How to make an offer on a house in 5 steps

When you finally find your dream home, the next step is a big one: making an offer to buy it. It’s an exciting time, but it can also be a nerve-wracking one since while you might need to move fast, you also want to move wisely.

That’s where knowledge and preparation come in. We’ll cover it all here and explore whether preapproval is a smart move, how to prepare your offer, steps to decide how much to offer, what happens after you make an offer, and much more. Whether you’re a first-time buyer or a seasoned pro, these important insights into how to put an offer on a house could save you time and stress. So, let’s dig in.

Before you make an offer

Before making an offer on a house, you’ll want to formulate a strong strategy. To do this, two things can help: getting mortgage preapproval and finding a qualified real estate agent. These can be the difference between success and rejection.

Get preapproved for a mortgage

When you’re ready to buy, preapproval can help in two key ways. First, it helps you understand how much house you can afford. Second, it can make you much more competitive when you make an offer on a home because the seller will know you are qualified and serious.

Don’t make the mistake of confusing prequalification and preapproval. They are different in an important way. Preapproval requires documentation, which the lender verifies. Prequalification relies only on self-reported information. Because of this, preapproval impresses sellers much more.

It’s even better to have a mortgage approval with documentation to back it up, like Verified Approval Letter¹ from Rocket Mortgage^®.

Find a real estate agent

Think of a good real estate agent as your personal advocate and guide through the entire home buying process. A qualified agent can make the journey less stressful and can often save you money in the long run. They bring market knowledge and experience to the table.

When it comes to making an offer on a house, your real estate agent will analyze comparable sales, offer advice, and help you decide exactly how much to offer. They’ll also prepare the paperwork. If your real estate agent can’t explain in detail how to make an offer on a house, you should consider replacing them     .

Prepare a strategy

Often, successful offers are ones that are well planned out before approaching the seller. Your plan should include not just how much you should offer on a house, but what contingencies you want to include, how much earnest money you’re comfortable with putting down, and more.

This kind of detailed strategizing helps you understand your limits and priorities. It also signals to the seller that you’re serious about buying their home. That can help you stand out against other offers.

How to make an offer on a house in 5 steps

Now that you’re fully prepared, it’s time to walk through the steps of making an offer on a house.

1. Decide how much to offer

Balance is key when it comes to making your offer. Too low and you risk offending the seller; too high and you could overpay. Getting a fair deal and staying competitive without busting your budget is the sweet spot to aim for.

To do that, consider these factors:

Home considerations

• How long the home has been on the market: If a home has been listed for several months it can mean the seller is now motivated. You may be able to make a lower offer or request concessions.
• Comparable home sales: Research recent sales of similar nearby homes. This will help you determine if the asking price is reasonable.
• Necessary repairs and renovations: Factor into your offer any needed updates or repairs. You might be able to negotiate for concessions or seller credits to cover these.
• Competition for the home: Multiple buyers may be vying for the same property, sometimes even to the point of a bidding war. If there’s strong competition, you might need to adjust your offer or backup offer in case a higher one falls through.

Market considerations

The state of the broader real estate market can help you decide on the amount of your offer in relation to the asking price. This is one area where having a qualified real estate agent really helps. They can prepare a comparative market analysis (CMA) to show what similar homes in the area have sold for.

Ask them about pending sales too. Those can indicate whether you’re in a buyer’s or seller’s market, or something in between. Understandingmarket dynamics helps you decide how bold you can be with your offer.

Budget considerations

Just because your lender preapproved you for a certain amount doesn’t mean you necessarily want to go that high with your offer. Stay within a comfortable budget for you and your family.

In addition, if you make an offer for the top amount you can spend, you don’t have any room to negotiate a higher offer. Have an honest discussion with your real estate agent to land on a reasonable opening offer.

2. Decide on contingencies

Contingencies are clauses that protect you and allow you, under certain conditions, to back out of a deal. If they are set up properly, you’ll be able to get back your earnest money.

Here are a few common contingencies:

• Home inspection contingency: This lets you renegotiate or withdraw your offer if the home inspection uncovers significant issues that weren’t disclosed by the seller.
• Appraisal contingency: This makes sure that the home’s appraised value matches or exceeds the agreed-upon sales price     .
• Financing contingency: This lets you back out of the deal if you can’t qualify for your mortgage.
• Title contingency: This confirms that the seller legally owns the house and can transfer title to you.

If you’re paying cash, you might not need some of these contingencies, such as the financing contingency. But you should always do due diligence on such a major purchase.

3. Decide how much earnest money to offer

Ernest money is a good-faith deposit you put in to show a seller that you are serious about buying their home. Think of it as putting your money where your mouth is. Typically, earnest money is around 3% of the purchase price of the property, but it can vary between 1% and 3%.

You can also offer more than 3%, and often a larger earnest money deposit will signal to a seller that you are not only very serious, but you also have ample means to buy their house. This can put them at ease and expedite a sale.

4. Prepare and submit your offer

Once you've decided on your offer amount, the contingencies you want, and an earnest money amount, work with your real estate agent to put together an offer letter. If possible, have an attorney review it.

In addition to obvious things like your name and anyone else who will be on the mortgage, a typical offer letter includes:

• The proposed purchase price
• Your earnest money amount and deposit details
• Any contingencies      
• Your preferred closing date
• A preapproval or Verified Approval Letter from your lender

5. Negotiate the price and terms

A seller can do one of three things when they receive your offer: accept it, make a counteroffer, or reject it. Here’s how each scenario plays out:

• The seller accepts your offer: Great news! You’ll move forward with signing the purchase agreement, providing your earnest money, and scheduling your home inspection, appraisal, and mortgage.
• The seller makes a counteroffer: This begins the negotiation process. Negotiations can include adjusting the offer price, changes to terms, or negotiating on repairs or concessions. Your real estate agent can guide you through this stage, including whether to include a heartfelt personal offer letter, which can sometimes help make your bid stand out.
• The seller rejects your offer: This happens, especially in competitive markets. Use it as a learning experience and resume your search. Who knows? It might just lead you to a home you like even more.

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

After you make your offer, typically, you’ll hear back within 1 – 3 days. Timelines can vary, however. Sometimes the seller needs more time for personal or other reasons. In addition, if the seller is receiving multiple offers, it can take them longer to assess them and respond.

The bottom line: Take the right steps toward making an offer on a house

Putting an offer in on a house doesn’t have to be an overwhelming experience, if you prepare. With an experienced real estate agent by your side and a preapproval letter – or better yet, a Verified Approval Letter from Rocket Mortgage^® – in your hand, making an offer on a house can be an exciting time that results in a great deal on your dream home.

If you’re ready to get started, begin your mortgage application process today through Rocket Mortgage.

¹ Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, assets and debt. 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, including, but not limited to satisfactory insurance, appraisal and title report/search, 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 due to a Rocket Mortgage error, you will receive the $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.