What Do I Need to Make an Offer on a House?

Purchasing a home is a significant financial commitment. Prospective buyers submit a formal offer to the seller, outlining their intent to acquire the property under specific conditions. Crafting a strong offer requires preparation and understanding of its essential components. This article guides you through the requirements and steps involved.

Financial Preparedness

Before making an offer on a home, buyers must demonstrate their financial readiness. A mortgage pre-approval letter is a conditional commitment from a lender, indicating the maximum amount they are willing to lend for a home purchase. This letter, based on a review of your financial standing (credit, income, debt, assets), signals to sellers that you are a serious buyer with verified financial capacity.

To obtain this document, you provide financial information such as recent pay stubs, W-2 forms, and bank statements. Lenders also conduct a credit check to assess your creditworthiness and debt-to-income ratio. A pre-approval letter usually has an expiration date (30 to 90 days) and may need renewal if your home search extends beyond this period.

Buyers also need to provide proof of funds. This documentation verifies you have sufficient liquid assets available to cover the down payment, closing costs, and any required reserves not covered by your mortgage loan. Proof of funds is important for all-cash offers, demonstrating the entire purchase price is immediately accessible. Common forms of proof include recent bank statements, investment account statements, or a letter from your financial institution certifying your available balance. While sensitive information like account numbers can be redacted, the document must clearly demonstrate the necessary funds are unencumbered.

The earnest money deposit, often called a good faith deposit, demonstrates your serious intent to purchase. This sum is typically submitted when the purchase agreement is signed. Earnest money amounts commonly range from 1% to 3% of the home’s purchase price.

The funds are held in an escrow account by a neutral third party, such as a real estate brokerage, title company, or attorney. At closing, the earnest money is applied toward your down payment or closing costs. If the buyer defaults on the contract without a valid reason covered by a contingency, the seller may keep the earnest money as compensation.

Key Offer Terms and Details

When preparing an offer, the offer price is a central decision, influenced by factors such as recent comparable sales, the home’s condition, and current market trends. Your real estate agent assists in analyzing these “comps” to determine a competitive yet reasonable price that aligns with your budget and the property’s value.

Contingencies are clauses within the purchase agreement allowing a buyer to withdraw from the contract without penalty under specific circumstances.
A financing contingency makes the offer dependent on securing the necessary mortgage loan within a set timeframe, typically 30 to 60 days.
An inspection contingency provides a period, often 7 to 10 days, for a professional home inspection, allowing negotiation for repairs or contract cancellation if major issues are found.
An appraisal contingency ensures the home appraises for at least the offer price.
For buyers needing to sell their current home, a sale of existing home contingency makes the new purchase conditional on their current property’s sale.

The desired closing date is another important term. Dates are typically 30 to 45 days from offer acceptance, allowing time for processes like financing and inspections. A mutually agreeable date can enhance your offer’s appeal, especially if it aligns with the seller’s specific needs.

Clearly defining inclusions and exclusions prevents disputes. Inclusions are items staying with the property, such as major appliances or window treatments. Exclusions are items the seller intends to remove, even if typically considered fixtures. Your full legal name(s) and current contact information are necessary for all legal documents within the purchase agreement.

Required Documentation for the Offer

Assembling the complete offer package involves gathering specific documents that formalize your intentions and financial capability. The primary document is the Purchase Agreement, a legally binding contract typically drafted by your real estate agent or attorney. This agreement systematically outlines all the terms and conditions previously decided upon, including the offer price, contingencies, and desired closing date, ensuring a clear framework for the transaction.

A pre-approval letter, obtained from your mortgage lender, should be included with your offer package. While not always strictly mandatory, sellers often prefer offers accompanied by this letter as it signals your strong financial readiness and the high likelihood of securing the necessary financing. Proof of funds documentation should also accompany your offer, especially if you are making a cash offer or need to verify the source of your down payment and closing costs. This typically involves recent bank or investment account statements, or a formal letter from your financial institution certifying your available balance.

The earnest money deposit, demonstrating your commitment, is also part of the offer process. While the funds are usually held in an escrow account, the method of providing this deposit with the offer should be clearly communicated and executed. Common methods for payment include a personal check, cashier’s check, or wire transfer instructions. A copy of your government-issued identification, such as a driver’s license or passport, may be required for identity verification purposes throughout the transaction.

Submitting Your Offer

Once you have meticulously prepared all the necessary documents and finalized the terms, your real estate agent plays a central role in formally presenting your offer to the seller. The agent will typically deliver the complete offer package, including the purchase agreement and supporting financial documentation, to the seller’s listing agent. This submission often occurs electronically via email, through online real estate platforms, or occasionally in person, ensuring a swift and efficient delivery of your comprehensive proposal. In competitive markets, your agent may strategically set a deadline for the seller’s response to encourage prompt consideration.

After submission, an acknowledgment of receipt is usually provided, confirming that the seller or their agent has received and is reviewing your offer. Sellers typically review offers and respond within a timeframe of 24 to 72 hours, though this can vary based on local market conditions, the number of offers received, or the seller’s availability.

There are three primary outcomes once an offer is submitted: acceptance, a counter-offer, or rejection. If the seller accepts your offer as submitted, the property goes “under contract,” and both parties become legally bound to the terms outlined in the purchase agreement. Alternatively, the seller may issue a counter-offer, proposing changes to specific terms like the price, closing date, or contingencies, which reopens the negotiation process. Should the offer be outright rejected, you can choose to submit a revised offer addressing the seller’s concerns or explore other suitable properties.