Real estate is full of specialized terms—an “offer,” “contingency,” or “earnest money deposit” can sound confusing. Misinterpreting jargon delays deals or leads to missed opportunities.
An incomplete or poorly drafted offer can expose you to legal risk or costly penalties. Clear knowledge ensures your proposal protects your interests.
The strength and clarity of your offer influence negotiation power, speed of closing, and ultimate success—whether you’re buying, selling, or investing.
An offer in real estate is a formal proposal by a buyer to purchase property under specified terms—price, contingencies and timelines. It sets the negotiation in motion.
An offer becomes a legally binding purchase agreement once accepted and signed by both parties. Until acceptance, it remains an invitation to negotiate.
Buyers typically work with their real estate agent or attorney to draft the written offer. Both buyer and seller sign once terms are accepted, turning the offer into a binding contract.
For an offer to bind, it must clearly state buyer intent, specific terms (price, contingencies, deadlines) and be accepted in writing by the seller.
The earnest money deposit shows good faith. It’s typically held in escrow and credited at closing or forfeited if buyer breaches without valid contingency.
Offers include expiration dates and may be revoked anytime before acceptance. After acceptance, withdrawal is governed by contract terms and contingency rights.
Specifying the offer price and how you’ll pay—cash or mortgage—is fundamental. Include lender details or pre-approval letter to strengthen your proposal.
Typical contingencies cover home inspection, appraisal and loan approval. They allow you to cancel or renegotiate if conditions aren’t met.
Clear dates for inspections, financing approval and closing ensure all parties know their obligations and timing, preventing costly delays.
You can attach addenda for HOA docs, repair requests or seller concessions. Custom clauses address unique property or transaction requirements.
A polished, concise offer with all attachments shows professionalism. Use standardized forms or templates recommended by your agent or attorney.
Online portals speed delivery and tracking. Paper forms via fax or courier remain common in some markets—choose what’s customary locally.
Sellers can accept outright, reject your terms or issue a counteroffer. A counteroffer voids your original offer, restarting negotiation.
In hot markets, sellers may field several offers. Strengthen yours with higher price, larger deposit, fewer contingencies or an escalation clause.
Backing out without a contingency can forfeit your deposit and invite breach-of-contract claims. Understand deadlines and removal of contingencies.
Many contracts specify liquidated damages equal to the earnest money if buyer defaults. That’s why deposit size and contingency use matter.
Contingencies for inspections, financing or title review give you legal exit ramps. Always confirm deadline compliance and send notices in writing.
No—only once the seller accepts in writing does the offer bind you to contract obligations.
Deposits often range from 1% to 3% of purchase price. Competitive markets may demand higher earnest money but weigh the risk of forfeiture.
You can revoke before acceptance. After acceptance, changes require mutual agreement or reliance on valid contingencies.
The response time is set in the offer’s expiration clause. If none is specified, local custom or statutes may apply.
Agents handle standard offers; complex deals or commercial properties often benefit from legal review to customize clauses and manage risk.
Partner with professionals who understand local markets and contract law. They guide strategy, paperwork and negotiations.
Balance attractive pricing and deposit size with contingencies that protect financing and property condition.
Lead with strong financing credentials, clear terms and reasonable timelines. Listen to seller priorities—cash deals or flexible closing dates often win.
Stay objective. Avoid overbidding in the heat of competition. Use data and agent advice rather than personal attachment.
Maria finds a $350,000 home she loves. She’s pre-approved for a mortgage and ready with $5,000 earnest money.
The seller counters at $348,000, waiving one minor contingency. Maria accepts, both sign and deposit is escrowed—offer becomes binding pending appraisal.
An offer is your formal entry into a real estate deal, outlining price, terms and protections. Acceptance converts it into a binding purchase agreement.
Leverage professional advice, understand deadlines and contingencies, and keep communication clear. With knowledge and preparation, your offer will lead you smoothly to closing.
