How to make a successful offer on a house

Step-by-step tips for getting your bid accepted

Finding a home to buy is exciting. Persuading a seller to accept your offer is even more exciting. How can you increase your chances of submitting the winning bid? Check out these suggestions!

Step 1. Offer a competitive purchase price

Offering to buy the home for a price close to its fair market value is a good way to get your bid accepted. Most sellers have a pretty good idea of what their home is worth and are unlikely to accept a low bid.

Consider working with a buyer’s agent to help you pick a price. Real estate agents follow the sale prices of homes in their communities and can help you choose a competitive price.

When you think the seller will receive multiple offers for their home, you might consider including an escalation clause. An escalation clause automatically increases your purchase price in response to the bids of other buyers. Learn more about escalation clauses.

Step 2. Pay cash (if you can afford it)

Offering to pay cash can make your bid more attractive. Cash sales can close faster and don’t require you to get approved for a mortgage to buy the house. Sellers may accept a lower price when you pay cash, too.

Most homebuyers can afford to pay cash only by selling their current home. Paying cash also locks up money in your home’s value and leaves you less cash for other bills and expenses. Some homebuyers pay cash for a house, then get a mortgage after the sale closes. This is called delayed financing.

Step 3. Document that you can afford the home

Offering a competitive price is a good step. Proving you can afford to pay that price is important, too. That’s why many offers to buy a home include prequalification and proof of funds letters.

A prequalification letter demonstrates that your lender believes you are qualified to get approved for a mortgage. These letters include the amount of money you are qualified to borrow, which can help you find homes you can afford to buy.

A proof of funds letter typically shows that you have enough cash to make the down payment and pay closing costs. When you make a cash offer for a house, the letter should show that you can afford the full price you are offering.

Step 4. Include a substantial amount of earnest money

Earnest money is also called a “good faith deposit.” Earnest money shows that you are serious about buying the home and will make good-faith efforts to ensure the sale closes. Earnest money deposits often range between 1% and 5% of the home's purchase price. Learn more about earnest money for houses.

Step 5. Limit the number of contingencies

Contingencies are conditions that must be met before the sale of the home closes. An offer that includes many contingencies can be less attractive to sellers.

At the same time, contingencies can also offer you important protections. Most bids to buy a home are contingent on the seller having a clean title on the house – that is, they are the legal owner of the home and have the right to sell it.

Many offers make the sale contingent on the results of a home inspection. You generally don’t want to buy a home and discover afterward that it has major problems that are expensive to repair. Offers often include an appraisal contingency, which requires the home's current value to be close to the purchase price. Learn more about contingencies.

Step 6. Include a personal letter

Think about writing a brief letter to the seller explaining why you want to buy their home. This personal touch might help your offer stand out from the others.

Step 7. Include other important details

Your offer should also include the legal address of the property and perhaps a legal description of the house. It should include your legal name and the legal name of anyone buying the house with you.

You’ll typically want to include the date on which you’d like to close the sale of the home and a date through which the offer on the home is valid. Your real estate agent can help make sure you include important details.

Step 8. Be prepared to negotiate

It’s common for sellers to make counteroffers or ask for other changes before they accept your bid. For example, the seller might want a different closing date than the one you propose. Don’t be surprised if there is some negotiation before your offer is accepted. Your real estate agent can help you with this.

What happens after your offer is accepted?

Most homebuyers don’t apply for a mortgage until their offer has been accepted. It is a good idea to research mortgages while you are shopping for a home, so you understand your loan choices and aren’t rushed into making a decision. Learn more about how to apply for a mortgage.

Once you’ve completed your application, we’ll help you understand mortgage underwriting and what you need to do to get your application approved. We’ll also help you understand how to close on your new home and become its owner! Learn more about our mortgage application process.

Last reviewed and updated July 2023 by Freedom Mortgage Corporation.