How to make an offer on a house in 5 steps

Congratulations! You’ve found your next home. It’s a great feeling, but the process doesn’t stop here. Your next step is to make an offer that the seller accepts. Understanding how to make an offer on a house can help you prepare for the home buying process.

Before you make an offer

We know how exciting buying a house can be, but before you get too far, make sure you get a preapproval letter and choose a real estate agent to work with.

Get approved for a mortgage

It may seem a bit like putting the cart before the horse, but as soon as you decide to buy a home and before you even start looking, you should begin the mortgage preapproval process. There are two major reasons for this:

• You'll be able to make an offer as soon as you’ve found a place you love.
• Sellers often prefer home buyers who have lender preapprovals.

Keep in mind that lenders often use the terms preapproval and prequalification interchangeably, even though they’re two different types of mortgage approvals. It’s often better to have a mortgage preapproval. Sellers and their real estate agents will take this more seriously because your information must be verified for an approval.

It’s even better to have a mortgage approval with documentation to back it up, like a Verified Approval Letter (VAL)¹ from Rocket Mortgage^®.

Find a real estate agent

If you’re looking to save money during the home buying process, you might be thinking of going it alone to avoid paying a real estate agent’s commission – but working with an experienced buyer’s agent will likely save you money in the long run. Real estate agents know the market and can offer advice about every aspect of buying a home.

How do you make an offer on a house?

Once you’ve locked down your approval letter, hired a reliable real estate agent and found your dream home, the next item to focus on is the actual process of making an offer. Here’s what you’ll need to do once you've decided you’re serious about a house:

• Strategize: Before you approach the seller, you’ll need to decide how much to offer, what contingencies you want and how much earnest money you’ll deposit.
• Make the offer: You’ll make your offer via a letter that you and your real estate agent work on together.
• Negotiate: Once the seller has received your offer, they can accept it, reject it or request changes. If they make a counteroffer, your agent can act as a liaison during negotiations.

How long does it take to hear back after making a home offer?

You can usually expect to hear back from the seller’s real estate agent within 1 – 3 days following your offer. The listing agent’s response time may vary depending on whether the home has multiple offers or other circumstances specific to the seller’s situation.

5 steps for making an offer on a house

Let’s break down the process of making an offer on your dream house into five simple steps.

Step 1: Decide how much to offer

The first step in making an offer on a home is to decide how much you’re willing to pay for the property. It’s important to stay within your budget, but you shouldn’t just throw out a random number. You’re looking for that sweet spot between getting the best possible price and not insulting the seller by making a lowball offer. Consider the following before you choose a final price to offer:

Home considerations

• Amount of time the home has been on the market: It’s possible that the seller might be more motivated to move if the home has been on the market for more than 2 or 3 months. Depending on the current market, you may want to consider offering a lower price if you’re looking at a property that’s been for sale for a while.
• Comparable homes (comps) in the area: Spend some time online researching comparable properties nearby that are currently for sale. Is the home’s asking price higher than other homes on the market with similar amenities? This is another instance when you may want to consider offering less money.
• Necessary repairs and renovations: Does the property need a lot of repairs? Keep the cost of these repairs in mind when you consider your total overall budget. When you prepare your offer, you may also want to ask the seller to make the repairs or other concessions.
• Competition for the home: Consider the amount of competition for your dream home before deciding how much to offer. Bidding wars might seem intimidating, but you'll have the best chance at winning if you and your agent discuss how much other buyers are offering for the house. If the seller has already accepted another offer on the house, you can use many of these same strategies to consider making a backup offer.

Market considerations

Real estate agents are particularly useful in assessing the current market and housing costs. Your agent will complete a comparative market analysis (CMA), which considers the most recent sales in the area to help you assess how the house you’re interested in compares with what the others sold for.

Be sure to ask questions about recent sales that haven’t gone to closing yet, which can help you decide if it’s a seller’s market, a buyer’s market or if it’s transitioning from one to the other.

Budget considerations

You may have been approved for a larger mortgage than you expected, but don’t let that dictate how much you offer. Make sure you can live comfortably with the monthly mortgage payment, even if your lender says you can afford more. And don’t offer your entire approval amount, even if you feel you’ll be able to comfortably afford it. Doing so leaves no room for negotiation or the potential for upgrades or repairs.

Don’t know how much to offer? Talk to your real estate agent. They won’t tell you how much to offer, but they’ll let you know what they think a successful offer looks like like.

