How to Know How Much to Offer for a House?


|10 min read

Buying a house is exciting, but it’s also one of the most significant purchases of your life. Knowing how much to offer to get the home of your dreams is crucial. The strategy behind making an offer isn’t just about how much you can pay but how to be competitive and get the best deal.

Whether you’re a first-time homebuyer or an experienced real estate investor, understanding how to craft a well-informed offer is crucial to success. For many, this step is not just a financial transaction but a milestone that involves significant planning and strategic decision-making.

Recognizing whether you are entering a buyer’s or seller’s market will directly influence your offer strategy. Your offer price isn’t just about paying market value; it’s a strategy to either beat other buyers or open negotiations with the seller. 

This article will break down what you need to review when deciding on an offer price. Your real estate agent is your best resource when deciding how much to offer. Listen to their perspective and lean on their experience.

Your Offer is a Negotiation Strategy

When entering into negotiations for a residential property, it’s important to understand that your initial offer price is not just a financial bid—it’s a strategic tool. The offer sets the stage for negotiations and communicates to the seller your level of interest and your financial approach.

This strategic use of the offer price can significantly influence the trajectory of property acquisition discussions. For example, an offer that is too low can insult a seller, while offering too low can result in overpaying. 

Your offer price should be informed by comprehensive research and a clear understanding of the property’s value, market conditions, and your own financial limits. However, it’s also important to approach this figure with flexibility.

Typically, an offer does not represent the ceiling of what you are willing to pay but rather a starting point from which negotiations can develop.

Treat your offer price as a conversation opener. Set a reasonable price and contract terms that align with your local market and budget. 

Understand the Housing Market

Housing market conditions will directly impact your offer on the house. In a soft market, buyers can be more aggressive with their offers, while in a hot market, offers often need to be above the asking price.

When you start looking for homes, get to know if it’s a buyer’s, seller’s, or neutral real estate market. 

What is a Buyer’s Market? 

 A buyer’s market in real estate is characterized by conditions that favor buyers over sellers. This type of market occurs when the supply of available homes exceeds the demand from potential buyers.

Market indicators of a buyer’s market include: 

  • Lower than historical asking prices or price reductions on listed homes. 
  • High inventory levels give buyers more options to choose from and decrease competition. 
  • Longer days on market (DOM), meaning that homes take longer to sell than average. 
  • Sellers offering more promotions or incentives, such as interest rate buy downs or closing cost concessions. 

In a buyer’s market, you generally have more negotiation leverage due to the lower competition. Buyers might consider making offers below the asking price, especially on properties that have been on the market for an extended period.

Furthermore, buyers have more flexibility in demanding contingencies for financing, inspection, and appraisals without significantly risking the loss of the property. With less pressure from competition, buyers can take their time putting together an offer on a house.

What is a Seller’s Market?

A seller’s market refers to an economic environment with more buyers than properties available. In these conditions, an imbalance in the housing market drives up prices quickly.

We saw an extreme version of a seller’s market driven by inflation across most of the country from 2020 to 2022. Despite high-interest rates today, many US housing markets remain strong for sellers. 

Market indicators of a seller’s market include: 

  • High asking prices with an increasing median price year-on-year trend. 
  • Fast selling timelines with listings sitting on the market for short periods of time. 
  • Bidding wars and resulting sale prices above asking. 
  • Low inventory levels. 
  • Low sale volumes. 

In a seller’s market, the selling parties typically have most of the negotiation power. Homes sell quickly, and buyers must be prepared to make quick decisions and strong offers to purchase a home successfully. 

What is a Neutral Market?

A neutral market, also called a balanced market, happens when there’s a balance between housing supply and buyer demand. In these markets, neither buyers nor sellers have the upper hand. Instead, more desirable properties may still sell quickly, while less desirable properties may take longer to sell. 

Signs of a balanced market are: 

  • Stable home prices without significant upward or downward trends. Sale prices tend to reflect the true market value of the home. 
  • Moderate inventory levels that meet demand reasonably well without serious competition. 
  • Homes sell at approximately the same rate as the historical average DOM. 
  • Few bidding wars with the average home typically selling for about asking price. 

For buyers and sellers, a neutral market is usually the least stressful, as market values are clear with little fluctuations. In these market conditions, your offer strategy will depend on the property, contingencies, and signs of other buyer demand. Talk to your real estate agent to get their advice. If your goal is to score a deal, you may have to be patient and be willing to pass over some properties. 

