Writing an offer is where preparation either pays off or gets exposed. This guide walks through how to land on a defensible offer price, which contingencies actually protect you, how earnest money works, when a personal letter helps, and how to hold your ground in a multiple-offer situation — plus how a resale offer differs from signing a builder's new construction contract.
How to Determine Your Offer Price
Your offer price should start with data, not the list price. List price is a marketing decision set by the seller and their agent — it may be priced to attract multiple offers, or it may be aspirational and due for a correction. What matters is what comparable homes have actually sold for recently: similar square footage, condition, lot, and location, closed within the last few months rather than a year ago. A Home Value Report can give you a data-backed estimate to anchor your number before you're standing in the home talking yourself into a figure.
From there, factor in market signals: how many days the home has been listed, whether the seller has already cut the price, how many other buyers have toured or are expected to offer, and how motivated the seller appears to be. A home that just listed in a hot pocket of the market behaves very differently than one that has sat for two months. Working with an agent through the buy process helps you read those signals correctly instead of guessing from the listing photos alone.
| Approach | When to Use It | Risk |
|---|---|---|
| At asking price | Home is fairly priced, limited competition, market is balanced | Lower risk of overpaying, but may lose to a higher offer if competition appears |
| Above asking / escalation clause | Home is priced to attract multiple offers or is genuinely underpriced for the market | Can overshoot true value; escalation clauses may reveal your ceiling to the seller |
| Below asking price | Home has sat on market, needs work, or comps support a lower value than list price | Seller may reject outright or counter; risk of insulting a motivated but firm seller |
| At asking with strong terms | Competitive market where price alone won’t win but clean terms can | Requires giving up some contingency protection to stay competitive |
Contingencies You Should Include
Contingencies are the conditions under which you can walk away from the deal and keep your earnest money. Each one you include protects you; each one you waive shifts risk onto you in exchange for a more attractive offer. Understanding what each contingency actually does helps you decide which ones are worth keeping in your specific situation.
- Financing (mortgage) contingency — lets you cancel and recover your deposit if your loan is denied, protecting you from being contractually obligated to buy a home you can no longer finance.
- Inspection contingency — gives you a window to have the home professionally inspected and to negotiate repairs, a credit, or an exit if serious issues turn up. See our full inspection walkthrough for what to expect during this window.
- Appraisal contingency — protects you if the lender’s appraisal comes in below your offer price, giving you room to renegotiate, cover the gap, or cancel rather than being forced to close at a price the bank won’t fully finance.
- Sale-of-current-home contingency — makes your purchase conditional on successfully selling your existing home, which protects buyers who need that equity to close but is generally the least attractive contingency to sellers in a competitive market.
For a closer look at how inspections work and how to negotiate once a report comes back, our Home Inspection Buyer Guide covers the process in detail, including how to choose an inspector and what issues are typically worth negotiating over.
Earnest Money
Earnest money is a good-faith deposit, typically ranging from about 1% to 3% of the purchase price, though the norm shifts by market and can run higher in competitive areas where a larger deposit is used to signal seriousness to the seller. It is not an additional cost on top of your down payment — if the sale closes, it is credited toward your down payment and closing costs.
The deposit is held in an escrow account, usually managed by a title company or brokerage, not paid directly to the seller. Whether you get it back if the deal falls through depends entirely on your contingencies: canceling within a valid contingency window (financing denial, a failed inspection you couldn't resolve, a low appraisal you didn't waive) generally preserves your deposit, while canceling for a reason outside your contingencies can put it at risk. Read the earnest money and default clauses in your offer carefully before you sign, and ask your agent to walk through the specific deadlines attached to each contingency.
Offer Letters
A personal letter to the seller — sometimes called a "love letter" — is a short note explaining why you want the home, occasionally included alongside an offer in the hope of standing out emotionally in a close decision. In some cases it can genuinely tip a close call, particularly with a seller who has an emotional attachment to the property.
That said, personal letters carry real downsides. Many agents and brokerages now discourage or prohibit them because they can inadvertently reveal information about a buyer's family, religion, or other protected characteristics, creating fair housing exposure for the seller if used to screen offers. Ask your agent whether letters are advisable in your specific market and transaction before writing one, and never treat a letter as a substitute for a competitive price and clean contingencies — it should be, at most, a tiebreaker, not the core of your strategy.
Multiple Offer Situations
In a multiple-offer situation, price is only one variable. Sellers and their agents are also weighing the strength of your financing (cash or a strong pre-approval versus a shakier loan), the size of your earnest money deposit, how few contingencies you're asking for, your flexibility on closing date and possession, and how clean and complete the paperwork is. A slightly lower offer with stronger terms sometimes beats a higher offer that looks riskier to close.
An escalation clause — which automatically raises your price by a set increment above the next-highest competing offer, up to a cap — can help you stay competitive without repeatedly resubmitting, but it also exposes your ceiling once the top offer is disclosed to other bidders, so use it deliberately rather than by default. Before you're in the middle of a bidding scenario, it helps to have already worked out your real limit with your agent, separate from the adrenaline of competing.
What Happens After You Submit
Once the seller accepts your offer, the transaction moves into a series of deadlines defined by your contract's contingencies. You'll typically need to deposit earnest money within a short window, schedule your home inspection, and get your loan application and the lender's appraisal moving if you haven't already. Any issues uncovered during inspection are then negotiated — repairs, a credit, or a price adjustment — within the inspection contingency period.
Missing a contingency deadline can affect your ability to cancel and still recover your earnest money, so tracking dates closely matters as much as the negotiation itself. Working with an agent through the buying process helps keep these deadlines from slipping while you're juggling financing, inspection scheduling, and any final negotiations before closing.
Offer vs New Construction Contract
A resale offer and a new construction purchase agreement are structurally different documents, and treating them the same is a common mistake for buyers who are house-hunting across both categories. A resale offer is a negotiated agreement between two private parties, typically built on a standard regional form that either side can propose changes to — price, contingencies, closing date, and included items are all points of negotiation.
A builder's purchase agreement, by contrast, is generally the builder's own standard-form contract, drafted by the builder's legal team and offered largely as-is. Deposit structures are often different and sometimes non-refundable past certain milestones, change orders for upgrades or structural modifications follow the builder's own process and pricing, and delivery timelines are estimates tied to construction progress rather than a fixed closing date. Contingencies you'd expect in a resale offer — like an inspection contingency that lets you walk away — often don't exist in the same form. If you're weighing a resale purchase against building new, our guide on whether you can negotiate with a builder covers what's typically flexible in a builder contract and what generally isn't before you sign anything.
Whether you're preparing an offer on a resale home or comparing it against a new construction purchase, going in with data and a clear strategy matters more than reacting in the moment. Explore the full home buying process with Reaixo, or get a report before you write your next offer.