I found my home—time to make an offer

Consider a preapproval first.

Once you’ve found the right home, you can prepare to make an offer. Some people choose to make an offer on a home with a standard preapproval,^{Disclosure 1} while others prefer the confidence and security of receiving a credit-underwritten preapproval.^{Disclosure 2} For a standard preapproval, you fill out a loan application, provide documentation to support information in the application, and undergo a credit check, then receive a preapproval letter. With a credit-underwritten preapproval, a lender conducts the underwriting process and verifies your financial information before you make an offer, instead of when you apply for a mortgage. Having a credit-underwritten approval can offer sellers assurance that you’re approved for the loan amount.

Making an offer

You can offer an amount lower than the asking price, or request that the seller pay some of your closing costs. Your real estate agent can advise you in making an appropriate offer at an amount you’re comfortable with and present it to the seller. If your offer is not accepted, you and your agent can consider whether to make a second offer, or counteroffer.

If the seller does agree to your offer, the signed offer, along with any amendments, becomes your purchase agreement, which is a legally binding written contract stating the terms and conditions under which a property will be sold. These may include the proposed date of closing and any special conditions or contingencies.

Along with your offer, you may be asked to submit earnest money. This is like a deposit and is meant to demonstrate that you’re serious about the home purchase. Earnest money is typically between 1% and 3% of the sale price and can be applied to your down payment or closing costs.

Consider a home inspection as a condition of purchase.

You may choose to include a home inspection as a condition of your home purchase. An inspection will provide you with useful information about the condition of the home and identify any deficiencies in its structure and components. Should the inspection reveal any major problems with the home (e.g., problems with plumbing or heating systems or deficiencies with the roof or foundation), you may request that the seller make the necessary repairs or renegotiate the purchase price. Your real estate agent can provide guidance on how much to ask for and which option is right for you.

If you can’t reach an agreement or the home inspection report documents more maintenance than you’d like to deal with, you typically can withdraw your offer and get back to the hunt. Be sure to look closely at how your purchase agreement is phrased regarding your inspection rights, including your ability to end the purchase agreement if necessary. In most cases, you will receive your earnest money back. This is a point you may want to discuss with your real estate agent.

Finding the home you want and making an offer can be exciting and stressful at the same time. There are several factors to think through, including the amount and the proposed closing date along with any special circumstances. If your offer is accepted, a home inspection can help ensure there are no issues or repairs needed to the home before closing. And then it’s time to secure funding to complete your purchase.

Home offer key terms

A purchase agreement is a written agreement between the buyer and the seller stating the terms and conditions of a sale or exchange of property.

Earnest money is an amount of money (either a percentage of the home price or a set amount) offered as a deposit to demonstrate your commitment to buying the home.