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Topic file 13 of 20

Offers and contracts

An offer is not just a price. It is a contract proposal with money at stake and deadlines attached, and the terms you choose decide whether you can walk away if something goes wrong.

Once you find a home, your agent or attorney turns your decision into a written offer, usually on a standard form used in your state. The form covers the price, the deposit, the financing, the contingencies, the dates and what conveys with the home. When the seller signs, it becomes a binding contract. Everything that follows, from inspection to closing, runs on the deadlines it sets.

The parts of an offer

Price is the headline. Behind it sit the financing terms, such as the loan type and amount, which tell the seller how you will pay; the earnest money deposit and who holds it; the contingencies that let you cancel under stated conditions; the closing date and possession date; and requests such as seller credits toward closing costs or items that stay with the home. Each one can be negotiated.

Earnest money

Earnest money is a good-faith deposit made after the seller accepts. Freddie Mac describes it as held in escrow by a third party until closing, where it is usually applied to your down payment or closing costs. The North Carolina Real Estate Commission's guide to earnest money is a clear official explanation of how deposits are held and what can happen if a deal does not close. The contract decides the amount, the deadline to deliver it, who holds it and when it can be kept by the seller.

Contingencies

Contingencies are conditions that must be met for the sale to go ahead. Common ones let you cancel or renegotiate if the inspection reveals problems, if the appraisal comes in below the price, if you cannot get financing, or if you need to sell another home first. For homes built before 1978, federal rules give buyers a 10-day opportunity to conduct a lead-based paint inspection or risk assessment unless the parties agree otherwise in writing. Each contingency has a deadline. Miss it and the protection may disappear.

Counteroffers and competing bids

Sellers can accept, reject or counter. A counteroffer replaces your offer, and you can accept, reject or counter again. In competitive markets, buyers sometimes use an escalation clause, which raises the offer by set steps above competing bids up to a cap, or offer a larger deposit or a flexible closing date. Those can help without giving up protections. The guides explain the risks of each.

Disclosures

Sellers give disclosures about the property's condition, with rules that differ by state. For homes built before 1978, sellers must disclose known lead-based paint and hazards and provide the federal lead pamphlet. Read every disclosure before your inspection, and ask the inspector to look closely at anything mentioned.

The offer as a timeline

An accepted offer starts several clocks at once: the earnest money delivery date, the inspection and lead evaluation periods, the appraisal and financing deadlines, and the closing date. Before you sign, read how the contract counts days and how notices must be delivered. After acceptance, put every date on a calendar with reminders a few days early, book inspections right away and send the contract to your lender the same day. The guides on making an offer and on contingencies show how to set realistic deadlines.

When the seller answers

A seller rarely signs your first offer as written. A counteroffer changes one or more terms, and you can accept it, reject it or counter again before its deadline. Each round can trade price against closing costs, the closing date, contingencies, the deposit or items that stay with the house, so recheck your budget every time a number moves. Nothing is binding until both sides sign the same terms. In a multiple-offer situation, an escalation clause can raise your price automatically to beat a competing bid by a set amount, up to a cap you choose. It should require proof of the other offer, and the cap should be a price you could still pay if the appraisal comes in lower. Some sellers will not accept escalation clauses, and the highest price does not always win. The guides on counteroffers and escalation clauses walk through both with worked examples.

How to use this file

Start with the earnest money guide; it shows how deposits are protected and includes a calculator. Then read the contingency guides before you write your first offer, so you know which protections you are keeping and which you are trading away.

Guides in this file

  1. The appraisal contingency: how it protects a buyer and how to set it

    Your exit if the appraisal comes in below the price.

  2. Contingencies in a home purchase: inspection, appraisal, financing and more

    The clauses that let you exit or renegotiate, and the deadlines that end them.

  3. How to respond to a counteroffer on a house

    A counteroffer means the seller wants to deal; now you decide on what terms.

  4. Earnest money: how much, who holds it, and how to protect it

    The deposit that shows good faith, and the contract terms that decide its fate.

  5. Escalation clause: how it works in a home offer

    An escalation clause raises your bid automatically, up to a cap you choose.

  6. The financing contingency: protecting your deposit if the loan falls through

    If the loan falls through, this clause decides who keeps the deposit.

  7. How to make an offer on a house: building the offer package

    Price, terms and paperwork, assembled in the order sellers read them.

  8. The inspection contingency: how it protects you and how to use it

    A set window to inspect, then ask, renegotiate or walk away.

  9. Seller disclosures: what sellers must tell you and when

    The seller's own account of the house, and the deadlines that come with it.

Related reading on this site

Questions buyers ask

What happens to my earnest money if the deal falls through?

It depends on the contract. If you cancel under a contingency within its deadline, the deposit is usually returned. If you back out for a reason the contract does not allow, or miss a deadline, the seller may be entitled to keep it.

Should I waive contingencies to win a bidding war?

Waiving a contingency removes a way out. Waiving the inspection or appraisal contingency can leave you obligated to buy a home with problems or to cover a gap in cash. Understand exactly what you would be giving up and whether you could afford the worst case.

Sources checked for this page

Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.

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