Step 26 of 48 Phase 4: Make an Offer & Negotiate
4.3 Making an Offer 101
Understanding the components of a purchase offer helps you craft a competitive bid that protects your interests. Your offer is more than just a price - it includes terms, contingencies, and timelines.
What This Step Covers
- Purchase price and how to determine it
- Earnest money deposit requirements
- Contingencies that protect you
- Closing timeline and possession date
- What is included in the sale
Key Offer Components
| Component | Description | Typical Range |
|---|---|---|
| Purchase Price | Your offer amount | Based on comps and market |
| Earnest Money | Good faith deposit held in escrow | 1-3% of price |
| Down Payment | Cash you will bring to closing | 3-20%+ of price |
| Financing | Loan type and terms | Per your pre-approval |
| Closing Date | When transaction completes | 30-60 days typically |
| Contingencies | Conditions that must be met | Inspection, appraisal, financing |
Pro Tips
- Review comparable sales with your agent to set the right price
- Stronger earnest money shows you are serious
- Fewer contingencies can make your offer more attractive
- Be flexible on closing date if it helps the seller
- Include everything you want in writing (appliances, fixtures)
Real-World Example
The Johnsons's Story: The Johnsons found their dream home listed at $425,000 in a competitive market. Their agent helped them craft a strategic offer.
- Comparable homes recently sold for $410,000-$430,000
- They offered $420,000 with a $12,600 earnest money deposit (3%) to show seriousness
- Included inspection and financing contingencies but offered flexible closing date
- Pre-approval letter was attached showing they qualified for $450,000
- They wrote a brief personal note about loving the garden the seller maintained
- Another buyer offered $425,000 but with only 1% earnest money and a rigid timeline
Outcome: The seller accepted the Johnsons' lower offer because the strong earnest money, flexible closing date, and personal connection showed they were serious, reliable buyers. Price is not the only factor sellers consider.