buying and closing: making offers

When you’re ready to put an offer on a home it may feel like the end is nearing. Unfortunately, submitting an offer can lead to rejections, prolonged negotiations, and still requires the complexities, time, and effort required in closing before you walk away with the keys to your new home.


The process of making an offer is pretty standard:

  1. When you decide you would like to make an offer, inform your agent

  2. The agent will present to you a Comparative Market Analysis (CMA). The CMA uses recently sold homes with similar location and features to estimate a range of values of the subject home to help determine a fair offer price.

  3. The agent will confirm your pre-approval letter and present it alongside your offer, which may also include contingencies, closing flexibility, and more (see below) and will be signed by the buyer(s)

  4. You, your agent, and whomever else is considered a stakeholder should discuss strategy — what happens if this offer is rejected? What is the next move?

  5. Most offers are responded to within 24 hours (generally they have 48–72 hours), and if/when accepted, you will move into what is known as mutual acceptance and will proceed to closing.

Here are a few things you can do to make offers that have a better chance at success:

Know the Market Conditions

Knowing whether you’re in a ‘buyers’ or ‘sellers’ market helps your gauge how aggressive you should be relative to the CMA.

In markets where homes are selling quickly and near full price, knowing the fair market value of the home and these conditions help narrow down your price target and offers close to or at fair value are generally a good idea.

In sluggish markets, the ability to come in with lower offers has better merits. Be sure, however, to not low-ball an offer and leave yourself no ability to negotiate. Leverage your agent’s knowledge and the CMA.

Provide Flexibility in Closing Timeline

Many seller’s prefer to move quickly, so the sooner you can offer to set a closing date the better. However, the seller may not yet have bought their next home, so providing flexibility in addition to the ability to close quickly may work in your advantage.

Increase Your Earnest Money

Earnest money is part of your down payment (not extra cash) in the form of an initial deposit that shows the seller you’re serious. This money is refundable up to attorney review (which happens after the seller accepts) so it carries little risk to make the deposit, but note the funds will come out of your bank account. Making a higher earnest money deposit can put your offer over the top.

Get Pre-Approved

Combining an offer letter with a pre-approval letter makes an offer much stronger, as it indicates to the seller the buyer is at significant less risk of having to walk away due to lack of financing. We strongly recommend all buyers seek our pre-approval prior to being prepared to submit offers.

Write a Letter

Writing a letter to the sellers can be influential in instances where the sellers have very similar and competing offers. It’s not uncommon for the seller’s agents to request “best offers” from all interested buyers and present them side-by-side to the seller. Here, the additional of a well written letter explaining why you should be the buyer can help. Here are a few techniques that can help:

1. Explain Your Bid If You Think It’s Low: Honesty matters and being forthright may connect with seller’s who are less motivated by money, but would prefer to sell to someone who they can trust.

2. Explain Why This is The Home: What stood out and importantly, how do you envision growing in the home and what joy and values does the home represent. Again, be honest about why you love the home and write the letter conversationally.

3. Try to Relate to the Seller: See something about the home that stood out to you? Focus on a simple one or two things and write about how you connected with what you saw while seeing the home, walking the neighborhood, or discussing with your agent.

Be Prepared With Multiple Offer Scenarios

Nothing beats preparation. If you intend to start with an offer that you believe will be countered, know your maximum offer and derive an intelligent initial offer based on the low-end of the comparables in the CMA. Predict likely counter offers and be prepared to move quickly with responses. Importantly, stick to your budget not only for the obvious reasons, but being able to confidently walk away may provide you the upper hand in negotiations.

Be Flexible on Contingencies

Contingencies are the conditions under which the offer is accepted. In extremely aggressive markets, buyers may need to waive contingencies in order to make their offers competitive. Here are the common contingencies. These should be discussed with your agent and lender when considering waiving:

  • Financing: Allows buyers to back out of a deal if financing falls through. By waiving this, the buyer is still on the hook to purchase.

  • Home Inspection: By waiving this, the buyer forfeits the ability to bring a licensed inspector through the property prior to closing to identify any potentially serious home flaws.

  • Title: Provides the right to the buyer to review the Title prior to closing, waiving this means missing potential other liens and debts against the property

  • Sale of Current Home: When the purchase of one home requires the sale of another, this contingency protects the buyer in this situation. Waiving this may require the buyer to seek a home equity line of credit (HELOC) as a bridge loan to purchase the new home before selling the current home.

  • Appraisal: All buyers should be sure the home value appraises for an amount close to the purchase price, to ensure the buyer didn’t severely overpay (and the bank over-lend, putting the buyer at risk if they need to sell in the near future). Waiving this contingency negates the ability to perform an appraisal.