A good opening offer comes from four things: what similar homes recently sold for, the condition of this particular house, how much competition you’re up against, and the most you’re willing to pay. Start with the comps, adjust for condition, then move up or down depending on how hot the market is. Set your ceiling before you write the offer. The asking price tells you what the seller hopes to get. The sold prices of similar homes tell you what the house is likely worth.
Below is a simple framework, a comps worksheet you can fill out tonight, and some practical offer ranges. We’ve also covered how to make your offer stronger without adding to the price.
Key takeaways
- Recent comparable sales determine what a house is worth. The list price is only the seller’s starting point.
- Decide your ceiling before you decide your opening offer.
- Offering over asking only makes sense if you can cover a possible appraisal gap.
- Your first offer starts the negotiation. What you do after the counteroffer matters just as much, so we cover it in a separate guide.
How to pick your opening offer in four steps
- Find the value. Look at 3 to 6 comparable homes that sold recently nearby, and use them to estimate what this house is worth. The list price doesn’t count here.
- Adjust for condition. If the house needs work the comps didn’t need, subtract a realistic repair cost. If it’s been updated and they weren’t, add a little.
- Read the competition. A fresh listing with a weekend of showings and an offer deadline calls for a different number than a house that has sat for two months after a price cut.
- Set your walk-away number first. Decide the highest price you’d pay, based on your budget and the value you estimated. Then choose an opening offer that leaves room to negotiate below that ceiling. If you expect multiple offers, open close to it.
Your agent should run the full analysis with you. It still helps to understand the reasoning yourself, so you can tell when a number makes sense and when it doesn’t.
A comps worksheet you can use yourself
Pull recent sales with your agent or from a listing site. Then ask these questions about each comparable home:
- How recent is the sale? The last three months is ideal, and six months at most. Older sales may not reflect current prices or mortgage rates.
- How close is it? Stay in the same neighborhood, and in the same school district if that matters where you’re buying. In older Mid-Atlantic cities, two blocks can mean a very different price.
- How similar is it? Compare square footage, bedrooms and bathrooms, lot size, parking, and style. A rowhome and a detached house on the same street aren’t true comps.
- What condition was it in when it sold? Check the listing photos. An updated kitchen or a new roof can explain a big difference in price.
- What did it sell for compared with its list price? If the comps sold above asking, homes nearby are drawing competition. If they sold below, buyers have more leverage.
- How long did it take to sell? A quick sale suggests strong demand. A long one suggests the price was too high or the house had problems.
Once you’ve dropped any home that doesn’t really match, the sale prices of the rest should cluster into a range. Where this house falls in that range depends on its condition and features. That’s your estimate of value.
Read the market without guessing
National headlines about “the housing market” won’t tell you much about the block you’re buying on. Local signals will:
- Days on market. A house that’s been listed for a few days with steady showings is in a different position than one approaching its second month.
- Price reductions. A recent cut often means the seller is ready to hear lower offers.
- Offer deadlines and “highest and best” requests. These usually mean the listing agent expects multiple offers.
- Months of inventory. This is how long the homes currently for sale would take to sell at today’s pace. A low number favors sellers and a higher number favors buyers. Ask your agent for the figure for your town or ZIP code, because national averages can hide very different local conditions.
Seller concessions follow the same pattern. Some sellers will pay part of the closing costs or give a repair credit, and in other areas sellers rarely agree to that. Ask your agent what’s common in your market right now before you add a concession request to your offer.
Factor in condition, repairs, and disclosures
Read the seller’s disclosure before you settle on a number. Items like an older roof, past water in the basement, or an outdated electrical panel are fair to account for in your price. Estimate repair costs from actual quotes or your agent’s experience, not guesswork.
Keep an inspection contingency in your offer if you can. The CFPB’s guide to home inspections explains what an inspection covers and why it matters. If the inspection finds something you didn’t know about, you can usually go back to the seller and ask for a repair, a credit, or a lower price.
Offer ranges: over, at, or under asking
These ranges are rules of thumb, not fixed rules. Where you land depends on your comps and your local market. As an example, the dollar figures below use a hypothetical home listed at $500,000.
Over asking
This makes sense when the comps support a higher price than the list price, the house is new to the market, or you know there are multiple offers. Going 1% to 5% over asking might mean $505,000 to $525,000 on our hypothetical house. In very competitive situations offers can go higher, but only if the comps back it up and you can cover a possible appraisal gap.
