• A real estate offer is a formal written proposal stating the price and terms under which a buyer agrees to purchase property from a seller.
• Offers become legally binding contracts once accepted and signed by both parties with no changes to the original terms.
• The strength of an offer depends on price, financing, contingencies, and timing—not just the dollar amount.
• Land purchase offers require special considerations, including entitlements, infrastructure, environmental factors, and resource rights.
• In competitive markets, buyers can strengthen offers with larger earnest money deposits, fewer contingencies, and flexible closing timelines.

An offer stands as the foundation of every real estate transaction. It represents the first concrete step toward transferring property ownership from a seller to a buyer. When a potential buyer finds a property they want to purchase, they submit a written proposal—the offer—that outlines their preferred and suggested terms for the purchase.

The offer serves three main purposes:

1. It tells the seller that a buyer wants to purchase their property.
2. It outlines the specific conditions under which the buyer is willing to make the purchase.
3. It provides the starting point for negotiations between the buyer and seller.

Real estate offers in the United States take the form of standardized contracts that comply with state laws. These contracts protect both parties by ensuring all aspects of the potential transaction are documented and understood before proceeding.

Real estate offers have specific legal characteristics that distinguish them from casual expressions of interest. Understanding these legal components helps both buyers and sellers navigate the transaction process with confidence.

Contractual Elements

For a real estate offer to be valid, it must contain certain elements, such as:

1. Identification of parties: The full legal names of both the buyer and seller.
2. Property description: A clear description of the property being sold, typically including the legal description.
3. Consideration: The purchase price and how it will be paid.
4. Consent: Signatures from all parties involved, indicating mutual agreement.
5. Legal purpose: The transaction must be for a legal purpose.

Additionally, the offer must demonstrate both parties’ legal capacity to enter into the contract and their understanding of the terms of the agreement.

RELATED: The Only 3 Things You Need to Make an Offer (It’s Simpler Than You’d Think!)

When Does an Offer Become Binding?

An offer becomes a binding contract when:

1. The seller accepts the offer without changes.
2. Both parties sign the contract.
3. The signed acceptance is communicated back to the buyer or buyer’s agent.

Until all these steps occur, either party can walk away without legal consequences. Once binding, however, failing to perform as agreed may result in legal and financial penalties.

Different situations call for different types of offers. Here are the most common ones you’ll encounter:

Standard Purchase Offer

This is the most common type of offer, used for typical residential or commercial property purchases. It includes all standard terms and contingencies.

Cash Offer

A cash offer indicates the buyer will purchase the property without mortgage financing. These offers often appeal to sellers because they typically close faster and have fewer contingencies.

Contingent Offer

This type of offer includes specific conditions that must be met before the sale can proceed. Common contingencies include:

• Home inspection contingency: Allows the buyer to negotiate repairs or back out if inspections reveal significant issues.
• Financing contingency: Makes the offer dependent on the buyer securing a mortgage loan.
• Appraisal contingency: Permits the buyer to renegotiate or cancel if the property appraises below the offer price.
• Home sale contingency: Makes the purchase contingent on the buyer selling their current home.

As-Is Offer

In an as-is offer, the buyer agrees to purchase the property in its current condition, often waiving the right to request repairs after inspection. These offers are common with distressed properties or in competitive markets.

Escalation Clause Offer

An escalation clause or escalator includes a provision that automatically increases the buyer’s offer by a specified amount over any competing offer, up to a maximum amount. It’s used in competitive markets to help buyers win bidding wars.

We cover these types of offers and how to make them specifically for the land business in our course, the Beginner’s Deal Finding Guide. Watch Seth describe what to expect from this comprehensive, A-to-Z course:

The process of making and responding to real estate offers follows a standard sequence:

1. Preparing the Offer

The buyer and their agent prepare a written offer based on:

• Market analysis and comparable sales, aka “comps.”
• The buyer’s budget and financing options.
• Property condition and needed repairs.
• The buyer’s timeline and requirements.

2. Submitting the Offer

The buyer’s agent presents the offer to the seller’s agent, who then presents it to the seller. Occasionally, the buyer’s agent may present directly to the seller.

3. Seller Response

Upon receiving an offer, the seller has three options: accept the offer, reject the offer, or present a counteroffer with modified terms.

4. Negotiation

If the seller counters, the buyer can accept, reject, or counter again. This negotiation continues until both parties reach an agreement or one party walks away.

5. Acceptance and Ratification

Once both parties agree to terms, they sign the contract, making it binding. This step starts the clock on contingency periods and other deadlines specified in the contract.

