How to Make an Offer on a House

You’ve found your dream home, now all you need to do is make an offer. The amount you offer will be your primary consideration, so thoroughly analyze the housing market. Remember to use professionals, such as real estate agents and lawyers, if necessary. When it’s time to make your offer, draft a purchase and sale agreement.

Part 1

Part 1 of 3:

Setting Your Bid

1
Look at comparable sales. A seller will expect to sell for a price similar to what comparable homes (“comps”) have sold for in the same market. Their asking price should be based on these sales, but do your own research. Check websites such as Zillow for market comps.
- A good comp should be a similar size and located in the same neighborhood.
- Because the market always changes, your comps should have sold in the last three or four months. Don’t go past six months unless you absolutely have to.^{[1]XResearch source}
No two homes are the same, so you should adjust your bid based on any unique features. For example, the home might have a swimming pool, which none of your comps have. Or the house might have a breathtaking view.
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3
Assess the market. If the market is hot, then the seller can probably get their asking price or a little more. However, if homes have been on the market a long time, you have more power as a buyer. Check how long homes are sitting on the market before selling. If most homes are sitting for four or more months, then the market is very slow.
- Also find data about the average sale price over the past year. In a cold market, the prices are probably falling or staying flat.^{[2]XResearch source}
There’s no reason to bid on a home if you can’t afford it. Pull together a monthly budget and check how much it costs for you to live. You can use online calculators to estimate how much your mortgage will cost.
5
Find out why the seller is moving. Some sellers might be particularly motivated to sell. When you walk through the home, ask the seller questions (if they are there). A real estate agent might be more tight-lipped, but still try to find out why the sellers are moving.
- If the person is moving across the country or looking to buy another house, then they might be super motivated to unload the property quickly.^{[3]XResearch source}
- However, someone selling simply because they are retiring or downsizing can probably take their time.
6
Discuss your offer with an agent. You might not know where to start or how to come up with a bid amount. Meet with an agent who is experienced in the market where you want to buy a home. You can find agents in the phone book or online.
- An agent can give you a Comparative Market Analysis (CMA), which is an expert analysis of comparable sales.^{[4]XResearch source}
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Part 2

Part 2 of 3:

Getting Pre-Approved for a Mortgage

1
Review your credit history. You’ll be in a stronger bargaining position if you get pre-approved for a mortgage. For this reason, you should check your credit history to see if there’s any negative information that might trip you up. In the U.S., you are entitled to one free credit report a year from each of the three credit reporting agencies.^{[5]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
- Check for any errors and dispute them. Common errors include accounts that don’t belong to you, accounts with the wrong credit limit, or accounts inaccurately listed as past-due.
2
Look at your credit score. Your credit score will affect whether you can get a mortgage and the interest rates you’ll pay. Generally, you’ll need a score of 620 to qualify for a conventional mortgage. A score above 740 will qualify you for the best interest rates.^{[6]XResearch source}
- You can often find your credit score on a credit card statement.
- Alternately, you can use a free service such as Credit.com or pay for your FICO score at myfico.com.
3
Gather required information. You must give the lender quite a bit of personal information when you apply for pre-approval. Collect this information ahead of time:^{[7]XResearch source}
- Recent pay stubs
- Tax returns for the past two years
- W-2 forms for the past two years
- Proof of other income, such as alimony, child support, retirement income, etc.
- Bank account statements for the past two months
- Investment account information
- Valid ID, such as a driver’s license or passport
- Social Security number
4
Apply. You can apply for pre-approval at a bank or credit union. You’ll have to complete an application and provide copies of your supporting documentation. Ask how long it will take for the lender to analyze your information.
- Spend some time shopping around for the best rates before applying. If you want, you can consider online lenders, but you should thoroughly research them. Check with the Better Business Bureau and your state’s Attorney General to see if complaints have been filed.
5
Receive your pre-approval letter. If you’re approved, then the lender should send you a letter stating the amount you have been approved for. This letter is not a mortgage commitment—the bank actually needs to appraise the house you intend to buy. However, the letter is solid proof you can financially qualify for a mortgage.
- The letter is usually only good for 90 days, so don’t seek pre-approval until you are ready to seriously start house hunting.^{[8]XResearch source}
- Avoid changing jobs or spending a large sum of money after you are pre-approved. Your request for a mortgage may still be denied if you change your financial situation too drastically.
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Part 3

Part 3 of 3:

Drawing Up an Offer

1
Read your jurisdiction’s laws. Every state and country has different laws that regulate how purchase offers are made. For example, in some U.S. states, only a lawyer can draft a legal offer.^{[9]XResearch source}
- If you need to hire a lawyer, contact your local or state bar association and ask for a referral to a real estate lawyer.
2
Look for purchase offer forms. Your jurisdiction might have a form local real estate agents use. You can get a copy by contacting your state’s Department of Real Estate or by searching online.
- Because the law often changes, any form you find might be slightly dated. For this reason, you might want to have a lawyer review your purchase offer before you submit it to the seller.
A valid purchase offer should identify the address of the property and sometimes include the legal description, which you can find on a deed.^{[10]XResearch source} Without this information, the contract will not be valid. You can get the description from the title company, and then both parties will need to sign it.
4
Explain what you will pay. A purchase offer must also include details about what you will pay for the house and how. Include the following information:^{[11]XResearch source}
- Your proposed purchase price.
- Whether it is an all-cash transaction or one that is subject to a mortgage.
- The amount of your earnest money deposit. Generally, this is 1-3% of the purchase price. Also explain how it will be returned to you if the seller rejects your offer.^{[12]XResearch source}
5
Include contingencies. Contingencies protect you. Include any of the following contingencies that apply to your situation:^{[13]XResearch source}
- You might not be able to buy unless you get financing, so include that contingency if necessary.
- You’ll definitely want a satisfactory home inspection soon after making your offer. You can back out if the inspection reveals problems.
- You’ll want an appraisal and the right to back out if it comes in less than the purchase price.
- You might need to sell your home before you can make the purchase. If so, include that contingency.
- You may also want to have an insurance contingency, and certain repairs may need to be made before you can get insurance coverage.
- Be aware that all types of contingencies have deadlines, so you will need to know when they are to avoid defaulting.
6
Set the duration of your offer. An offer isn’t good forever. Instead, you get to decide how long it is good for. Talk with your agent and discuss what is typical for your area. For example, a bid might be good for a couple of days or only a few hours.^{[14]XResearch source}
- In a hot market, a shorter deadline is best. This will prevent another buyer from sneaking in and making a competing offer.
7
Add other necessary provisions. Purchase offers contain a lot of conditions meant to protect you in the sale. Make sure your purchase offer includes the following:^{[15]XResearch source}
- Reserve the right to walk through the property before closing.
- Request that the seller provide clear title.
- Allocate who will pay for the survey, inspection, title insurance, etc.
- State the type of deed the seller will grant you.
- Divide up the real estate taxes, utility bills, fuel bills, etc. For example, if you close at the end of June, you might want the seller to pay half of the tax bill for the year.
- Include any other provision required by your state law.
If the seller accepts your offer, then the purchase offer becomes a binding contract (subject to your contingencies). Because of this, you need to thoroughly review all of the information you’ve included.^{[16]XResearch source} Meet with a lawyer if you have questions.
If your initial offer is lower than the asking price, consider explaining your reasoning. Draw up a list of comps and explain why you used them to set your bid. The seller’s agent must give the seller anything you submit.^{[17]XResearch source}
10
Consider writing a letter of interest. In a hot real estate market, you need to stand out. One way to do that is to tell the seller your story. Write a letter of interest in which you describe yourself, your family, and why you are interested in the house.
- Try to form a connection with the seller. Perform basic Internet research and find out where they went to school or work. Social media accounts should tell you whether they have family.
- Also explain what you loved about the house and the neighborhood. Sellers want to know that their buyers will love the home as much as they did.^{[18]XResearch source}
11
Submit your offer. Gather together your earnest money, purchase offer, letter of interest, and any description of the comps you used. You’ll either submit the offer to the seller’s real estate agent or to your own agent.^{[19]XResearch source}
- Submit with full knowledge that you may need to negotiate with the seller.
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Expert Q&A

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Question
Can you withdraw a house offer?
Carla Toebe
Real Estate Broker
Carla Toebe is a licensed Real Estate Broker in Richland, Washington. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. She graduated from Washington State University with a BA in Business Administration and Management Information Systems.
Carla Toebe
Real Estate Broker
Expert Answer
You can withdraw your offer up to the closing but you will generally lose your earnest money if you cancel without a contingency. If you cancel with a contingency, then you will typically get your earnest money back.
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Question
How do I make an offer on a house without an agent?
Carla Toebe
Real Estate Broker
Carla Toebe is a licensed Real Estate Broker in Richland, Washington. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. She graduated from Washington State University with a BA in Business Administration and Management Information Systems.
Carla Toebe
Real Estate Broker
Expert Answer
If you do not have an agent then it's best to get an attorney unless you know what you are doing. This is one of the largest purchases you will ever make so it is best to use a professional to guide you through the process and look out for your interest. It does not cost any money to use a real estate agent to write an offer on a house for you unless the seller will not pay a commission, but most times the seller will pay if the agent asks for it with the offer.
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Question
Can you make an offer on more than one house?
Carla Toebe
Real Estate Broker
Carla Toebe is a licensed Real Estate Broker in Richland, Washington. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. She graduated from Washington State University with a BA in Business Administration and Management Information Systems.
Carla Toebe
Real Estate Broker
Expert Answer
You can make as many offers as you want to. Typically, you will have 3 days to cancel based on the seller disclosures so even if more than one offer gets accepted, you have an easy out to cancel the others before spending money to purchase them.
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