Key takeaway

Typically, the seller won’t accept your first offer on a home. They expect to negotiate. So as you prepare your offer, keep in mind the mortgage you’re prequalified or preapproved for, then work with your real estate agent to make a competitive first offer that still leaves you room to negotiate with the seller.

You’ve done your prep work by getting your finances in order. You have been through the prequalification or preapproval process, so you know what size mortgage you might qualify for and be able to afford. Once you’ve found a house you love that’s in your price range, it’s time to see if you can come to an agreement with the seller.

As you work with your real estate agent to craft the offer, keep your home mortgage consultant involved to help you understand how your offer will impact your ability to secure a mortgage. Don’t forget that the offer process on a home is often a negotiation. Here are three things to consider while you’re making your offer.

Tips to help you determine your offer

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$1,500 is the average cost, including installation, of a new refrigerator, though the price can vary widely by model

What do you want to keep from the current home?

When you purchase a home, you’re typically buying the structure and what are called “fixed” features — things that are installed and attached to the home, like chandeliers or built-ins. You’ll want to know exactly what stays with your potential home, because if the seller is planning on taking the refrigerator and you don’t own one, you may be looking at an additional $1,000 expense right away.

Your offer can include contingencies — which are things you request stay with the house — or certain terms, like that you need the contract to close by a specific date. Standard contingencies typically include a positive home inspection and appraisal.

Source: HomeAdvisor

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Recent first-time homebuyers made 3.8 offers before one was accepted

Your first offer: Leave room for negotiation

One common strategy is to make an initial offer that leaves room for negotiation with the seller. Why? Starting by offering the maximum at which you’re likely to qualify for a mortgage may make it difficult to negotiate any further with the seller. Your real estate agent can offer guidance, as they will have experience related to similar homes that have sold in the area. As you develop your offering price, you’ll want to take into account any items that will (or won’t) remain with the home.

There’s a good chance the seller will not accept your first offer. It may take several rounds of negotiation to reach an agreement. Ask yourself: Can you go a little higher on your price and still stay within your budget? Can you give up some of the items you’d asked to stay with the house? You may have to consider the other offers the seller may be fielding, if you’re looking in a popular neighborhood.

Source: NerdWallet, 2019

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Determine your offer deposit

The amount you’re willing to pay up front as a deposit (often called “earnest money”) can help make your offer more competitive. Your deposit is money that goes toward your purchase price if you end up closing on the home. However, in most instances, it is nonrefundable if you eventually determine you don’t want to move forward with purchasing the home for any reason not covered by the contract.

Source:, 2019

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Finalizing the agreement

Once you and the seller have finished negotiating, you’ll sign a purchase agreement, which contains all the relevant details, including the purchase price, whether you plan to have a mortgage, your earnest deposit amount, and more. Once you’ve signed this, you typically enter what is called a due diligence period.

That is the time for you, your real estate agent, and your home mortgage consultant to check that the home’s condition, value, and ownership are as expected. You’ll also want to start formalizing your mortgage application. Due diligence includes steps such as having a home inspection. You may choose to negotiate any needed repairs that the inspection uncovers.

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