Own Luxury Homes®
Step 5: How to Make an Offer on a House
Anchor to comps not list price. DOM matrix: 0–14d = at list; 31–60d = 2–5% below; 61–90d = 5–7%; 90+ = 7–10%+. 7.9% average below-asking discount 2025 (Redfin). 3 contingencies: inspection, financing, appraisal — never waive any without understanding exact financial risk. EMD: returned within contingency window; at risk if you exit without one. Call listing agent before offer: timeline, other offers, seller priorities. Own Luxury Homes® 12-Point Agent Integrity Audit™ — listing agent called before every submission.
Step 5: How to Make an Offer on a House — Price, Contingencies, Earnest Money, and Terms
Making an offer is the most consequential decision in the home buying process. The purchase price, contingencies, earnest money, and terms all determine what happens for the next 30–45 days. And unlike almost every other step, a mistake here is difficult or impossible to undo. Waive the wrong contingency and your deposit is at risk. Offer too far below market in a competitive situation and you lose the house. Offer too far above market and you may face an appraisal gap that costs you tens of thousands of dollars. This step walks through every element of a purchase offer with specific guidance on each.
Step 5A: Setting the Offer Price
Anchor to Comps, Not List Price
Your offer price should be anchored to what comparable properties have sold for in the last 90 days — not to the list price. The list price is the seller's wish. Comps are the market's verdict. The DOM guidance: 0–14 days on market: offer at or above list if comps support it. Competition is likely; the seller has options. 31–60 days: 2–5% below list is defensible with comp support. 61–90 days: 5–7% below list; seller motivation is elevated. 90+ days: 7–10%+ below list; seller has likely already adjusted expectations. The national median buyer who paid below asking in 2025 received a 7.9% discount (Redfin). That discount didn't come from guessing. It came from using DOM as leverage and anchoring to comps.
Step 5B: The Three Core Contingencies
What Each Contingency Protects
Inspection contingency: gives you the right to have the property professionally inspected and to negotiate repairs, credits, or exit the contract within a defined window (typically 7–14 days). If you exit within the inspection window for a valid reason: your earnest money is returned. Financing contingency: protects you if your loan is not approved. If the lender declines to fund for reasons related to your financial qualification, you can exit with your deposit. Appraisal contingency: protects you if the property appraises below the purchase price. If the appraisal comes in at $380,000 on a $405,000 offer, the appraisal contingency gives you the right to exit, renegotiate, or provide an appraisal gap coverage clause. Waiving any contingency increases competitive attractiveness and increases your financial risk. Never waive a contingency without understanding exactly what you are giving up.
| Contingency | What It Protects | What Waiving It Means | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Inspection | Your right to exit or renegotiate based on property condition findings | Any condition issue discovered becomes your problem after closing; no exit without losing deposit | |||||||
| Financing | Your deposit if your mortgage is denied for financial qualification reasons | If financing falls through for any reason, your deposit is at risk (exceptions for property-related denial vary by contract language) | |||||||
| Appraisal | Your right to exit or renegotiate if property appraises below contract price | You are obligated to close or lose deposit even if appraisal is $30,000 below your offer price; appraisal gap must be funded in cash | |||||||
| In competitive markets, buyers sometimes waive contingencies to win bidding wars. If you waive the appraisal contingency: confirm you have cash available to cover the maximum likely gap. If you waive the inspection contingency: consider a pre-offer inspection (with seller permission) before removing that protection. | |||||||||
Step 5C: Earnest Money — How Much and What Happens to It
EMD Mechanics
Earnest money demonstrates that you are a serious buyer. Typical amounts: 1% in buyer's markets; 2–3% in competitive markets. Where it goes: into an escrow account held by the title company or attorney. It is applied toward your down payment and closing costs at closing. When you get it back: if you exit within any valid contingency window (inspection, financing, appraisal): returned in full. When you lose it: if you exit outside of a contingency window, or without a contingency that covers the reason for exit, the seller may claim the deposit as liquidated damages. The practical risk: if your financing contingency expires and you then fail to get a loan, you may have no exit without forfeiting the deposit. This is why you should be pre-approved, not pre-qualified, before making any offer with an EMD at stake.
Step 5D: Non-Price Terms That Win Offers
What Sellers Care About Beyond Price
In many transactions, sellers are optimizing for more than just the highest number: certainty of close: a strong pre-approval letter signals the deal won't fall through at underwriting. Timeline: if the seller is simultaneously buying another home, a close date that aligns with their purchase can win over a higher offer. Leaseback: offering the seller the right to remain in the property for 30–60 days after closing (paying rent to you) removes a logistical obstacle that concerns many sellers. Clean offer: fewer conditions, shorter inspection period (still conduct the inspection; just complete it faster), organized documentation. Call the listing agent before you submit. Ask: is there a specific timeline the seller needs? What does the seller care most about? Five minutes of that conversation can tell you exactly how to structure the offer to win.
“The offer conversation I have before every submission: "What does this seller actually need?" Not what the listing says. What does the listing agent tell me when I call. I call every listing agent before every offer. Is there a specific timeline? Are there other offers? Is the seller flexible on the close date? What concerns them most? In five minutes I learn whether they need certainty of close, timeline flexibility, or a clean offer. An offer written without that conversation is optimized for a hypothetical seller, not the actual one. The buyers who win aren't always the ones who bid the most. They're the ones whose agents ask the right questions first.”
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®
How much below asking price should I offer?
Anchor your offer to comparable sales (last 90 days, similar properties), not list price. Use DOM as leverage: 0–14 days = at or near list; 31–60 days = 2–5% below list with comp support; 61–90 days = 5–7% below; 90+ days = 7–10%+. The average buyer who paid below asking in 2025 received a 7.9% discount (Redfin). Every offer should include a comp analysis justifying the price. An offer backed by data feels like a fair negotiation. An unsupported offer feels like an insult.
What contingencies should I include when buying a house?
Include all three standard contingencies unless you have a specific reason and resources to waive one: inspection (right to negotiate based on property condition), financing (protects deposit if mortgage is denied), appraisal (right to exit or renegotiate if property appraises below offer price). In competitive situations: consider a shortened inspection period (7 days instead of 14) or an appraisal gap coverage clause rather than a full appraisal waiver.
Own Luxury Homes® — listing agent called before every offer submission. 12-Point Agent Integrity Audit™. Find a verified buyer specialist ›
"The introduction Own Luxury Homes® makes is to a specialist with documented closing history in your specific market — not the county, not the metro, the submarket you're actually selling or buying in. That's the standard we verify before your name goes anywhere."
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes® (FL License BK3626873)