How to Make an Offer on a House: An 8-Step Guide

Finding a home to buy is only the beginning. Whether or not you actually end up in it boils down to your offer, its acceptance depending on more than the dollar amount itself. Now more than ever, preparation matters. Recent National Association of Realtors housing data shows listed homes receive an average of 2.2 offers, roughly 16% selling above asking price. With so many homes going under contract in just over a month, buyers often need to act quickly and decisively—the offer itself needing to do more work than it used to.

A knowledgeable real estate agent can help you navigate pricing and local norms, but understanding how an offer is structured and what makes it competitive is just as important. The eight steps discussed in this article walk through what to have in place before you submit an offer, how to size and shape it, which contingencies to include (and which are perhaps worth modifying in a hot market), and what happens after the offer is finally in the seller’s hands.

Key Takeaways

• Preparation beats speed: You should have mortgage preapproval, accessible cash for the down payment and earnest money, and a signed buyer representation agreement all in place before submitting an offer.
• The right offer balances competitive with comfortable: Comparable sales, days on market, condition, and local competition drive the number more than the listing price alone.
• Earnest money is signal as much as substance: Typical deposits reflect 1–3% of the purchase price, a larger one strengthening your offer in a competitive market but only refundable if a contingency protects you.
• Each contingency protects you but slightly weakens the offer: Financing, inspection, and appraisal contingencies are standard; waiving them can win bidding wars but expose you financially.
• Three outcomes follow any submitted offer: Yours will be met with either an acceptance, counteroffer, or rejection. If accepted, the process moves into inspection, appraisal, underwriting, and closing within several weeks.

1. Get the right items in place before submitting your offer

The keys to your future home are almost in hand, the prepared buyer more likely to win in today’s fast-paced market. Getting organized early on gives you the means to move quickly and confidently when the right opportunity surfaces, calling on you to…

Have your finances in order

Make sure your financing is already in place before submitting an offer. Unless you’re paying entirely in cash, that means obtaining a formal mortgage preapproval from a lender—ideally before you begin actively touring homes. A preapproval is not the same as a prequalification (our article on mortgage preapprovals spells out the difference). During preapproval, a lender will review your income, credit history, assets, and debt-to-income (DTI) ratio to determine how much you’re conditionally approved to borrow. The preapproval itself gives you:

• A clear maximum purchase price range

• An estimated monthly payment

• Credibility with sellers seeking assurance that you can close

Many sellers won’t seriously consider offers in the absence of documented financing.

Keep funds accessible and verifiable

In addition to loan approval, you need to demonstrate access to the cash required for:

• Your down payment

• The earnest money deposit

• Closing costs (see our article on the home-closing process for a full walkthrough)

You should hold these funds in a checking, savings, or other liquid account you can easily access. Lenders will request recent bank statements to verify available assets, and large unexplained deposits may require documentation. If you need to transfer funds, liquidate investments, or receive a monetary gift from a family member, allow sufficient time for the transaction to settle; asset verification delays can slow underwriting and, in some cases, jeopardize closing timelines. In high-cost markets (e.g., Bergen County, where down payments often run six figures and closing costs alone can total $20,000–$40,000), asset verification deserves real lead time.

Pro tip: Ask your lender for a custom preapproval letter, reflecting robust financing without giving away your maximum budget.

2. Understand the buyer-agent relationship

Real estate rules shifted recently. One of the biggest changes? How buyers work with their agents. Following the National Association of Realtors (NAR) settlement, buyers now need to sign a buyer representation agreement before submitting an offer. While this document may sound formal, it’s simply designed to clarify expectations and protect both parties pre-negotiation.

What the buyer representation agreement covers

• Compensation structure: How your agent is paid (flat fee, hourly rate, or a percentage of the purchase price), negotiable and no longer assumed to follow a uniform standard

• Who pays the compensation: Whether the seller, the buyer, or a combination of both is responsible for covering the agent’s fee

• Exclusivity and representation scope: Whether the agent represents you exclusively, the geographic area covered, and which services are provided throughout the transaction

• Agreement duration: The timeframe during which the agent will represent you

• Termination terms: How either party can exit the agreement, if necessary

• Agent compensation: How agent compensation (often addressed within the purchase offer itself) interacts with your offer, perhaps influencing how competitive the offer appears to a seller

3. Come up with a competitive (and comfortable) offer

Once you’ve found a home you love, the next big decision is what to offer; this is where your agent’s market knowledge really comes into play, a good agent helping you look past the listing price so you can focus on factors actually determining value.

Review the basics together to kick things off:

• Comparable sales (“comps”)

• Days on market

• Condition and upgrades

• Local competition

When going over asking makes sense

In a fast-moving, low-inventory market or when you know multiple offers are coming in, a higher bid can help you stand out. In many parts of Bergen County and other competitive NJ markets, well-priced homes in strong school districts regularly receive multiple offers in the first weekend—the winning bid often running 3–8% above the listing price.

