How to Make a Competitive Offer in Any Market

Know the Market You Are In

Your offer strategy depends entirely on whether you are in a seller's market (low inventory, multiple offers) or a buyer's market (lots of homes, few buyers).

• Seller's market: Homes sell fast, often above asking. Expect bidding wars. - Buyer's market: Homes sit longer. You have room to negotiate price and terms. - Balanced market: Neither side has a clear advantage. Fair offers get accepted.

Your agent should tell you which market you are in based on absorption rate — how long it takes current inventory to sell at the current pace. Less than 3 months is a seller's market. More than 6 months is a buyer's market.

Price Strategy in a Seller's Market

Look at comparable sales (comps) for the last 90 days. If homes are consistently selling 5–10% above listing, your offer needs to account for that.

But do not just throw a high number. Ask your agent to call the listing agent and ask: "What matters most to the seller?" Sometimes they want a quick close. Sometimes they want a lease-back option. Price is rarely the only factor.

Price Strategy in a Buyer's Market

Offer 5–10% below listing and include a request for closing cost assistance or a home warranty. Sellers expect negotiation in a slow market. If the home has been on the market 60+ days, your offer should reflect that.

Start with a reasonable offer. Lowball offers ($20k+ under asking on a $350k home) can offend sellers and kill negotiations before they start.

Earnest Money: Signal Your Seriousness

Earnest money is a deposit you make when the offer is accepted — typically 1–3% of the purchase price. The higher your deposit, the more serious you look.

• Standard offer: 1% earnest money - Strong offer in a competitive market: 2–3%

The money sits in escrow and applies to your down payment at closing. In a bidding war, offering a non-refundable earnest money deposit (after inspection) can seal the deal.

Contingencies: What to Keep and What to Cut

In a seller's market, offers with fewer contingencies win. But cutting the wrong ones is risky:

• Inspection contingency: Keep this. Always. You can shorten the inspection period to 7 days instead of 10 or 14. - Financing contingency: Keep this unless you have cash. Losing your deposit because financing fell through is devastating. - Appraisal contingency: You can waive this in competitive markets, but only if you have cash to cover a potential gap.

The Escalation Clause

In a bidding war, an escalation clause says you will beat any competing offer by a set amount (say $1,000 or $5,000) up to a maximum price. This lets you stay competitive without overbidding from the start.

Example: "Offer $400,000. If a competing bona fide offer exists, escalate by $2,000 up to a maximum of $425,000."

Closing Timeline

Sellers often have a preferred closing timeline. Ask the listing agent: "Is the seller flexible on closing date?" If they need 60 days and you offer 30, they might choose a slower offer that fits their schedule.

• 30-day close: Standard. Works for most sellers. - 45–60 days: If the seller needs time to find a new home, this can be your competitive advantage. - 21-day close: Aggressive but signals urgency. Only do this if your lender confirms they can move that fast.

Personalize the Offer

A simple cover letter from you to the seller can make a difference — especially if they have lived in the home for decades. Share why you love the home and your plans for it. Keep it genuine and brief. Some agents scoff at this, but many sellers appreciate knowing their home is going to someone who will care for it.