Making an Offer on a Home: A Complete Guide

Making an offer on a home is one of the most exciting and nerve-wracking moments in the home buying process. You have found the right home, and now it is time to put together a proposal that the seller will accept. This guide walks you through every element of a strong offer, from pricing strategy to contingencies to negotiation tactics.

I have helped over 636 families buy and sell homes across Burlington County and South Jersey, and I have seen what works in every type of market. Whether you are buying in a competitive market like Moorestown or a more balanced market like Delran, the fundamentals of a strong offer remain the same.

What Goes Into a Real Estate Offer?

A real estate offer is a formal legal document that outlines the terms under which you are willing to purchase the property. In New Jersey, the offer is typically presented on a standard form contract. Here are the key components:

Purchase Price

The purchase price is the most obvious part of your offer, but deciding how much to offer requires careful analysis. Your agent will prepare a comparative market analysis (CMA) that shows recent sales of similar homes in the same area. This is the most reliable tool for determining fair market value.

How to decide on your offer price:

• In a balanced market: Offer close to the asking price, typically 95% to 100% of the list price, depending on how the home is priced relative to comparable sales.
• In a seller's market: You may need to offer above asking price to compete. Look at the sale-to-list ratio of recent sales in the neighborhood to understand how much above asking homes are selling for.
• In a buyer's market: You may have room to negotiate below the asking price, especially if the home has been on the market for several weeks.

Earnest Money Deposit

The earnest money deposit, also called a good faith deposit, shows the seller that you are serious about purchasing the home. The deposit is held in escrow by a title company or attorney and is applied to your down payment at closing. If you walk away from the deal without a valid contractual reason, you may forfeit this deposit.

In New Jersey, earnest money deposits typically range from 1% to 3% of the purchase price. On a $400,000 home, that is $4,000 to $12,000. A larger deposit can make your offer more attractive to sellers, especially in competitive situations.

Contingencies

Contingencies are conditions that must be met for the contract to move forward. They protect you as the buyer and give you the right to walk away if certain conditions are not satisfied. The most common contingencies in New Jersey are:

• Inspection contingency: Allows you to have the home inspected and negotiate repairs or cancel the contract based on the findings. Typically 10 to 14 days.
• Financing contingency: Protects you if your loan falls through. You have a set period to secure final mortgage approval.
• Appraisal contingency: Ensures the home appraises for at least the purchase price. If it appraises low, you can renegotiate or walk away.
• Sale of current home contingency: If you need to sell your current home before buying, this contingency gives you time to do so.

In a competitive market, some buyers choose to limit or waive certain contingencies to make their offer more attractive. However, I generally advise against waiving the inspection contingency entirely, as it is your primary protection against costly hidden defects.

Closing Date and Timeline

Your offer should specify a proposed closing date, typically 30 to 60 days after the offer is accepted. The closing date can be negotiated, but having a clear timeline helps both parties plan. Consider whether you need a quick closing or more time to coordinate your move.

Inclusions and Exclusions

Your offer should specify which items are included in the sale. Standard inclusions typically cover built-in appliances, light fixtures, window treatments, and any other fixtures permanently attached to the property. If you want specific items like the refrigerator, washer, or dryer included, state that in the offer. If the seller wants to take something you assumed would stay, it should be listed as an exclusion.

How to Craft a Competitive Offer in South Jersey

In a competitive market, your offer needs to stand out. Here are strategies that work in Burlington County and South Jersey:

Price Strategically

In a multiple-offer situation, the highest price does not always win. Sellers also consider the financing type, contingency structure, and closing timeline. A cash offer with no contingencies may be more attractive than a higher-priced offer that requires financing and has multiple contingencies.

If you are using financing, a larger down payment (20% or more) signals to the seller that your loan is likely to be approved. This can make your offer more competitive even if your offer price is not the highest.

Write a Personal Letter

In some cases, a personal letter to the seller can make a difference. Share why you love the home and the neighborhood, and help the seller see you as the person who will care for the home they are leaving. This is especially effective when the seller has lived in the home for many years and has an emotional attachment to it.

Be Flexible on Timing

If the seller needs extra time to move or wants a quick closing, accommodating their timeline can make your offer more attractive. Ask your agent to find out what the seller's ideal timeline looks like.

Limit Inspection Requests

You do not need to waive the inspection entirely, but you can agree upfront to limit repair requests to major health and safety issues or items above a certain dollar amount. This gives the seller confidence that you are not going to nickel-and-dime them over minor issues.

What Happens After You Submit Your Offer?

Once your offer is submitted, several things can happen:

• Acceptance: The seller accepts your offer as written. Congratulations, you are under contract.
• Counteroffer: The seller comes back with different terms. This could be a higher price, a different closing date, or modified contingencies. You can accept, counter back, or walk away.
• Rejection: The seller rejects your offer. This is disappointing, but it happens. Your agent will help you understand why and adjust your strategy for the next opportunity.
• Multiple offers: The seller may receive multiple offers and ask all buyers to submit their highest and best by a specific deadline. This is common in competitive markets.

In New Jersey, offers and counteroffers typically have a 24-hour expiration, though this can be negotiated. Your agent will guide you through each response and help you make informed decisions.

Negotiating After the Offer Is Accepted

The negotiation does not end when your offer is accepted. There are two additional points where negotiation commonly occurs:

After the Home Inspection

Once the inspection is complete, you will receive a report detailing any issues found. Your agent will help you prioritize which items are worth negotiating. Major safety issues, structural defects, and failed systems are reasonable to request. Minor cosmetic issues or normal wear and tear are typically not worth negotiating.

There are several ways to handle inspection negotiations:

• Ask the seller to make the repairs before closing
• Request a credit at closing so you can make the repairs yourself
• Reduce the purchase price to account for the cost of repairs
• Accept the property as-is if the issues are minor

After the Appraisal

If the appraisal comes in below the purchase price, you have several options. You can negotiate with the seller to lower the price, bring additional cash to cover the gap, challenge the appraisal with additional comparable sales, or walk away if the appraisal contingency is in place.

In a competitive market, some buyers include an appraisal gap clause in their offer, agreeing to cover a certain amount above the appraised value. This can make your offer more attractive to sellers who are concerned about a low appraisal.

Common Mistakes When Making an Offer

• Offering without a pre-approval letter: Most sellers will not consider your offer without proof of financing.
• Getting emotionally attached before the offer is accepted: Do not start planning your furniture arrangement until you have a signed contract. Deals fall through, and it is easier to move on if you have not emotionally moved in.
• Not understanding the seller's motivation: Knowing why the seller is moving and what their timeline looks like gives you a significant advantage in negotiation.
• Ignoring contingencies: Waiving contingencies can make your offer stronger, but it also increases your risk. Make sure you understand what you are giving up.
• Lowballing in a seller's market: In a competitive market, an unreasonably low offer will be ignored, not countered. Work with your agent to make a realistic offer based on market data.

Frequently Asked Questions

Ready to Make an Offer?

Making an offer is the most critical step in the home buying process. Having an experienced agent who knows the local market, understands the nuances of New Jersey real estate contracts, and can negotiate effectively on your behalf makes all the difference.

If you have found the right home and are ready to make an offer, reach out anytime. I would be honored to help you craft a winning offer and guide you through the rest of the process.