How to Write a Winning Offer on a House: Price, Earnest Money, Contingencies, and More

What Is a Purchase Agreement and Why Every Element Matters When Making an Offer on a House

A purchase agreement (sometimes called a purchase contract, sales contract, or offer to purchase) is the legally binding document that defines the full terms of your home purchase. When you make an offer on a house, you are not simply naming a price. You are presenting a complete package of financial terms, timelines, protections, and commitments that a seller will evaluate holistically.

According to NAR's Consumer Guide on navigating multiple offers, sellers consider several factors beyond price, including financial terms, contingencies, closing timeline, and earnest money deposits. The strongest offer may not be the highest-priced one. Understanding how each element of a purchase agreement influences the seller's decision is what separates strategic buyers from those who lose out on their dream home.

Most purchase agreements include these core components:

Your real estate agent drafts this document using state-specific forms and negotiates terms on your behalf. This is where experienced agents earn their value: a well-constructed offer can beat higher-priced competitors by addressing the seller's specific priorities. Let's examine each component in detail.

How to Determine Your Offer Price: Purchase Offer Strategy That Wins

The purchase price is the most visible element of your offer, but setting it requires analysis rather than guesswork. A data-driven offer price reflects what the home is actually worth in the current market while positioning you competitively against other buyers.

Comparative Market Analysis (CMA): Your Pricing Foundation

Your agent will prepare a comparative market analysis that examines recently sold properties (comps) similar to your target home in size, condition, location, and features. This analysis establishes a realistic value range and reveals whether the listing price is fair, inflated, or a potential bargain.

Key factors that influence your offer price include:

Pricing in a Competitive Market vs. a Buyer's Market

In a seller's market where inventory is low and multiple offers are common, you may need to offer at or above asking price. NAR's 2025 Profile of Home Buyers and Sellers found that all-cash purchases have reached an all-time high of 26% of transactions, meaning financed buyers need to be especially strategic to compete.

In a buyer's market, you have more room to negotiate. Homes that have been listed for 30+ days without an accepted offer may warrant an offer 3% to 5% below asking price, particularly if the CMA supports a lower valuation.

The Appraisal Gap: Planning Ahead

If you offer above asking price, consider whether the home will appraise at your offer amount. When the appraisal comes in low, the lender will only finance the appraised value. You can bridge this gap by offering to cover the difference in cash (an "appraisal gap guarantee"), which strengthens your offer considerably. Freddie Mac notes that an appraisal contingency allows buyers to walk away or renegotiate if the appraisal falls short, but waiving this contingency (or guaranteeing a specific gap amount) sends a powerful signal to sellers.

Earnest Money: How Much to Deposit and What It Signals to Sellers

Earnest money is the good-faith deposit you submit with your offer to demonstrate that your intent to purchase is genuine. This deposit is held in a third-party escrow account until closing, at which point it is applied toward your down payment or closing costs.

According to NAR's Consumer Guide on Escrow and Earnest Money, deposits can range from 1% to 10% of the home's purchase price, with the amount depending on local customs, market competitiveness, and seller expectations. There are no laws requiring an earnest money deposit, but most sellers expect one and may not consider offers without it.

How Earnest Money Protects You

Your earnest money is refundable under specific circumstances defined in your purchase agreement. If the deal falls apart because of a failed contingency (home inspection issues, low appraisal, denied financing), your deposit is returned. However, if you back out for reasons not covered by your contingencies, the seller may be entitled to keep your earnest money as compensation for taking the property off the market.

For a comprehensive understanding of earnest money deposits, including when you can expect a refund and how to protect your deposit, see our detailed guide on earnest money explained.

Earnest Money as a Competitive Advantage

Contingencies: What to Include, Waive, or Negotiate in Your Home Offer

Contingencies are conditions written into your purchase agreement that must be satisfied before the sale can close. They protect you by providing a legal exit from the contract if something goes wrong. However, each contingency you include adds risk from the seller's perspective that the deal could fall through.

NAR's Consumer Guide on contract contingencies identifies several standard contingencies that are common in real estate transactions. Understanding each one and knowing when to include, modify, or strategically waive a contingency is critical to crafting a competitive offer. For a deeper exploration of this topic, see our guide on real estate contingencies.

