You have found the house. What you write next is a legal document, not a conversation — once a seller signs it, you are in a contract. Here is what goes into an offer, how to arrive at the number, and what to do when other buyers are bidding too.
Get Pre-Approved Before You Look Seriously
A pre-approval letter does two jobs. It tells the seller you can actually complete the purchase, and it tells you the ceiling before you fall in love with something above it. Touring houses at $500,000 and then discovering you are approved for $350,000 is an avoidable kind of heartbreak.
One caution while you are running the numbers: buying is not automatically better than renting, and the tax benefit people cite is smaller than they think, because most homeowners no longer itemize. See renting vs buying a home and what is actually in your mortgage payment.
What Goes Into a Purchase Offer
A purchase offer is a written proposal setting out your terms. Until the seller signs, it is only an offer; once signed by everyone required, it becomes the purchase contract. Real estate contracts must be in writing to be enforceable, which is why nothing agreed verbally counts.
- Full names and contact details for buyer and seller.
- The property address and its legal description.
- The price you are offering.
- How you will pay — loan type, down payment, and whether the offer is cash.
- The amount and form of your earnest money deposit, and the conditions under which it is returned.
- Contingencies: inspection, financing, appraisal, and sometimes the sale of your current home.
- What personal property is included — appliances, fixtures, anything you expect to still be there.
- Who pays which closing costs.
- Target dates for closing and for possession, and a deadline for the seller to respond.
Arriving at a Number
The asking price tells you what the seller hopes for. What you need is what similar homes actually sold for — asking prices and sold prices are different data, and only one of them is evidence.
Recent sold comparables in the same area, matched as closely as possible on size, age, condition and lot, are the foundation. Major listing portals publish sold data, and an agent can pull fuller records from the local Multiple Listing Service. Then adjust for how long the home has been listed, whether the price has been cut, why the seller is moving, and what condition the property is in. Our full method is at how to tell what a house is really worth.
Competing Against Other Buyers
In a seller’s market you may be one of several offers. Understand the rules before you join in: a seller can accept any offer, reject all of them, or counter. A seller may counter you and keep entertaining other offers at the same time, and can withdraw that counteroffer before you respond. Sellers do not have to reply in the order offers arrived, and do not have to tell you what anyone else has bid.
Two things make competitive bidding dangerous, and neither is about money. The first is that competition makes a house look better than it is — wanting to win is not the same as wanting the home. The second is that the usual way to strengthen an offer is to give up protections. Waiving an inspection or an appraisal contingency does make your offer more attractive, and it also removes the escape hatch that protects your deposit.
Safer ways to strengthen an offer include being genuinely pre-approved, offering flexibility on the closing or possession date to suit the seller, keeping your own contingencies tight but intact, and offering a larger earnest money deposit. Decide your walk-away number before you bid, and write it down, because the moment to hold that line is exactly the moment you will not want to.
Be aware of the appraisal gap: if you bid above the asking price and the appraisal comes in lower, your lender will lend against the appraised value, and you make up the difference in cash or renegotiate.
After the Offer Is Accepted: Buyer’s Remorse
A wave of doubt after signing is so common it has a name, and it hits experienced buyers as well as first-timers. It usually passes. Rereading why you chose this house, revisiting your comparables, and confirming that the payment still fits your budget generally settles it faster than waiting for the feeling to lift on its own.
But know this before you sign rather than after: there is generally no automatic right to cancel a signed real estate purchase contract, and no federal three-day cooling-off period for buying a home. Your ability to withdraw comes from the contingencies you negotiated and their deadlines. Walking away outside them can cost you your earnest money and, in some circumstances, more. This is the practical reason not to waive protections in the heat of a bidding war.