provides general educational information about the home purchase process and is not legal or financial advice. Consult a licensed real estate agent or attorney for guidance specific to your situation and jurisdiction.
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Real Estate Editorial Team
Real Estate Editorial Team is the collective byline for our editorial team and contributor network. Articles published under this byline or an editorial pen name are researched, written, and reviewed according to our editorial standards for clarity, consistency, and independence before publication.
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