Evaluate the Property

The condition of a property directly impacts its market value. A home in need of repair, renovation, or redevelopment will have a significantly lower price than one that is move-in ready.

A thorough evaluation of the property provides insights into the property’s condition and market value, giving buyer’s concrete evidence to support their offer on a house. 

Home Inspections

A well-informed offer takes into consideration the condition of the property. In an ideal world, buyers would be able to get a full inspection before submitting an offer on a house. However, in most real estate markets, that just isn’t feasible, and home inspections are reserved for offers with an inspection contingency. 

Most of the time, buyers need to evaluate the home during a walk-through, sometimes bringing along a contractor to point out any red flags. Then, they can review the disclosure documents to see if any issues are listed there. 

In a strong buyer’s market, a seller may permit a home inspection before accepting an offer. Alternatively, house flippers will often offer an inspection to quell any concerns of subpar workmanship. 

During a home inspection, the inspector collects and provides information on the property’s:

  • Appliances
  • Plumbing
  • Electrical
  • HVAC Systems
  • Structural Integrity
  • Roof Condition

Big ticket items in need of repair will impact what a seller is willing to pay for a home. If they have this information upfront, they can use it during initial negotiations. An inspection that reveals issues gives buyers a strong basis to negotiate a lower price or request repairs.

In a seller’s market, where competition is fierce, sellers might be less inclined to negotiate on price based on inspection outcomes. Buyers may have to decide whether to accept more issues or potentially lose out on the property.


Getting an appraisal is a good tool when deciding what to offer in almost any market conditions. You can get basic exterior-only professional appraisal without access to a home that will give you a general idea of the home’s value.

However, remember that market conditions impact value. A property’s fair market value is not what is reported on an appraisal report but what a buyer is willing to pay. 

An appraisal is a good tool to gauge how far off the asking price is from what comparable sales have achieved. If you don’t want to pay for a professional appraisal, ask your real estate agent for a comprehensive comparative market analysis (CMA). This report should include all of the recent sales and help you determine the approximate value of the property you are interested in. 

If an appraisal comes in close to or above your offer price, it reaffirms that your offer is in line with the property’s market value, giving you confidence in your purchase decision and validating your offer. 

However, if the appraisal is lower than your offer, you need to consider whether to renegotiate the price or potentially walk away to avoid overpaying. While getting an appraisal before making an offer on a house is optional, a bank funding any mortgage will likely require an appraisal once the property is under contract as a loan condition. 

While this information helps when determining what to offer on a house, don’t forget about market conditions. In a seller’s market, it’s common for appraisals to come in below list price, and sellers will likely resist lowering their price because they will expect to receive a higher price from other buyers. 

Make Your Financial Considerations: How Much Can You Afford?

While everyone wants to own their dream home, most buyers have to work within a budget. Making an offer on a house that is above your budget or what you are qualified to borrow could leave you in tears (and losing your earnest money deposit). 

Your budget should consider: 

  • The amount you are pre-approved for. 
  • What you plan and have saved as a down payment. 
  • Your closing costs. 
  • Any additional expenses you anticipate for renovations or furniture. 
  • A contingency fund as a safety net should anything go wrong. 

The amount that you offer needs to be something you can afford. If you’ve found your dream home, it doesn’t always pay off to stress about a few thousand dollars on the purchase price (unless you’ve maxed out your budget). Consider how the purchase price impacts your monthly mortgage payment and if that payment works with your long-term budget. 

Get Pre-Approved with a Mortgage Lender

Most sellers will require a pre-approval letter and proof of funds before accepting an offer; however, if a seller is desperate or selling without a real estate agent, they might overlook this step. Getting pre-approved doesn’t just give a seller confidence in your offer and ability to close; it gives buyers a firm idea of how much they are qualified to borrow. 

When making an offer, you must stick within the amount you can borrow, even if you find yourself in a bidding war. The loan size you can get depends on your income and expenses, not necessarily how much you have saved. If you plan to exceed your qualified loan amount, expect to pay the difference in cash. 

You Deposit Amount

How much you can put down on a home impacts the loan product you can get, whether or not you have to pay mortgage insurance, and how much you can spend on a property. 

When writing an offer, you need to consider how much cash you have available as a deposit while still reserving funds for closing costs and inspections. 

Does the Home Need Immediate Repairs?

If you’re offering on a fixer-upper and know you need a budget for repairs, make sure you factor this into your offer. Sometimes, fixer-uppers aren’t listed at a reasonable price, and negotiations are needed to accommodate the cost of renovations. 

