What to Write in an Offer Letter for a House?

An offer letter is a formal written proposal outlining the terms and conditions under which a buyer intends to acquire a property. Once accepted and signed by the seller, it becomes a legally binding contract, initiating the real estate transaction and detailing the buyer’s intentions.

Core Financial Components of the Offer

The financial aspects of an offer letter outline the monetary framework of the proposed transaction. The purchase price is the amount a buyer is willing to pay for the property, which can be at, below, or above the seller’s asking price.

The earnest money deposit (EMD) accompanies the purchase price, demonstrating the buyer’s serious intent. This deposit typically ranges from 1% to 3% of the offer price, though it can be higher in competitive markets. The EMD is usually held in an escrow account by a third party and is generally applied towards the buyer’s down payment or closing costs at settlement.

The offer letter also specifies financing details, indicating how the buyer plans to fund the acquisition, whether all-cash or through a mortgage. If financing is required, the loan type (conventional, FHA, or VA) is noted. Including a pre-approval letter from a lender demonstrates financial readiness and strengthens the offer. The down payment, whether a percentage or specific amount, is also outlined.

Contingencies and Conditions

Contingencies are protective clauses inserted into the offer letter, allowing a buyer to withdraw from the contract without penalty if certain conditions are not met. These clauses safeguard the buyer’s interests during the transaction.

A common contingency is the inspection contingency, granting the buyer the right to conduct a professional home inspection within a specified timeframe. If the inspection reveals significant issues, the buyer can renegotiate the price, request repairs, or terminate the agreement and receive their earnest money back.

The appraisal contingency ensures the property’s appraised value meets or exceeds the purchase price. Lenders require an appraisal to confirm the home’s value aligns with the loan amount; if it comes in low, this contingency allows for renegotiation or withdrawal. The financing contingency protects the buyer if they cannot secure the necessary mortgage loan within a specified period, as final loan approval can depend on various factors.

For buyers needing to sell their current residence before purchasing a new one, a sale of current home contingency can be included. This clause provides a timeframe for the buyer to sell their existing property, allowing them to back out if that sale does not materialize. Other potential contingencies include a title review contingency, ensuring the property’s title is clear of liens or disputes, and review periods for homeowners association (HOA) documents, if applicable.

Key Dates and Property Inclusions

An offer letter specifies several dates governing the transaction timeline. The offer expiration date sets a clear deadline for the seller to respond, typically within a few days to a week.

The proposed closing date is the target date for the final transfer of ownership, where all legal and financial documents are signed and funds exchanged. For financed purchases, this usually occurs within 30 to 60 days, while all-cash transactions can close more quickly, sometimes in as little as 7 to 20 days.

The possession date indicates when the buyer expects to take physical occupancy. This date may coincide with the closing date or be a later date, allowing the seller additional time to move. In some cases, a lease-back agreement might be negotiated, where the seller temporarily rents the home from the buyer after closing. Inclusions and exclusions should be clearly defined, detailing specific items part of the sale (e.g., appliances, light fixtures, window treatments) or explicitly excluded.

For homes built before 1978, federal law mandates a lead-based paint disclosure. This informs potential buyers of any known lead-based paint or hazards and typically includes an EPA-approved pamphlet on lead safety.

Presenting Your Offer

The offer letter’s structure and format typically follow standard real estate contract forms, which organize legal and financial details. These forms include sections for the property address, legal description, and names of the buyer and seller. Clarity and specificity in language are paramount to avoid misinterpretations. Maintaining a professional and respectful tone throughout the document is also expected.

Some buyers include an optional personal letter to the seller. This letter aims to build rapport by expressing appreciation for the home and explaining why it is a good fit, sometimes mentioning specific features. This supplementary letter should focus on emotional connection, avoiding personal details that could lead to biases or violate fair housing guidelines.

Once complete, all necessary parties must sign the offer letter and any accompanying documents. The entire package is then delivered, typically through real estate agents, often electronically.