At asking
This makes sense when the list price lines up with the comps, there’s some interest but no bidding war, and you want the house without a long back-and-forth. In the example, that’s $500,000.
Slightly under asking
This makes sense when the house has been listed for a few weeks, showings have slowed, or the comps come in a little below the list price. An offer 1% to 3% under asking would be about $485,000 to $495,000.
Discounted
This makes sense when the house needs real work, has been listed for a long time, or the price has already been cut. An offer 5% to 10% under asking would be about $450,000 to $475,000. Include a short explanation with the offer, such as the repair quotes or comps that support your number.
Lowball
Anything more than about 10% under asking can work on a stale listing or with a seller who is under pressure. It can also offend a seller and end the conversation. If you go this low, make sure the numbers support it, and be ready for no response or a firm counteroffer.
What happens if you offer more than the appraisal
Lenders generally base your loan on the lower of the purchase price or the appraised value. If you offer more than the home appraises for, you’ll usually need to cover the difference in cash, renegotiate with the seller, or use an appraisal contingency to cancel the contract.
A hypothetical example: you offer $520,000 and the appraisal comes in at $505,000. You now have a $15,000 gap to cover on top of your down payment, unless the seller agrees to lower the price. The CFPB explains your options when an appraisal comes in low. Before you go over asking, decide how much of a gap you could cover in cash.
Make your offer stronger without paying more
Price matters most to sellers, but it isn’t the only thing they look at. Terms often decide which of two similar offers gets accepted.
- Get fully pre-approved. A pre-approval letter from a lender who has actually reviewed your finances means more to a seller than a quick pre-qualification.
- Offer meaningful earnest money. A larger deposit shows you’re serious. Ask your agent what’s typical where you’re buying and under what conditions you’d get it back.
- Be flexible on timing. Ask the listing agent what closing date works best for the seller. A quick close, a later close, or a short rent-back can matter as much as a few thousand dollars.
- Keep it clean and clear. An offer with fewer requests and complete paperwork is easier to accept. Keep the contingencies that protect you and drop the extras you don’t need.
- Respond quickly. Be available during the offer window, and have your agent confirm that the listing agent received the offer.
Some buyers use escalation clauses, which automatically raise the offer by set amounts up to a cap if there are competing bids. How well they work depends on local custom, so ask your agent before using one. Freddie Mac’s overview of making an offer is also worth reading. When the counteroffers start, our guide on how to negotiate a house price covers what comes next.
Who’s on your side when you make an offer
Buying rules changed after the 2024 NAR settlement. In many markets, you’ll now sign a written agreement with your agent before touring homes or making offers. It spells out what the agent will do for you and how they’ll be paid. Read it carefully before signing. The terms, including compensation and how long the agreement lasts, can be negotiated.
The agreement matters for your offer too. Your agent’s job is to represent your interests: helping you pick a price, write terms, and negotiate. It also affects your offer’s structure. Depending on your agreement and what the seller is willing to do, you might ask the seller to cover some of your agent’s compensation as part of the offer. Ask your agent to explain how that would work in your case before you submit.
Frequently asked questions
How much should I offer on a house?
Start with what similar nearby homes sold for recently, adjust for this home’s condition, and then factor in competition. In a hot market, offering at or above asking may be needed. When a home has been listed for weeks or needs work, offering under asking is common. Set your maximum before you choose an opening number.
Is it rude to offer below asking price?
No, as long as the comps or the home’s condition support your number. Most sellers expect some negotiation. Very low offers without any explanation are the ones that tend to end conversations.
How much over asking should I offer in a bidding war?
There’s no standard amount. Base it on the comps, your budget, and how much cash you could put toward an appraisal gap. Offering more than the house is likely worth can leave you covering the difference out of pocket.
What happens if the appraisal comes in lower than my offer?
Your lender will usually base the loan on the appraised value. You can cover the gap in cash, ask the seller to lower the price, split the difference, or, if you have an appraisal contingency, cancel the contract.
Do I need a buyer’s agent agreement before making an offer?
In many markets, yes. Since the 2024 NAR settlement, agents working with buyers commonly need a signed written agreement before touring homes or writing offers. The agreement describes the agent’s services and pay, and its terms can be negotiated.
Can I make an offer stronger without raising the price?
Yes. Full pre-approval, solid earnest money, a closing date that suits the seller, and clear terms can all make your offer more attractive at the same price.
