You're Ready to Make an Offer on a House: Now What?


You've found the home of your dreams. Now the hard work starts: It's time to make an offer, and hopefully, close the deal that will make the home yours.

If you've never made an offer on a home before, the process can be intimidating. Fortunately, there is a formula here. Knowing that formula should at least remove some of the uncertainty from making an offer.

The Purchase Offer

Once you've found the home that you want to buy, you'll work with your real estate agent — or on your own if you're buying without an agent — to fill out a purchase offer form. Most agents use a standard form. You'll fill in your name and the address of the home you want to buy.

You and your real estate agent will also fill in the price you want to pay and provide an expiration date for the offer. Usually, you'll give the sellers and their real estate agent two to three days to respond, though you can set any expiration date you'd like.

The purchase offer will also include information on how you will pay for the home, indicating that the offer hinges on you qualifying for a mortgage loan or that you are going to pay for the property in cash. The offer will also state a date by which the sale must close if the sellers accept the offer.

How much you offer for the home is up to you. Your real estate agent will recommend a price for your first offer. If you really want the home, and you're worried that another buyer will make an offer, too, you might offer to pay the home's full list price. In some particularly hot markets, buyers even offer more than list price to make sure they don't lose the home.

The Seller's Move

After your real estate agent submits the offer to the agent representing the seller, it's your turn to wait. Sellers can accept your offer as is, make a counteroffer or reject your offer without making a counteroffer, effectively ending any future negotiations.

You and your agent will review any counteroffers together. Usually, sellers will make a counteroffer based on the price you submitted. The sellers might have listed their home for $300,000 and you might have offered to pay $280,000. The sellers' counter offer might request that you pay $290,000 instead.

Don't panic when you receive a counter offer. There is no limit to how many times you and the sellers can go back and forth. You and your agent can keep submitting offers until the sellers either accept one, or you or the sellers finally decide that the sale isn't going to happen.

The Sellers Accept — Now What?

When the seller accepts your offer, you'll sign a contract. The contract states that you intend to buy the home, as long as the property meets certain contingencies. The sellers can't entertain other offers for the home now unless your deal falls through.

Earnest Money

You'll supply earnest money with the contract. This money, which can range from a couple hundred dollars to thousands of dollars, tells the sellers that you are serious about buying their home. The money is held in an escrow account maintained by the title company handling the real estate closing. If you back out of the home sale for a reason not allowed in your sales contract, the sellers get to keep the earnest money deposit.

If you go ahead with the sale, the earnest money that you already supplied is usually applied to the closing costs of the mortgage loan or the down payment on the house. If you supplied an earnest money deposit of $1,000, say, and you are providing a down payment of $10,000, you could use the earnest money so that you'd only need to provide $9,000 for that down payment.


After you and the sellers sign the contract, your mortgage lender will require that you pay for an appraisal to make sure that the home you are buying is worth at least what you are paying. If the appraisal comes in too low — say the appraiser says that the home you are buying for $250,000 is only worth $200,000 — the lender might rescind its offer to loan you mortgage dollars. This could scuttle the deal, though in most instances you will have your earnest money deposit refunded.


You also have the opportunity to schedule a home inspection after signing the contract, and you really should. An inspector will tour the home and point out any problems with the property. You then can ask the seller to fix the problems, reduce the sales price of the home, or provide you with the money you need to fix the problems yourself. Your contract will also state how serious these problems have to be before you can cancel the sale. For instance, your contract might state that you can walk away from the home sale if the inspector turns up needed repairs that are equal to $10,000 or more.

If the appraisal and the inspection go well? It's time to move to the closing table, where you'll sign a stack of papers that will officially transfer ownership of the home to you.

If you've ever bought a home, how did your offer and negotiation go?

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