Skip to main content

You’ve got this: How to make an offer on a house

What we'll cover

  • How to make your offer competitive

  • Basics of a purchase and sale agreement

  • Ways to handle a counteroffer

You've combed through listings and toured kitchens and bathrooms on the hunt for the home of your dreams. Now, you've found it — the house you want, and it's time to make an offer.

As a first-time homebuyer , you want to boost your chances of success, but you may be unsure about your next move. Here's where to start.

Determine your offer amount

The amount you pay depends on how much house you can afford  and what the sellers will accept. Your offer should reflect your personal financial situation and market circumstances.

Consider asking a realtor about the local real estate market. Is it a hot market? If so, you'll likely need to move quickly. Or is it a buyer's market, meaning you can offer less than the asking price?.

You can also  ask your realtor  to give you an idea of what they think the property is worth by comparing it to similar homes nearby that have recently sold. When formulating your offer, you should also think about:

  • The quality and characteristics of the home

  • Property location

  • Any price changes

  • Seller motivation

  • How much you want the home

A well-thought-out offer considers all these factors and puts a price on them. If you feel a house needs a lot of updating, you may want to put in an offer with those  renovation expenses  in mind.

Your offer should reflect your personal financial situation and market circumstances.

Make the official offer

Once you've settled on an amount, take a deep breath while your realtor creates and submits your written offer to the seller via a purchase and sale agreement. What a realtor includes in a purchase and sale document varies by location, but it typically contains the following:

  • The amount you’re offering

  • Earnest money — aka a deposit to demonstrate you're serious about buying the home. It's often 1% to 3% of the purchase price. (Speak with your agent to find out if the deposit is refundable if the deal falls through and under what circumstances.)

  • The amount of your intended down payment

  • How you plan to pay for the property (all cash, finance with a mortgage, etc.)

  • Proposed closing date

  • Contingencies — the conditions that must be met for the sale to happen and can include passing inspection, financing approval, etc.

  • An expiration date for the offer so the process continues moving forward

Once received, the sellers will review your offer. You should be prepared for them to make a counteroffer. If they do, you'll need to decide whether to make a new offer, stick with your original offer or walk away.

The negotiation part of buying a house may last several rounds. While it may feel nerve-wracking, the important thing is to remain focused on how much you can reasonably afford to pay. Otherwise, you could overstress your financial situation with a mortgage payment too high for your current income or a down payment bigger than what you can make.

Our mortgage payment calculator can help you anticipate your future monthly costs.

Writing an offer letter

A written offer may not seal the deal in your favor in a competitive market. Some buyers may be tempted to include a letter with their offer to help them stand out and make the buying process more personal.

The National Association of Realtors (NAR) warns that sharing personal details could violate the Fair Housing Act or state and local housing laws, including race, religion, sex, disability, familial status or national origin.

Moving toward homeownership

Putting in an offer on a home can be tricky business. But as soon as your offer is accepted, you can enter the  closing period  with confidence.

You still have a few steps left, including an appraisal,  home inspection  and finalizing your financing through a lender, like  Ally Home . But the end — and a new set of keys — is in sight.

Explore more

Save Invest Home

Read next

A mother and father are playing with their child in the kitchen of their home. Steps for closing on your first home

Sept. 5, 2023  •  3 min read

Young couple sitting on the floor looking at plans for their home Which type of mortgage loan is right for you?

Feb. 27, 2023  •  9 min read

Money solutions and strategies sent straight to your inbox.

Tips and tools to help you build your best financial future.

Let's Connect