When to negotiate under asking

If the home needs repairs, has been sitting on the market for a while, or isn’t attracting much attention, buyers usually have more wiggle room to offer a lower bid. A property that’s found itself on the market for 60+ days, has had a price reduction, and/or has obvious deferred maintenance, for example, is often more flexible than the listing implies.

4. Determine an appropriate earnest money deposit

An earnest money deposit serves as a good-faith indication to the seller that you intend to move forward with the purchase (see our article on earnest money to familiarize yourself with related mechanics).

Typical deposit range

Earnest money generally falls between 1% and 3% of the purchase price, though exact expectations vary by market conditions and local norms. In competitive Bergen County markets, 2–3% is common for primary residences; some buyers go higher, though, to signal commitment.

Why the amount matters

A larger deposit can strengthen your offer, particularly in competitive environments. Sellers often view a higher earnest money amount as evidence of financial stability with less risk of withdrawal.

Refundability and the risk of forfeiture

Earnest money is typically refundable if you terminate the contract for reasons protected by contingencies (e.g., inspection issues, appraisal discrepancies, or financing denial). If you withdraw from the transaction for reasons not covered by contingencies, however, the seller may be entitled to retain the deposit. The size of the deposit is exactly why the contingency structure (Step 5) matters so much.

5. Select the contingencies that protect your position without scaring off the seller

Contingencies outline specific conditions that must be met for the transaction to proceed. Not only do they provide important legal and financial protections for buyers, but they can also affect how competitive your offer seems. The goal here is to include the safeguards you actually need without adding unnecessary friction for the seller.

Financing contingency

A financing contingency allows you to withdraw from the contract if your lender can’t finalize loan approval so you’re ultimately not obligated to purchase a home without secured financing—especially important for buyers using a jumbo loan, where underwriting requirements are often more involved and last-minute conditions are common.

Home inspection contingency

An inspection contingency (see our article on home inspections for what to expect) permits you to evaluate a property for structural, mechanical, or safety issues. Depending on subsequent findings, it gives you the right to:

• Renegotiate the purchase price

• Request repairs

• Terminate the contract entirely

In highly competitive markets, some buyers opt for shortened inspection windows or informational-only inspections to strengthen their offer while still retaining minimal protection. This is worth weighing carefully, the inspection contingency considered the single most valuable buyer protection in the contract.

Appraisal contingency

Lenders require an appraisal to confirm the home’s value aligns with the loan amount. The appraisal contingency, likewise, ensures you’re not financially responsible for covering an appraisal gap if the property appraises below your offer price. In bidding wars where the winning offer comes in above the listing price, the appraisal gap is a real risk; some buyers either waive this contingency or offer a partial “appraisal gap guarantee” up to a defined dollar amount to make their offer more competitive while limiting downside.

Other optional contingencies

Depending on your situation and local customs, you can incorporate other protections such as a:

• Title contingency

• Home sale contingency

• HOA document review contingency

6. Prepare and submit a formal purchase offer

Once you’re ready to move forward, your real estate agent will draft a formal written offer outlining the terms of the proposed transaction and becoming legally binding once both parties sign. Since New Jersey is an attorney-state for real estate closings, offers typically go through an attorney review period thereafter—both buyer and seller usually having several business days to negotiate or withdraw before the contract becomes fully binding. Although the exact format varies by state, most purchase offers include the following components:

Property identification

• Legal address and description: The contract must clearly identify the exact property you’re offering to purchase, precision important for legal enforceability.

Purchase price and deposit

• Offer price

• Earnest money deposit

• Down payment and financing terms

Contingencies and legal protections

• Contingencies (financing, inspection, appraisal, and any optional protections)

• Clear title requirement stipulating that the sellers provide a marketable title confirming they have the legal right to sell the property

• Required seller disclosures regarding the property condition and timing of delivery

Closing and cost allocation

• Projected closing date

• Closing cost allocation specifying how closing costs, transfer taxes, and prorated expenses (e.g., property taxes or HOA dues) will be divided between buyer and seller

• Escrow and title company details (see our article on what is escrow on a mortgage)

Property inclusions and possession

• Fixtures and personal property clarifying which items will remain with the home

• A possession date, meaning when the seller must vacate and transfer the property to you

Offer timeline

• Expiration date and time

• Proposed closing date

Compensation terms

• Buyer’s agent compensation

Note: While some buyers consider submitting personal letters to sellers, many professionals discourage this due to fair housing concerns. Speak with your Realtor before drafting one.

7. Understand next steps after you submit your offer

Once your offer is delivered to the seller, one of three outcomes typically follows—each path with its own next steps and considerations.

