Last time, I shared a checklist for what to look for during a showing. Now let's say it worked. You walked through a home, and you can picture yourself living there.
The next step is making an offer, and this is where many first-time buyers feel the most nervous. An offer is more than a price. It's a set of terms, and each one affects how appealing your offer looks to the seller and how well it protects you. Here's how each piece works.
1 Purchase Price
Price is the first thing sellers see, but it shouldn't be a guess or a gut feeling. Before we write an offer, I'll review recent sales of similar homes nearby, how long the home has been on the market, and any price changes along the way.
Sometimes the right offer is at list price. Sometimes it's below, and sometimes a well-priced home in demand calls for more. The goal is an offer supported by the data, so you're neither overpaying nor insulting the seller.
If you haven't already, read How Much Home Can You Afford? first. An offer should fit your comfortable monthly budget, not just what a lender will approve.
2 Earnest Money
Earnest money is a deposit you make after the seller accepts your offer. It shows the seller you're serious. It isn't an extra cost. It's held in escrow and applied toward your down payment or closing costs when you close.
The amount varies by price range, competition, and the situation. A larger deposit can make your offer look stronger, but it also means more of your money is tied up if something goes wrong.
It's important to understand the conditions under which your earnest money is protected and when it could be at risk. We'll go over that together before you sign.
3 Financing
How you're paying matters to the seller. Offers with a strong preapproval letter from a lender are taken more seriously than offers without one. If you haven't been preapproved, start there, because sellers want to know an offer is likely to make it to closing.
Your loan type (conventional, FHA, VA, USDA, or a down payment assistance program) can also affect timing and requirements. I'll help you understand how your financing fits into the offer.
4 Closing Date
Closing dates are easy to overlook, but they matter. A seller who is buying another home may need a specific timeline. Another may want extra time to move out. Being flexible on the closing date can make your offer more attractive without costing you anything.
Just make sure the date is realistic. Your lender, the appraisal, and the title work all take time, and a date that's too tight can create stress for everyone.
5 Seller Concessions
Seller concessions are when you ask the seller to contribute toward some of your closing costs or prepaid items. For buyers with limited cash, this can be a helpful tool.
The tradeoff is that a request for concessions can make your offer less competitive, depending on the market and the home. Limits on how much a seller can contribute also vary by loan type. We'll look at whether asking makes sense for your situation, and how it might change your price strategy.
6 Contingencies
Contingencies are conditions written into the offer that must be met for the sale to go forward. They protect you, and common ones include:
- Inspection. You can have the home inspected and negotiate repairs or back out within the agreed timeframe.
- Financing. The sale depends on you getting your loan approved.
- Appraisal. The home needs to appraise at a value that works for your lender.
Each contingency gives you protection, and each also affects how the seller views your offer. Waiving them can look attractive to a seller, but it can also put you at real financial risk. I never recommend giving up protection without you fully understanding what you're taking on.
I'll explain more in my article on Home Inspections and Contingencies.
Read Before You Sign
Once you're ready to make an offer, you'll be signing a legally binding contract. I encourage every buyer to read it closely and ask questions. If you'd like a deeper look at the document itself, see my article Understanding the Purchase Contract.
The Real Takeaway
A strong offer isn't just the highest price. It's a well-built package of price, terms, timing, and protections that fits both your goals and the seller's. The best approach is a plan made together, before you write anything down.
Final Thoughts
If you're getting close to making an offer on a home, I'd be glad to walk you through the process and help you put together an offer you feel confident about.
Coming up next: your offer is accepted. What happens between now and closing day?
Notice: This article is provided for general informational and educational purposes only and is not legal or financial advice. Every transaction is different, so please talk with your REALTOR®, lender, and attorney about your situation.