How to structure an offer

How do I structure an offer on a house?

Every offer has the same core components. How you balance them determines whether you win—and on what terms.

Price: What you’re offering to pay. This should be based on comparable sales, current competition, and days on market—not the Zestimate or what you “feel” the home is worth.

Earnest money deposit: A good-faith deposit that shows you’re serious. Typically 1-3% of the purchase price in West Chester, Garnet Valley, Kennett Square, Downingtown, Media, Newtown Square, and Chadds Ford.

Contingencies: Conditions that must be met for the deal to proceed—inspection, financing, appraisal. These protect you, but too many (or too broad) can weaken your offer.

Closing timeline: When you’re proposing to close. Flexibility here can matter as much as price to some sellers.

Additional terms: Everything else—rent-back arrangements, included items, who pays what costs. These details can make or break an offer.

How much earnest money should I put down?

In our area, earnest money typically ranges from 1-3% of the purchase price. On a $500,000 home, that’s $5,000 to $15,000.

Why it matters: Earnest money signals commitment. A larger deposit tells the seller you’re serious and have skin in the game. In competitive situations, a strong deposit can tip the scales.

What happens to it: Your earnest money is held in escrow and credited toward your down payment and closing costs at settlement. It’s not “extra” money—it’s part of what you’re already paying.

Risk: If you back out for reasons not covered by your contingencies, you may forfeit your earnest money. This is why contingencies exist—they define the conditions under which you can exit and get your deposit back.

In a normal market, 1-2% is standard. In competitive situations, 2-3% (or more) can strengthen your position.

What contingencies should I include?

Contingencies protect you—but each one also gives the seller a reason to worry that the deal might fall through. Here are the standard ones:

Inspection contingency: Allows you to have the home professionally inspected and negotiate repairs, credits, or exit the deal based on what’s found. This is your main protection against hidden problems.

Financing contingency: Protects you if your mortgage falls through. If the lender doesn’t approve your loan, you can exit without losing your deposit.

Appraisal contingency: Protects you if the home appraises below your offer price. If the appraisal comes in low, you can renegotiate or exit.

Home sale contingency: Makes your purchase dependent on selling your current home first. This protects you but significantly weakens your offer—sellers prefer buyers who can close without this uncertainty.

In competitive situations, buyers sometimes waive or limit contingencies. This is a risk/reward calculation: removing contingencies strengthens your offer but increases your exposure. Only waive what you can afford to lose.

Should I offer asking price?

It depends. Asking price is a starting point, not a rule.

When to offer at or above asking: When the home is priced competitively, you expect multiple offers, or comparable sales support the price. In hot markets, asking price may be the minimum to compete.

When to offer below asking: When the home has been on market 30+ days without offers, comparable sales suggest overpricing, or there are condition issues that justify a discount.

How to know: Look at the data. How does the list price compare to recent sales of similar homes? How long has it been on market? Have there been price reductions? What’s happening with competing listings?

Your agent should be able to show you this analysis. If you’re guessing, you’re either overpaying or losing to better-informed buyers.

How do I make my offer stand out to sellers?

Price gets attention, but terms win deals. Here’s what sellers value beyond the number:

Strong financing (or cash): A pre-approved buyer with solid financials is less risky than one who “should” get approved. Cash offers eliminate financing risk entirely.

Larger earnest money: Shows commitment and gives the seller confidence you won’t walk away easily.

Flexible closing timeline: If the seller needs time to find their next home, offering a later close date (or rent-back arrangement) can be worth more than extra dollars.

Fewer contingencies: Every contingency is a potential exit point. Removing or limiting them signals confidence and reduces seller anxiety.

Clean, simple terms: Offers with lots of special requests, complicated conditions, or unusual terms create friction. Simple deals close.

The key is finding out what the seller actually prioritizes. Some need speed. Some need flexibility. Some just want the highest number. Your agent should be asking the listing agent what matters most.

What is an escalation clause?

An escalation clause automatically increases your offer to beat competing bids, up to a maximum cap you set.

Example: “Buyer offers $500,000, escalating in $5,000 increments above any competing offer, up to a maximum of $525,000.”

If another buyer offers $505,000, your offer automatically becomes $510,000. If someone offers $530,000, you’re out—your cap was $525,000.

Pros: Keeps you competitive without guessing what others might offer. You don’t overpay if there’s no competition.

Cons: Reveals your maximum to the seller. Not all sellers accept escalation clauses—some prefer “highest and best” offers. In some cases, the seller may simply counter at your cap.

Escalation clauses work best in situations with clear competition where you want to stay in the running without blindly overbidding.

Should I write a personal letter to the seller?

Personal letters used to be a common way to connect with sellers emotionally—especially in competitive situations. Today, they’re more complicated.

The case for: Some sellers genuinely care about who buys their home. A thoughtful letter explaining why you love the property can create a connection that tips the scales in a close competition.

The case against: Letters can inadvertently reveal protected characteristics (family status, religion, national origin) that could expose the seller to fair housing concerns. Some listing agents advise their sellers not to read letters at all.

The reality: In most transactions, the terms of your offer matter more than a letter. If your offer is strong, you don’t need a letter. If your offer is weak, a letter won’t save it.

If you write one, keep it focused on the home and neighborhood—what you love about the property—rather than personal details about your family.

How long should I give the seller to respond?

Offer deadlines (also called expiration dates) create urgency but also signal your expectations.

Standard practice: 24-48 hours is typical for most offers. This gives the seller time to consider without leaving you hanging indefinitely.

Competitive situations: If there’s an offer deadline set by the seller (e.g., “all offers due by 5pm Sunday”), you’ll follow their timeline, not yours.

Short deadlines: A very short deadline (same day, 12 hours) can pressure the seller but may backfire if they feel rushed or have other offers to consider.

No deadline: Leaving an offer open-ended gives the seller time to shop it around. Not recommended.

Work with your agent to set a deadline that’s reasonable for the situation while protecting your ability to move on if needed.

Should I include a home sale contingency?

A home sale contingency makes your purchase dependent on selling your current home first. It protects you from owning two homes—but it significantly weakens your offer.

Why sellers don’t like it: They’re accepting uncertainty. Your home might not sell, or might not sell in time, and they’re back to square one. In competitive markets, they’ll often choose a buyer without this contingency.

If you must include one: Consider a “kick-out clause” (also called a “bump clause”). This lets the seller continue marketing the home. If they get another offer, you have a set period (usually 48-72 hours) to either remove your contingency and commit, or step aside.

Alternatives: Some buyers sell their home first and rent temporarily. Others use bridge financing to buy before selling. These approaches let you make a stronger offer, though each has trade-offs.

Your agent can help you think through the options based on your specific situation and local market conditions.

What happens after I submit my offer?

Once your offer is submitted, the seller has three options:

Accept: They sign your offer as-is. You have a deal. The contract is binding, and you move to the next steps (inspections, financing, etc.).

Counter: They come back with changes—different price, different terms, different contingencies. You can accept their counter, counter back, or walk away.

Reject: They decline your offer without a counter. This could mean they have a better offer, or your offer was too far from what they’d accept to negotiate.

Your agent should be in communication with the listing agent throughout this process, getting feedback and understanding where you stand. If there are multiple offers, they should be advocating for your position and gathering intel on how to improve if needed.