So you’ve found the house of your dreams, huh? Now it’s time to figure out how to make an offer on a home and go for that dream house! Sure, making a home offer may seem simple: You work with your real estate agent to come up with a price and then submit it to the sellers. But that’s just the big picture. A home offer also includes elements that you may not immediately take into consideration — such as contingencies, requests for home inspections, and any cost negotiations before settling on that final number.

Did you know? This is the third article in our series on buying a home. If you haven’t already, check out the first two articles:
What to Consider When Buying a Home in 2022
How to Write a House Offer Letter

With this in mind, you’re likely to develop a lot of questions about the process of making a home offer, and that’s normal. Let us save you some panic and help to get you prepared. 

We’ve compiled answers to some of those questions, including whether you can make an offer on a house without preapproval, deciding how much house you can afford, and thinking through the process of writing a home offer letter to the homeowners. You should also be prepared to know what contingencies you’re comfortable asking for — maybe you want a fast closure or to skip home inspections — that are in your budget and that make sense for you as the potential owner of that house. 

In the housing market, competition can be fierce and homes can go under contract very quickly. That’s why the negotiation process is so important and why writing a home offer letter well really matters. It’s also why you’ll want to have most, if not all, of these decisions made as early in the game as possible.

Let’s get started.

What do you need to have in place before you make a home offer?

In short order, you need several things to be ready to make a home offer on your dream abode.

  • Payment Method: You need to be preapproved by a financial institution for a mortgage or home loan, or you have to have the cash in hand to make the payment in full. Otherwise, your offer will go straight to the rejection pile.
  • Agent: Decide whether you want to work with a real estate agent or go solo. Making an offer on a house without an agent is certainly possible, but having a pro by your side gives you a massive advantage.
  • Price: How much do you want to pay for the home? Be sure to get the necessary paperwork in front of the seller. 
  • Down Payment: You need to think about how much down payment you’ll want to make, and a house calculator can help you with that decision. 
Did you know? Once you’ve found the house you want, the home-buying process can be completed within a month! 
A real estate agent calculating how much a new homeowner should offer

How do you get started making an offer on a house?

The first step in the process is the easiest one: You have to decide that it is time to buy. For first-time home buyers, this is the moment of truth. That means setting up a budget to know how much you can afford, deciding whether to work with a real estate agent, and figuring out what neighborhood or city you want to live in. Eep!

Once you have that settled, go online and use a mortgage calculator to determine how much house you can buy with your income and any debt you may have. Look with your real estate agent or go onto a reputable home-buying website to see how much homes are selling for in the particular neighborhood your perfect home is in.

Next, think about your timeline: Do you need to move right away, or can you wait for the current homeowner to find a place? Can you avoid contingencies like a home inspection, or do you want certain contingencies to make sure the home is ready to move into? 

How much should you offer on a house?

How much you should offer on a house is determined by three things:

  1. Your budget for a monthly house payment
  2. What you can afford in terms of a down payment
  3. Mortgage rates at the time you buy

Once you’ve worked these numbers through honestly and completely, you can determine whether you have enough funds to make an offer. In a hot market, most buyers have to come in at the home’s asking price or slightly above (and sometimes significantly so), as well as compete with multiple offers. Keep that in mind and check with your lender to see whether you can bring cash to the table as well to cover any extra costs that go beyond the home’s appraised value. 

Negotiating a home offer is challenging, and the home seller may want to check with an agent on each and every offer, so have some patience at this step of the process. 

You may have to go at least 5 to 10% over the asking price — especially if you’re looking in a hot neighborhood or a city where a lot of people are looking to live.

How do you make a good offer on a house?

This is the tricky part. You need to determine how much you can afford to throw at a house that you may have fallen in love with or one in an area where you want to live. If you really need the home, then you will want to make a house offer that is at least near the asking price — perhaps within 5% to 10% of that asking figure. For most sellers, coming in close to what they want to get and what the market bears for that particular home is considered a good offer. 

You may be wondering, however, when it comes to a competitive housing market, “How much over asking price should I offer on a home?” The answer: You may have to go at least 5 to 10% over the asking price — especially if you’re looking in a hot neighborhood or a city where a lot of people are looking to live. 

In the end, what is a reasonable offer on a house? It’s what you are comfortable paying every month, taking into account what mortgage rate you received and what kind of lifestyle you want to have once you’re in the home. 

Insider Tip: This is the time when you may want to write a letter to the home seller that your real estate agent can include in your home offer. This letter should highlight why you want that home, what you like about it, and how you can see your family living there. This tends to make the home seller feel like you will appreciate the home, and your home offer may be taken more seriously if you take the time to write something from the heart. These letters don’t have to be very long — one or two pages at most are considered ideal. Check with your real estate agent first, though, to ensure this is a standard practice with home buying and selling in your area. 
A couple standing in front of their new home with their house keys

How do I improve my chances of getting the home I want? 

Here’s where things get interesting. Negotiating a cash offer on a home has proven to be one of the most effective ways to buy a home — sellers love a cash offer. That’s because someone who pays in cash is likely going to make the deal happen. If you need to work with a mortgage lender, there can be delays or sometimes buyers fall through, and a seller doesn’t want any setbacks when it comes to moving. 

Now, chances are the seller will do something some buyers dislike: make a counter offer. It’s when the seller comes back from your original house offer amount and asks you to raise it or change some contingencies. Whether you decide to come up with more money or change your offer is up to you. After all, buying a home during the coronavirus pandemic is complicated enough, so this step may feel like you’re ready to run out of gas. But if you are committed to that house, you may want to come up with the additional funds or make the necessary changes to get you to the finish line — that is, the closing table, where you can sign the papers that will make that house offer turn into a house closing. If you need more help, check out the PODS blog for ideas, suggestions, and advice on the home-buying and selling process from start to finish. 

Once you get your offer accepted, it’s time to get moving! Your contract will determine your move-in date, but oftentimes, there will be about one-to-two months between closing and your occupancy date. Don’t leave it all to the last minute! You can get a head start, and save a headache or three, with PODS portable moving and storage containers. Keep one (or more) in your driveway while you pack and load, and when you’re ready, PODS will pick it up and deliver it to your next home or keep it in a secure Storage Center.


Karen Dybis is a freelance journalist and a frequent contributor to the PODS blog. Her work has appeared in Time magazine, U.S. News & World Report, The Detroit News, and more.