6. Earnest Money Deposit

After acceptance, the buyer deposits the agreed-upon earnest money with an escrow agent or title company. The deposit demonstrates the buyer’s seriousness and can be forfeited if the buyer breaches the contract.

Creating an offer that stands out requires strategic thinking about both the market and the specific property.

Understanding Market Conditions

The strength of your offer should reflect current market dynamics.

For example, in a seller’s market (low inventory, high demand), offers need to be aggressive with few contingencies and strong terms.

Conversely, in a buyer’s market (high inventory, low demand), buyers have more room to negotiate favorable terms and conditions.

In cases where the market is neutral or balanced between the two, reasonable offers with standard contingencies are typical.

Key Components of a Competitive Offer

To create a compelling offer, regardless of current market conditions, remember these tips:

1. Offering at or above the asking price in competitive markets can help your offer stand out.
2. A larger deposit signals you’re serious about the purchase.
3. Pre-approval letters from lenders strengthen your offer by demonstrating you can secure financing.
4. Limiting contingencies or including shorter contingency periods makes your offer more attractive.
5. Aligning your closing date with the seller’s preferences can give you an edge.

Additionally, a personal letter (aka “buyer love letters”) might work for some sellers. Some buyers may use a letter to explain why they love the property, and in some cases this can appeal to the seller’s emotions. However, this practice is becoming less common due to fair housing concerns.

Both buyers and sellers make mistakes during the offer process that can cost time, money, or even the deal itself.

Buyer Mistakes

• Making lowball offers in competitive markets
• Including too many contingencies
• Not having financing in order before making an offer
• Failing to include an escalation clause when needed
• Not having enough earnest money ready to deposit

Seller Mistakes

• Rejecting offers outright instead of countering
• Focusing only on price and ignoring other terms
• Not considering the buyer’s ability to close
• Setting unreasonable deadlines or conditions
• Letting emotions override business decisions

Land transactions differ from residential property deals in several important ways that affect offers and negotiations.

Unique Aspects of Land Offers

When making or receiving offers for land, consider these special factors:

1. Financing challenges: Traditional mortgages are harder to obtain for raw land, so offers often include alternative financing arrangements like seller financing or longer timeframes to secure specialized loans. Learn why seller financing makes the most sense for structuring land transactions.
2. Due diligence requirements: Land offers typically include extended due diligence periods for investigating zoning, access rights, environmental issues, utility availability, and development potential.
3. Valuation complexity: Without comparable improved properties, land valuation is more subjective, which can lead to wider gaps between asking prices and initial offers. Seth has compiled the best-in-class valuation guidance for land investors in our blog, “How To Find The ‘Market Value’ of Vacant Land.”
4. Contingency focus: Land offers emphasize contingencies related to soil and perc tests, surveys, environmental studies, zoning verification, and development approvals rather than home inspections.
5. Creative structures: Land offers often include creative terms like performance-based pricing, phased acquisitions, joint ventures, or option agreements that aren’t common in residential deals.

Structuring Land Offers for Success

Land investors can structure offers to manage risk while appealing to sellers:

• Option agreements: Pay for the exclusive right to purchase within a specified timeframe. The conversation between Seth and Jesse below highlights how to close a land deal successfully with option agreements.
• Phased closings: Buy portions of the property over time as certain milestones are reached.
• Performance-based pricing: Tie the purchase price to achieving specific entitlements or approvals.
• Partnership offers: Propose joint ventures where the seller retains partial ownership.
• Extended closings: Negotiate longer closing periods for thorough due diligence.

Land Development Considerations

When buying land for development, offers need to cover more than just the basics. Unlike buying a home, developers must think ahead about what they’ll need to build on the property.

Smart developers include contingencies about permits and approvals in their offers. This gives them time to work with local governments to get the green light for their plans. If they can’t get crucial permits, these contingencies let them back out of the deal without losing money.

Infrastructure also needs attention in a development offer. Who will pay for roads, water lines, electricity, and sewer connections? The offer should clearly state who handles these costs and what happens if building this infrastructure costs more than expected.

Environmental issues can make or break a development project. A good offer addresses potential problems like wetlands, protected wildlife, or soil contamination. It should spell out who will pay for environmental studies and cleanup if needed, plus a way to end the deal if major problems are found.

Rights to resources matter too. The offer should clarify who owns mineral rights, water rights, and development rights, since these aren’t always included with the land itself.

Finally, neighboring properties can affect development plans. Some developers include options to buy adjacent land in their initial offer, giving them room to expand later while keeping competitors at bay.

