Buying a property shouldn’t be stressful or complicated but it often is because it appears more complicated than it is.

Learn about the basic blocks of an offer and you will have confidence when talking to an agent or making the offer yourself.

Before Making an Offer 

Get a Preapproval Letter From a Lender

Not a prequalification but preapproval. For preapproval, the lender will review not only your credit but also your recent pay stubs, bank statements, and tax returns. 

Preapprovals should only be conditional on appraisal, final underwriting, and standard settlement conditions.

If you are paying cash, get proof of funds. This will make your offer appear solid. 

Decide Which Contract to Use 

Most states have these two contracts: As Is and Standard.  Watch the video to see a more detailed explanation of the difference between both contracts.

  • “As Is” Contract- this contract gives you the right to cancel the contract based on the results of an inspection. Contrary to what people think, this contract doesn’t mean that you accept the property As-IS. It just means that the seller doesn’t have an obligation to fix anything. You as a buyer can either try to renegotiate the price based on the findings of the inspection or walk away and get your deposit back.
  • Standard Contract – the seller has an obligation to fix warranted items up to a certain amount/percentage.

Determine the Price You want to Offer

You can estimate the correct selling price by doing a Comparative Market Analysis (check our video on this topic

Next, check the list to sales price ratio. Your agent can give you that data or you can search Redfin. 

Call the Seller or the Listing Agent to Let them Know That an Offer is Coming and Request a Seller Property Disclosure

The seller is required to disclose all known defects especially the ones that are not visible.

The listing agent usually has this already available. Some sellers may refuse to provide the disclosure, usually, banks and owners who have not lived in the property.

Try to get more information about the seller’s motivation. You may get an answer or you may not. 

Real estate is people’s business and establishing a personal connection is very important especially in multiple offer situations.

Writing the Offer

Every realtor association’s contract will be slightly different but the basics are the same.

  1. Contact and Property Description –  Write the full names of the sellers and the buyers. You can get the legal description from your local property appraiser’s website.
  2. Financing – What is your offer price, downpayment, and balance to pay at closing.
  3. Other Contingencies and Deadlines – Unless you have a reason to change the inspection deadlines leave them the way they are.
  4. Decide Who Will Pay for Owner Title Insurance – In Florida, it’s customary for whoever pays for the Owner Title Insurance to pick the Title Company. This is usually the seller but this is negotiable.
  5. Is the Contract Assignable (Florida) – Unless you are planning to, it’s a good idea to not check this box. Most agents will immediately think that you will be trying to wholesale the property and this will not help you get your offer accepted.
  6. Who Will Pay for Home Warranty – This is not a requirement.
  7. Addendums – Some addendums apply for all states, like financing addendums. For example, short sale addendum or lead-based paint disclosure or FHA financing. 

Putting the Offer Together

What you should include with your offer?

  1. Contract plus addendums
  2. Your preapproval letter
  3. Offer Synopsis or letter (optional)
  4. Copy of the good faith deposit. You don’t have to deposit with the title company until the offer is accepted but include a copy of it.
  5. Signed Seller Property Disclosure.

Submitting the Offer

You can email or fax the offer. The best way to do it is through DocuSign or any other online signature app.

Making an Offer Q&A

I have found a house that has a good cash flow. However, based on comps from the neighborhood, this home is very overpriced. It has only been on the market for 3 days. My agent couldn’t find any information on the seller. I don’t know if they have to move or not. The house is listed at $280,000 and I think $240,000 is the price based on comps. Is there anything I can do to make my offer more appealing?

There are a couple of things you can do when you are making a low price offer, especially in today’s market.

  1. Ask your agent to create a CMA that justifies the price you are offering. When you present facts sellers are less likely to react emotionally.
  2. Include a letter or offer synopsis of what you are offering and why. 
  3. Give them a short time to respond, reasonable but short, possible 24 hours.

Is it normal to make an offer after seeing it on a video only?

If I don’t know the area you may want to see the house, because you are buying not only the house but also the neighborhood. That being said, I have bought houses sight unseen with an inspection contingency. 

In this market, you have to make offers quickly if the property makes sense.

Do counteroffers and negotiations have to be in writing?

I strongly recommend that the initial offer is in writing but the negotiations can happen verbally. After you agree on everything, just changed it in the contract and initial the changes.

I just missed a great property, is it worth making a backup offer?

Absolutely, this is a little known strategy to get a good deal. Call the listing agent and ask them if they will accept a backup offer.

With a backup offer, the seller has a lot fewer chances to sell. They may be frustrated and want to just move on. 

Don’t be intimidated that the house is under contract, make an offer and if you are putting down a large deposit or are a cash buyer, make sure you mention that when you speak with the seller or listing agent.

I found a property that’s listed as a short sale. What is the lowest price that the bank will accept?

If you are dealing with a short sale, first make sure that the listing agent knows what they are doing. Short sales can take months so you don’t want to be wasting your time with a seller who is not qualified or motivated to sell.

I would say offer what you think is fair.

When making an offer on a house do you just automatically offer something lower than what was asked?

No, the house may be priced very well. You have to consider what the house is worth and if the current price will give you the cash flow you want. Make an offer based on that.

In fact, many agents underprice properties to get bidding wars and thus achieve a much higher price than they would have if they price it at the market.

Is it wrong to make an offer on a home that is much lower than the asking price?

No, it’s not wrong. Seller’s have different motivations. 

If this was the case the I Buyers like OfferPad and Opendoor would not exist. Their business model is to buy under market and resell it. 

Make offers on homes that have been on the market for a while or on homes that need work.

Is there a general percentage rule to go by for an initial offer? The house has been on the market for a couple of months.

There isn’t a percentage. Offer slightly less than you will be willing to pay just to give yourself some room to negotiate. In my experience, if the house is empty, you may have a motivated seller.

About the author

Jana Christo is a business owner, real estate investor, and property manager. She has 16 years of experience in most areas of real estate.
During the last recession, she was also the managing partner for a company that bought and rehabbed properties from the court foreclosure auctions. Today, she manages her own portfolio of rental properties and shares her experience on