Buyers with a limited budget should be wary of fixer-uppers as they tend to have hidden costs. Analyze the local market and put together a budget that includes renovation funds and a sizeable backup fund. Make sure these funds are set aside outside of the initial purchase costs. 

When to Offer More Than Asking Price

If a list price is disclosed, why should you offer to pay more? Sometimes, paying more than asking is what is required to buy a home. 

In a Seller’s Market

A seller’s market means you’re likely going to face competition and potentially a bidding war. If you’ve found a home you love, you may need to pay more than the listing price.

Talk to your real estate agent about how to write a compelling offer that fits within your budget and contingency needs. Be prepared with a solid offer that is more than asking and has limited contingencies. 

If the List Price is Too Low

In some situations, the list price is not the real asking price but a starting point for negotiations and a strategy to attract buyers. Listing agents use a low listing pricing strategy to attract more buyers to the property, leading to a multiple offers scenario.

In some of the country’s hottest seller’s markets, it’s not abnormal for desirable homes to sell for 30-50% over the asking price. Furthermore, buyers have to navigate offers against cash buyers, which often means bidding even higher. 

In these market conditions, ask yourself: 

  • Does the property meet my living requirements? 
  • Am I confident I can make the mortgage payments? 
  • Is the current market trending upwards or cooling off? 
  • Are there comparable homes I could potentially buy for less? 
  • Do I have a time restriction when buying a home? 

Bidding more than the listing price depends on your finances and needs. It can get frustrating to repeatedly lose bidding wars, so in a hot market, make sure you make a strong offer on a house you love. 

When to Offer Less Than the Asking Price

Selles sometimes overprice their homes in hopes of selling for top dollar, which happens frequently in a buyer’s market when seller expectations are still high. 

Smart buyers know that they can either submit a lowball offer in hopes of negotiating a reasonable price or look at other options. So, when should you offer less than the listing price? 

The House Has Been on the Market for a Long Time

A house that has been on the market for a long time (significantly more than the average DOM) is considered a stale listing. It hasn’t acquired the necessary demand from buyers, and the sellers could potentially be getting anxious. 

Therefore, buyers could have an opportunity to work with a more motivated seller and offer less than full price. 

The Comparable Sales Indicate the House is Overpriced

If a property’s listing price is already noticeably higher than comparable homes, don’t be afraid to submit a low offer. An experienced agent will help you with a breakdown of recent sales and justification for your price, giving you the upper hand in negotiation.

Your evidence will help avoid a seller becoming insulted and open the conversation for productive negotiation. 

The House is in Need of Repair

A home in disrepair is an investment risk. Every renovation project uncovers more issues, so buyers expect a deal. If you’ve found a fixer-upper that’s attracted little buyer interest, you should feel confident making a lower offer.

You’re Making a Cash Offer

If you’re in a position to make a cash offer, sellers might be willing to accept a lower price due to the simplicity and security of the transaction compared to one involving mortgage financing, which is subject to approval and can fall through. However, cash offers don’t mean the seller is guaranteed to accept a lowball offer.

The Seller is Motivated

Sometimes, your real estate agent hears that a seller is motivated to sell their property quickly. Seller motivations could be that they have to move for a job, can no longer afford their mortgage, are selling an inherited property, are getting divorced, or any other number of reasons.

In these situations, buyers have more wiggle room to negotiate the best terms and price. 

How to Know How Much to Offer on a House: Talk to Your Real Estate Agent

Crafting an offer on a home goes beyond just the price—it’s about employing a strategic approach to secure the house of your dreams. Most individuals will purchase only a handful of homes in their lifetime, whereas real estate agents handle numerous transactions annually.

Leveraging their extensive experience, a knowledgeable agent can expertly guide you through the local offer process. Instead of thinking you know best, talk to your agent about your options and their recommendations. They will give you their suggestions based on current market conditions, the home’s features, comparable sales, and your budget. 

When buying a house, it’s crucial to work with a real estate agent who has a successful track record representing buyers. The right agent will listen to your needs and work within your budget. Start your agent search with FastExpert. FastExpert helps you review agent profiles and experience to take the guesswork out of finding a great agent to help you make a successful offer. 

Kelsey Heath

Kelsey Heath is a real estate content specialist with an extensive background in residential, industrial, and commercial property. She has been involved in the industry for a decade as a professional and personal investor, gaining a deep understanding of the market and trends. With a passion for written communication, Kelsey loves helping people understand the sometimes-complicated concepts behind real estate and is now a sought-out guest and ghostwriter.

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