The Five Core Contingencies Every Buyer Should Understand

Strategic Contingency Decisions for a Competitive Offer

In competitive situations, the way you structure your contingencies can be more impactful than offering a higher price. Consider these strategies:

Shorten contingency periods. Instead of requesting 14 days for an inspection, offer 7 days. A pre-approved lender who can close in 21 days instead of 30 demonstrates efficiency. Shorter timelines reduce the seller's risk exposure.

Offer "inspection for informational purposes only." This means you will still inspect the property, but you will not ask the seller for repairs or credits. You retain the right to walk away if a serious issue is discovered, but you are signaling that you will not nickel-and-dime the seller over minor items.

Include an appraisal gap guarantee. If you have the cash reserves, offering to cover a gap of $5,000 to $15,000 between the appraised value and your offer price eliminates one of the biggest closing risks for sellers.

Drop the home sale contingency. If your offer depends on selling your current home, you are at a significant disadvantage. Explore bridge loans, HELOCs, or selling your current home first to eliminate this contingency entirely.

Closing Date and Timeline: How Flexibility Strengthens Your Home Offer

The closing date you propose in your purchase agreement tells the seller when ownership will transfer and when they will receive their proceeds. According to Freddie Mac, the typical closing timeline is 30 to 45 days after the seller accepts the offer. But in competitive situations, the closing date can be a powerful negotiating lever.

Matching the Seller's Timeline

If the seller has already purchased their next home and needs to close quickly, a 21-day close is highly attractive. If the seller has not yet found their next home, offering a longer closing period (45 to 60 days) or a flexible close with a rent-back arrangement shows that you are willing to accommodate their needs.

Your agent should ask the listing agent about the seller's preferred timeline before submitting an offer. This simple step can give you a significant advantage over other buyers who propose a generic 30-day close without considering the seller's situation.

Occupancy Terms and Rent-Back Agreements

NAR's guidance on contract contingencies notes that sellers may request a rent-back clause, allowing them to remain in the home for a period after closing. If the seller needs this flexibility, offering it proactively in your purchase agreement demonstrates empathy and problem-solving ability that can tip the balance in your favor.

Common rent-back terms include:

Financing Terms That Make Your Purchase Offer Stand Out

How you plan to pay for the home is one of the most scrutinized elements of your offer. From the seller's perspective, the strongest offer is the one most likely to close, and your financing terms are a primary indicator of that probability.

Pre-Approval vs. Pre-Qualification

A mortgage pre-approval is far more powerful than a pre-qualification. Pre-qualification is a preliminary estimate based on self-reported information. Pre-approval involves a lender verifying your income, assets, credit, and employment, and issuing a conditional commitment to lend a specific amount.

Include your pre-approval letter with your offer. Some agents take this further by having the buyer's lender call the listing agent directly to confirm the buyer's financial strength, which adds a personal touch that builds confidence.

Loan Type Matters to Sellers

Different loan types carry different perceptions among sellers:

NAR's 2025 data shows that the median down payment for all buyers was 19%, with first-time buyers at 10% and repeat buyers at 23%. A larger down payment reduces lender risk and signals financial strength. If your down payment is lower, offset that perception with a strong pre-approval, larger earnest money deposit, and clean contingency structure.

Inclusions, Exclusions, and Special Provisions: The Details That Make or Break Your Offer

These are the items and terms that fall outside the core financial structure of your offer but can significantly impact whether your purchase agreement gets accepted.

Inclusions and Exclusions

Inclusions are items conveyed with the property (typically anything permanently attached). Exclusions are items the seller intends to keep. Misunderstandings about what stays and what goes are a common source of disputes, so clarity in your offer is essential.

Seller Concessions and Credits

You can ask the seller to contribute toward your closing costs. This is common in buyer's markets or when a property has been sitting on the market. However, requesting concessions in a competitive multiple-offer situation weakens your offer because it reduces the seller's net proceeds.

Conventional loans typically allow seller concessions of 3% to 9% of the purchase price depending on your down payment. FHA loans allow up to 6%, and VA loans allow up to 4%. These limits are set by Fannie Mae and the respective government agencies.