Option 1: The seller accepts the offer

Acceptance is a major step forward, but the transaction is still not official until both parties sign the purchase agreement (and, in NJ, attorney review concludes). Several tasks immediately follow:

• Submitting your full mortgage application to the lender

• Scheduling the home inspection and any relevant follow-up evaluations

• Preparing for the appraisal, ordered by your lender

• Reviewing all seller disclosures, title documents, and escrow instructions as they become available

Option 2: The seller issues a counteroffer

A counteroffer signals that the seller is open to working with you but wants to tweak some of the terms. At this point, you can:

• Accept the revised terms

• Submit a new counteroffer

• Decline and walk away if the changes don’t align with your goals or budget

Your agent will help evaluate whether the counteroffer is reasonable based on market conditions.

Option 3: The seller declines the offer

A rejection is disappointing but common, especially in competitive markets. The next move is often to review the situation with your agent, determine whether any strategy adjustments are needed, and resume your home search when ready.

8. Prepare for what’s next after your offer is accepted

Once the seller formally accepts your offer and both parties sign the purchase agreement, the transaction moves into the closing phase—typically lasting several weeks and involving multiple required steps, as follows…

Home inspection and negotiations

You’ll schedule a professional home inspection to evaluate the property’s condition. If any issues are identified, you can request repairs, ask for concessions, or renegotiate specific terms based on the findings.

An appraisal, ordered by the lender

Your lender will arrange an appraisal to ensure the home’s value supports the loan amount. Should this come in low, you may need to renegotiate or activate your appraisal contingency.

Loan underwriting

During underwriting, the lender will review your income, credit, assets, employment, and property details to finalize loan approval. You may be asked to provide additional documentation during this stage, especially for jumbo loans (often more heavily involved in this respect).

Homeowners insurance

Most lenders require proof of an active homeowners insurance policy before closing (see our related article on homeowners insurance). Selecting and finalizing coverage early on helps prevent delays.

Closing disclosure

You’ll receive a closing disclosure at least three business days before closing, this document outlining your final loan terms, closing costs, and the total cash amount needed at settlement. The three-business-day review window is required by law.

Final walkthrough

Typically scheduled within 24 hours of closing, the walkthrough ensures the property is in the agreed-upon condition and that any negotiated repairs are complete.

Closing appointment

At closing, you’ll sign the required documents, submit your funds for closing costs and the down payment, and finalize the loan. Once funds are disbursed and documents are recorded, you’ll receive the keys and officially take possession of your new home.

The bottom line

A successful offer balances competitiveness with financial discipline. In a market where nearly 28% of purchases are made via all-cash offers, financed buyers must rely on strong terms, realistic contingencies, and clear communication to compete. While the eight steps discussed here don’t guarantee acceptance—no offer ever does—they can indeed tilt the odds in your favor. The single highest-leverage thing a buyer can do is enter the offer stage already prepared with financing in place, a signed agent agreement, verified cash, and a clear sense of the comp landscape. Everything else will flow from there.

Have questions?

Making an offer on a house is one of the most consequential financial decisions most households will ever make—the structure of the offer often mattering as much as the price.

Reviewed for accuracy

Paul Muller, AEP®, CFP®

Founder and Relationship Manager at Vision Retirement, with 30+ years in the financial industry.

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FAQs

• How long does it take to buy a home?

  The home-buying process usually takes 30 to 60 days from the time an offer is accepted to closing, but this can vary depending on market conditions, lender timelines, and inspections.

• How much should I save for a down payment?

  While 20% is often recommended, many first-time buyers qualify for loans with as little as 3% to 5% down. Keep in mind you'll also need money for closing costs, moving expenses, and an emergency fund.

• Can I buy a home with student loan debt?

  Yes. Lenders will look at your debt-to-income (DTI) ratio rather than the loan balance alone; if your overall debt is manageable and your credit is in good shape, you can indeed qualify for a mortgage.

• Do I need a mortgage pre-approval to go out and look for home?

  It’s strongly recommended. Pre-approval gives you a clear price range, shows sellers you're serious, and can speed up the offer process once you find the right place.

• What are closing costs, and how much are they?

  Closing costs include lender fees, title insurance, appraisal fees, and other administrative expenses. Expect to pay around 2% to 5% of the purchase price, typically due on closing day.

• Should I buy a home if I plan to move in a few years?

  It depends. If you’re planning to stay in place for fewer than five years, renting might make more sense—especially if home values in your area aren’t rising steadily—but buying might be a smart move if you want to build equity and the numbers work for you.

• What documents do I need to apply for a mortgage?

  Lenders typically require recent tax returns, pay stubs, W-2s, and bank statements as part of the home loan application process to verify income and financial stability.

• What financing options are available?

  Several home loan options—including conventional, FHA, VA, and USDA loans—are available, each with different eligibility requirements, down payment amounts, and benefits. Compare and contrast to find the best fit for your needs.

Disclosures:
This document is a summary only and is not intended to provide specific advice or recommendations for any individual or business.