Making an Offer

Chris and Stephanie Wendell spent three months looking for a home in Rockville, Md. before they made a house offer. When they saw a three-bedroom, two-and-a-half bath townhome in Regent Square, they thought they'd found "the one."

"We pulled into the parking lot and saw a really massive oak tree near the house. I said to Chris, 'Unless this place is really disgusting inside, this is it,'" Stephanie Wendell recalls.

Working with real estate agent Lisa Abrams of Re/Max All-Pro, they crafted a house offer. Having researched the process, they knew that submitting an offer-to-purchase contract would entail more than simply coming up with a price.

"It was hectic. We submitted our offer and then found out there was another one for the same house," Wendell says.

"We were cautious. There were just things, like the home inspection, that we wouldn't waive," Wendell says.

After days of negotiations, the Wendells increased the house offer price, but decided to keep most of the other requests in their offer-to-purchase contract. With their agent's advice, they knew that much of what's contained in a real estate sales contract exists for both the buyers' and sellers' protection.

Making an offer to buy a home is one of life's biggest decisions. While the house offer contains the most important figure – the price – the contract also contains details that must be reviewed carefully to protect a potential investment and limit risk during the transaction. A real estate sales contract is more than just the offer of a price, it's a legal document that determines who pays what, when they will pay, how they will pay and what day the property will change hands.

A standard house offer, or sales contract, according to the National Association of Realtors, includes:

  • A home's address
  • The sale price
  • Financial terms
  • A seller's promise to provide clear title
  • The amount of earnest money deposit accompanying the offer
  • The method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted between buyer and seller
  • Provisions about who will pay for title insurance, survey, termite inspections, closing costs, etc.
  • Type of deed to be given
  • State-required disclosures or contingencies
  • A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
  • A target date for closing
  • A time limit after which the offer will expire
  • Contract contingencies

While all sections are important, some require close oversight. It behooves buyers and sellers to pay special attention to the information contained in the sections below.

Price and Financing

Usually the most important part of the house offer to buyers and sellers is in this section. Buyers should begin by determining what they want to offer as a purchase price. This decision usually is made based on information such as comparable sales, available tax assessment information and the market rate. Coming up with this figure is often the most stressful task of drafting an offer: propose too little and you risk receiving an outright rejection; offer too much and you could be stuck with a bad investment. If you have a real estate agent, weigh his or her suggestions on this part carefully. Ultimately, you're the one who must live with the decision.

A buyer's first offer kicks off the negotiations. While the first house offer could be the final price, it's usually more of an opening salvo. Savvy, well-positioned buyers can expect a counteroffer, or an opposing offer, from the seller.

Along with the house offer price, buyers include their plans for financing the deal. A sales contract contains the details: how much you have for a down payment; the amount of your first trust mortgage; whether you will seek a second trust. This information is important to the seller because it shows whether you're a serious buyer.

Earnest Money

Besides the price included in the sales contract, a seller sometimes determines a buyer's ability to seal the deal based on the earnest money deposit -- the deposit handed to the real estate agent at the time of the offer. The deposit is held by a real estate broker or attorney during the transaction and is used toward the down payment.

Again, buyers carefully should consider the amount of their earnest money deposit. The deposit should be large enough to illustrate your intent to purchase, yet it shouldn't be so large that, should something go wrong in the deal, funds are at risk.

A general rule of thumb is for the earnest money deposit to be equal or less than 2 percent of the offer price. In a seller's market, with multiple contracts offered, potential buyers may want to exceed this rule to draw attention to their house offer.

But in a buyer's market, 1 to 2 percent usually shows intention without tying up valuable funds.

Personal Property

Generally, house offers include a place for buyers to list anything in the house they'd like to keep. Most contracts include boxes next to a list of items like appliances, fixtures, window treatments, alarm systems and more. Buyers should check the boxes for those items to ensure that they stay put when the seller vacates. Likewise, if a seller wants to remove a specific item that is part of the home – like, say, an heirloom chandelier -- the seller must list it in the contract.


A sales contract includes a timetable for the deal, including a time frame for the seller to respond to the house offer. It also lists a date for going to settlement, or completing the transaction, as well as a date for taking possession of the property. It's essential that you include a settlement date as part of your offer, but understand that there may be need for flexibility on both the selling and buying side.

A transaction is closed once the deed is recorded at the local courthouse. Make sure the contract includes the date that you plan to occupy the property.


A contingency is a specification that you will only buy the house if something occurs in the buying process as required. If a contingency doesn't occur as planned, the house offer can be withdrawn without penalty. At the height of the market, buyers often waived standard contingencies like home inspections, so their contract would seem "easy" and appeal to the sellers. This isn't advisable. Buying a house is the biggest purchase of a lifetime. Would you buy a car without taking it for a spin? We hope not.

Other common contingencies are the buyer's ability to obtain specific financing from a lending institution for the transaction; radon testing; and contingencies on the buyer selling their current home.

When crafting a contract, remember that anything discussed verbally between the buyers and sellers during the initial review of the property should go into the contract. Agreements regarding payment for closing costs and points, to make repairs or paint, or other agreements, should be put in writing if they are to be legally binding.

Learn more about closing costs in our "Guide to Settlement and Escrow."

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