Escalation Clauses: When and How to Use Them

An escalation clause states that you will automatically increase your offer by a specified increment above any competing offer, up to a maximum price. For example: "Buyer will pay $1,000 above the highest competing offer, up to a maximum of $425,000."

Escalation clauses can be effective in multiple-offer situations, but they also reveal your maximum willingness to pay. Not all sellers or listing agents accept escalation clauses, and in some markets they are uncommon. Your agent will advise you on whether this strategy is appropriate for your situation.

Offer Strength Scorecard: How Competitive Is Your Purchase Offer?

Use this interactive scorecard to evaluate how your offer stacks up before you submit it. Select the option that best describes each element of your purchase agreement, and the tool will calculate your overall competitiveness score out of 100 points.

Home Offer Tips: Common Mistakes That Cost Buyers the Deal

Even well-qualified buyers lose out on homes because of avoidable mistakes in their purchase offer strategy. Understanding these pitfalls helps you craft a smarter, more compelling offer.

Mistake #1: Leading with Price Alone

Many buyers focus exclusively on offering the highest price while neglecting the other elements of their offer that sellers care about. A $410,000 offer with a home sale contingency, long closing timeline, and minimal earnest money may lose to a $400,000 offer with a quick close, 3% earnest money, and clean contingencies.

Mistake #2: Submitting Without Market Intelligence

Going in blind costs money. Before writing an offer on a house, your agent should contact the listing agent to ask about competing offers, the seller's preferred timeline, any seller concerns, and whether there are items the seller wants excluded. This intelligence shapes a more targeted offer.

Mistake #3: Overloading with Contingencies

Including every possible contingency (inspection, appraisal, financing, home sale, insurance, HOA review) makes your offer look uncertain. Evaluate which protections are essential for your situation and structure the rest strategically. Freddie Mac advises buyers to discuss contingency strategy with their agent, noting that too many contingencies can reduce the attractiveness of the offer.

Mistake #4: Ignoring the Offer Expiration

Your offer should include a reasonable expiration window, typically 24 to 48 hours. An offer without an expiration gives the seller unlimited time to shop your offer to other buyers or wait for better options. A tight but respectful deadline creates urgency without offending the seller.

Mistake #5: Writing an Emotional Personal Letter

While personal letters were once common, many listing agents now advise sellers against reading them to avoid potential Fair Housing violations. Instead of relying on emotion, let the strength of your offer terms speak for themselves. Focus your energy on the financial and structural components of your purchase agreement rather than personal appeals.

What Happens After You Submit Your Offer on a Home

Once your offer is submitted, the seller has three options: accept it outright, reject it, or counter with modified terms. Understanding the post-submission process helps you respond strategically.

The Counteroffer Process

Most first offers receive a counteroffer. NAR's guidance on multiple offers notes that when a seller counters, the original offer is voided, meaning the seller cannot go back and accept your initial terms. Counter offers may adjust the price, closing date, contingency terms, or any other element of the agreement.

When you receive a counteroffer, you can accept it, reject it, or counter back. Each round of countering narrows the gap between buyer and seller positions. Your agent will advise you on how aggressively to negotiate based on the competitive landscape and the seller's likely alternatives.

Multiple-Offer Situations

If the listing agent announces that multiple offers have been received, the seller may invite all buyers to submit their "highest and best" offer by a specific deadline. In this scenario, you typically get one shot to present your strongest terms. Your Offer Strength Scorecard becomes invaluable here: maximize your score across all dimensions rather than simply increasing your price.

Under Contract to Closing

Once the seller accepts your offer (or you reach agreement through counteroffers), you are "under contract." The contingency clock starts, and you must promptly complete each required step: scheduling inspections, finalizing your mortgage application, ordering an appraisal, and securing title insurance. Missing deadlines can jeopardize your earnest money and the entire transaction.

The typical closing process takes 30 to 45 days and involves coordination among your lender, title company, insurance provider, and real estate agents. For a detailed walkthrough of what to expect, see our guide on what happens at a closing.

Frequently Asked Questions About Making an Offer on a House