Step 2: Decide on contingencies

Contingencies are basically escape clauses in a sales contract that allow buyers to walk away from a sale with their earnest money, which is essentially a type of security deposit. Common contingencies include the home inspection, appraisal, financing, title and – though it’s far less commonly used today – the home sale contingency.

If you’re buying a home and can pay cash for it, you’ll not need to include the financing contingency or the appraisal contingency, which is required by lenders to make sure that the property is worth at least the mortgage amount.

Step 3: Decide on how much earnest money to offer

Cash is king, and even if you’re not buying a home with cash, you’ll have to submit a good faith deposit, which is often referred to as earnest money. The earnest money requirement varies from market to market but is typically 1% – 3% of the total home price. That said, the more money you offer, the better your offer looks in the eyes of the seller.

This money will be held in an escrow account and later applied to your mortgage down payment. But you’re probably wondering: If the money isn’t going directly into the seller’s pocket, why do larger earnest money payments matter? Because your ability to produce a large amount of cash lets the seller know that you’re a serious buyer who has the assets to back it up.

Step 4: Write a house offer letter

Now that you’ve come up with an offer amount, it’s time to convey that offer to the seller. If you’re working with a real estate agent, they'll draw up the offer letter for you. If you choose to write your letter yourself, or if you don’t have a real estate agent, make sure you include the following information:

• The address of the home you want to buy.
• Your name and the name of anyone else who’ll be on the house title with you, such as a spouse.
• The amount you want to offer for the home.
• Any contingencies the home needs to meet before the sale goes through, such as a successful inspection.
• Any concessions you’re asking from the seller, such as covering closing costs or repairs.
• Items you want included in the sale, such as window treatments, appliances or lighting fixtures.
• The amount of your earnest money deposit.
• Your mortgage approval letter so the seller knows you can fund the purchase.
• The date you expect to close on your loan.
• The date you want to move into the home.
• The deadline to respond to your offer.

You or your real estate agent will finalize the offer letter and submit it to the seller or the seller’s agent. After that, all you can do is wait for a response.

Step 5: Negotiate the price and terms of the sale

A seller can do one of three things when they receive your offer: accept it, make a counteroffer or reject it.

The seller accepts your offer

Did the seller accept your offer? If yes, congratulations! You can proceed to producing the earnest money check and signing the sales contract. Now, you’re ready to move forward with your mortgage lender and begin scheduling the home inspection and appraisal visits.

The seller makes a counteroffer

If the seller responds with a counteroffer, it’s up to you to decide what to do next. Your real estate agent can contact the seller or their agent to get a feel for what the seller hopes to get for their home and whether they’re willing to negotiate with you on price and terms. These negotiations are typically informal conversations between the parties and their agents, but they’ll ultimately form the basis of the purchase contract.

Here are a few tips to keep in mind:

• You can negotiate more than just the purchase price of your home. You may be willing to trade concession or repair requests for a lower purchase price. Work with your real estate agent and the seller to see if you can reach an agreement for the home.
• Try to find out where the sellers’ pain points are. Do they need to close quickly? Or would they rather push closing out as far as possible while they look for their next home? If you’re flexible, you might be able to solve a problem and make your offer more attractive to the seller at the same time.
• Write a home offer letter. Your agent can help you decide whether this is a good strategy in your particular situation. This should be a heartfelt letter from you to the seller that lays out your reasons for wanting to buy their home. If your offer is similar to others that they’re entertaining and the seller has a strong emotional attachment to the home, your personal plea might just be enough to push your offer to the top of the pile.

The seller rejects your offer

Sometimes, things just aren’t meant to be. Maybe you lowballed the offer, or maybe the seller isn’t ready to sell. Although a rejection may be disappointing, remember that the house you love today may seem like a burden 5 years from now if you can’t comfortably afford it.

Consider the process a learning experience and resume your house hunting. It may be that your true dream house is right around the corner.

The bottom line

Remember that even after making an offer, you’re free to change your mind and walk away before signing a contract. Don’t worry about wasting anybody’s time or disappointing someone. You’ll be paying for and living in the house, so you need to feel completely comfortable with the purchase terms.

Interested in a mortgage? Begin the approval process today with Rocket Mortgage.

¹ Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, debt, property, insurance, appraisal and a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage's^® control, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close, you will receive $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Additional conditions or exclusions may apply.