Making an Offer on a House: How the Process Works

Before writing a number on paper, review recent sales of similar homes in the same neighborhood — ideally within the past 90 days and within roughly a half-mile radius. These comparable sales (often called "comps") are the most objective benchmark for what the market says a home is worth. Your buyer's agent can generate a Comparative Market Analysis (CMA) that organizes this data. In a competitive seller's market, offering at or above list price may be necessary; in a softer market, there may be room to negotiate down.

Contingencies are conditions that must be satisfied for the sale to proceed. If a contingency is not met, you can typically withdraw and recover your earnest money. The three most common are:

• Financing contingency: Protects you if your mortgage falls through.
• Inspection contingency: Allows you to negotiate repairs or walk away after a home inspection.
• Appraisal contingency: Lets you exit if the home appraises below the agreed purchase price.

Waiving contingencies can make your offer more attractive in a competitive market, but doing so increases your financial risk considerably. Discuss the tradeoffs carefully with your agent. For plain-language definitions of these terms, see our homebuying vocabulary guide.

Earnest money is a good-faith deposit that accompanies your offer, signaling serious intent to the seller. It's typically held in an escrow account and applied toward your down payment or closing costs at settlement. In most U.S. markets, buyers deposit between 1% and 3% of the purchase price, though this varies by region and market conditions. A higher earnest money amount can strengthen your offer in a competitive situation.

Your buyer's agent or a real estate attorney will prepare the formal purchase agreement — a legally binding contract that includes the offer price, contingencies, earnest money amount, proposed closing date, and any personal property included in the sale (appliances, fixtures, etc.). Read every section carefully before signing. Pay particular attention to deadlines: inspection periods, financing contingency windows, and the closing date all have real legal consequences if missed.

Your agent delivers the signed offer to the seller's listing agent, typically with your pre-approval letter and proof of earnest money funds attached. Sellers generally have 24 to 72 hours to respond, though this window can be shorter in fast-moving markets. They have three options: accept the offer as written, reject it outright, or issue a counteroffer that modifies one or more terms.

A counteroffer opens a negotiation. The seller may push back on price, ask for a longer closing timeline, request fewer contingencies, or propose a different earnest money amount. You can accept their counter, reject it and walk away, or issue your own counter. This back-and-forth can take several rounds. Once both parties sign the same version of the agreement with no changes pending, you have a ratified contract and move into the due diligence phase. Understanding whether you're in a buyer's or seller's market shapes how aggressively you negotiate at this stage.