Why It Matters
You've found a property you want. Now you need to put your terms in writing. An offer spells out exactly what you're willing to pay, how you'll pay it, what conditions must be met before closing, and when you want to close. It's not a casual expression of interest — it's a legal document that, once accepted, obligates both sides.
Your offer includes a purchase price, an earnest money deposit (typically 1-3% of the price), your financing method, contingencies like inspection and appraisal, a proposed closing date, and an expiration deadline. The seller can accept it, reject it outright, or send back a counter-offer with different terms.
The strength of your offer isn't just about the number. A $285,000 offer with a pre-approval letter, a 2% earnest money deposit, and a 30-day close beats a $290,000 offer from a buyer who hasn't talked to a lender. Sellers weigh certainty of closing as heavily as price.
At a Glance
- What it is: A written proposal to buy a property at a specific price and on specific terms
- Key components: Purchase price, earnest money deposit, financing type, contingencies, closing date, expiration deadline
- Earnest money range: 1-3% of purchase price in most markets
- Seller response options: Accept, reject, or counter-offer
- Legal requirement: Must be in writing for real property (Statute of Frauds)
How It Works
The offer document. Every offer starts with the basics: buyer and seller names, property address, proposed purchase price, and earnest money amount. Your agent uses the state-specific purchase offer form, which runs 8-15 pages depending on the state. The form captures financing terms (conventional, FHA, VA, cash), contingency deadlines, personal property inclusions (appliances, fixtures), and your proposed closing date. Once you sign it, your agent delivers it to the listing agent.
Contingencies protect you. The most common contingencies are inspection (7-14 days to investigate the property), financing (21-30 days for loan approval), and appraisal (lender confirms the property's fair market value supports the loan amount). Each contingency has a deadline. Miss the deadline and you may waive that protection. In a multiple-offer situation, buyers sometimes waive contingencies to strengthen their position — a calculated risk that removes your safety net.
The earnest money signal. Your earnest money deposit shows the seller you're serious. In most markets, 1-3% of the purchase price is standard. A $250,000 offer with $2,500 in earnest money (1%) signals less commitment than one with $7,500 (3%). The deposit goes to an escrow account within 1-3 business days of acceptance. If you back out without a valid contingency, the seller may keep it.
The seller's three options. After receiving your offer, the seller can accept it as-is (congratulations, you're under contract), reject it outright (no response required), or respond with a counter-offer that modifies price, terms, or both. Counters go back and forth until both sides agree or walk away. Your original offer typically includes an expiration — usually 24-72 hours — so the seller can't sit on it indefinitely while shopping for better deals.
Real-World Example
Tomas Rivera finds a duplex listed at $315,000 in a B+ neighborhood in San Antonio. Both units are occupied with long-term tenants paying $1,375 and $1,425/month. Tomas runs his numbers and determines the property's fair market value is closer to $305,000 based on recent comps.
He submits an offer at $298,000 — 5.4% below asking — with the following terms:
- Earnest money: $5,960 (2% of offer price)
- Financing: Conventional loan, 25% down, pre-approval letter attached
- Inspection contingency: 10 days
- Financing contingency: 25 days
- Closing date: 35 days from acceptance
- Expiration: 48 hours
The seller counters at $308,000 with all other terms accepted. Tomas responds with a final offer of $303,000 and increases his earnest money to $7,575 (2.5%) to demonstrate seriousness. The seller accepts. From initial offer to executed contract: 4 days.
At $303,000 with 25% down ($75,750), Tomas finances $227,250. With combined rent of $2,800/month and estimated expenses of $1,180/month (taxes, insurance, maintenance, vacancy reserve), his projected NOI is $19,440/year — a 6.4% cap rate on his purchase price.
Pros & Cons
- Puts your terms in writing — Eliminates misunderstandings about price, conditions, and timeline by documenting everything before both sides commit
- Protects you through contingencies — Inspection, financing, and appraisal contingencies let you exit the deal if problems surface, with your earnest money returned
- Creates negotiation leverage — A well-structured offer with strong earnest money and fast closing signals credibility, often beating higher-priced but weaker competing offers
- Sets a legal deadline — The expiration clause prevents sellers from holding your offer hostage while waiting for something better
- Locks in the deal — Once accepted, the seller can't entertain other offers (in most states), giving you exclusive rights to close on the property
- Non-refundable risk — If you waive contingencies or miss deadlines, your earnest money deposit is at risk if you back out
- Emotional pressure in competitive markets — Multiple-offer situations push buyers to overbid, waive protections, or make decisions faster than they're comfortable with
- Binding once accepted — Walking away from an accepted offer without a contingency exit can expose you to legal liability beyond just losing your deposit
- Cost of making offers — Inspection fees ($300-600), appraisal fees ($400-700), and attorney review costs add up, especially if multiple offers fall through before one closes
- Information asymmetry — The seller knows their property's true condition; your offer is based on incomplete information until the inspection contingency period
Watch Out
Don't skip the pre-approval. Submitting an offer without a pre-approval letter tells the seller you haven't verified your financing. In competitive markets, these offers go straight to the bottom of the pile — or the trash. Get pre-approved before you start making offers, not after.
Watch your contingency deadlines. Every contingency has a clock. If your inspection contingency expires on day 10 and your inspector doesn't deliver the report until day 11, you've lost your right to negotiate repairs or exit the deal. Calendar every deadline the moment your offer is accepted.
Verbal offers mean nothing. Under the Statute of Frauds, real estate offers must be in writing to be enforceable. A seller who verbally agrees to your price can change their mind, accept another offer, or raise the price. Nothing is real until it's on paper and signed.
Escalation clauses can backfire. In a multiple-offer situation, an escalation clause ("I'll pay $1,000 more than the highest offer, up to $320,000") reveals your ceiling. Some sellers use this information against you. Know your max and decide whether you're comfortable showing it.
Ask an Investor
The Takeaway
An offer is where investing stops being theoretical and starts being real. It's a formal commitment — your price, your terms, your earnest money on the line. The strongest offers combine a competitive price with proof of financing, reasonable contingencies, and a clean timeline. Every component signals something to the seller: your earnest money shows commitment, your pre-approval shows capability, your contingencies show sophistication, and your closing date shows readiness. Get these right and you'll close deals that higher-priced, sloppier offers miss.