RELATED: What Every Land Investor Should Know About Mineral Rights

Technology has changed how offers are created, submitted, and processed in the real estate industry.

These days, modern offers often use digital forms and utilize electronic signature platforms like PandaDoc or DocuSign. In bigger real estate investment companies, these offers are sent out en masse using email or similar transaction management software and tracked individually.

While many purists argue that these technologies have removed the “personality” of the offer, they have no doubt accelerated the offer process. This enabled faster submissions and responses, which is particularly important in competitive markets.

Impact of iBuyers and Instant Offers

Companies like Opendoor, Offerpad, and Zillow Offers have introduced “instant offers” to the market. These offers use a special algorithm based on property data and are sent to sellers without the traditional step-by-step process of an offer. These usually take the form of cash offers with flexible closing dates.

Instant offers are controversial, however, especially since most are drastically below market value in exchange for the convenience. The caveat is that the auto-generated offers feature speed and certainty, which can be more important for some motivated sellers.

How long does a buyer typically have to respond to a counteroffer?

There is no standard timeframe for responding to a counteroffer, as it depends entirely on what’s specified in the counteroffer itself. Most counteroffers include an expiration date or deadline, typically ranging from 24 to 72 hours in active markets.

Without a specified timeframe, the counteroffer technically remains open until revoked by the seller, though unwritten industry standards often expect responses within 1-3 days. Sellers can revoke unaccepted counteroffers at any time before the buyer responds.

In hot markets, response windows may be just hours, while in slower markets, longer timeframes are common. Both parties should clearly communicate expected response times to avoid misunderstandings.

Can a seller accept multiple offers on the same property?

No, a seller cannot legally accept multiple offers on the same property simultaneously. Once a seller accepts an offer and communicates that acceptance to the buyer, a binding contract exists.

However, sellers can accept backup offers that would take effect if the primary contract falls through. These backup offers include specific language stating they’re contingent on the termination of the first contract. Sellers can also use multiple offer situations to negotiate better terms with potential buyers but must ultimately select just one offer to accept.

Note that accepting multiple binding offers constitutes a breach of contract.

What happens to earnest money if the deal falls through?

The fate of earnest money depends on why the deal collapses.

If the buyer backs out for a reason covered by a contingency in the contract (like a failed inspection or inability to secure financing), they typically receive their earnest money back. On the other hand, if they withdraw for reasons not protected by contingencies, the seller usually keeps the deposit as liquidated damages.

Some contracts specify how earnest money will be distributed in various scenarios. Disputes over earnest money often involve the escrow holder keeping the funds until the parties reach an agreement or a court decides. Mediation clauses in many contracts require attempted settlement before litigation.

1. California State University Northridge, “Understanding the Roles of Offer and Acceptance in the Formation of a Contract.” https://www.csun.edu/sites/default/files/blawaccept.pdf
2. Opendoor, “What is a cash offer in real estate and why consider it?” https://www.opendoor.com/articles/what-is-a-cash-offer-in-real-estate-and-why-consider-it
3. Quicken Loans, “A Guide To Escalation Clauses In Real Estate.” https://www.quickenloans.com/learn/escalation-clause
4. Zillow, “What Is Earnest Money?” https://www.zillow.com/learn/earnest-money-deposits/
5. Pennsylvania Association of Realtors, “Love Letters: Full of Risk or Reward?” https://www.parealtors.org/blog/love-letters-full-of-risk-or-reward/
6. FasterCapital, “Land acquisition strategy: The Art of Land Acquisition: Insights for Entrepreneurs and Marketers.” https://fastercapital.com/content/Land-acquisition-strategy–The-Art-of-Land-Acquisition–Insights-for-Entrepreneurs-and-Marketers.html
7. Listing 2 Leasing, “Real Estate: Instant Offers and Future Trends.” https://listing2leasing.com/blog/real-estate-instant-offers-future-trends/
8. HomeLight, “An Offer Comes in on Your Home: How Long Do You Have to Respond?” https://www.homelight.com/blog/how-long-does-a-seller-have-to-respond-to-an-offer-on-a-house/
9. Real Estate Law Corporation, “Can The Seller Accept Backup Offers While Under Contract With A Buyer?” https://www.realestatelawcorp.com/can-the-seller-accept-backup-offers-while-under-contract-with-a-buyer/
10. HomeLight, “A Seller’s Guide To When A Buyer Does and Doesn’t Get Their Earnest Money Back.” https://www.homelight.com/blog/how-to-get-earnest-money-back/
11. SAC Attorneys, “Is Earnest Money Refundable?” https://www.sacattorneys.com/articles/is-earnest-money-refundable/