How to Make a Competitive Offer as a First-Time Buyer

28 May 2025

Buying your first home is a huge milestone, but let’s be honest—it can also be nerve-wracking. The real estate market is competitive, and as a first-time homebuyer, you might feel like you’re at a disadvantage compared to seasoned buyers.

But don’t worry! With the right strategy, you can submit a strong, competitive offer that grabs the seller’s attention and increases your chances of landing your dream home. In this guide, we’ll break down everything you need to know so you can confidently make an offer that stands out.

💡 Understand the Market Before Making an Offer

Before diving in, take a step back and assess the real estate market in your area. Is it a buyer’s market (where there are more homes available than buyers)? Or is it a seller’s market (where homes are selling fast with multiple offers)?

If homes are flying off the market, you’ll need to act quickly and strategically. Research recent sales in the neighborhood and talk to a real estate agent to get a clear picture of what you’re up against.

💰 Get Pre-Approved for a Mortgage

If you’re serious about buying, pre-approval is a must. A mortgage pre-approval shows sellers that you’re financially ready to buy and can afford the home.

- ✅ It strengthens your offer since sellers prefer buyers who have financing already lined up.
- ✅ It helps you understand how much house you can afford.
- ✅ It speeds up the closing process.

A pre-qualification is not the same as a pre-approval. Pre-qualification is an estimate, while pre-approval is based on real financial data. Sellers will take you more seriously when you’re pre-approved.

📊 Work with a Knowledgeable Real Estate Agent

Trying to navigate the buying process alone can be overwhelming. A good real estate agent knows the ins and outs of the market and can guide you in making a strong offer.

Here’s what a great agent will do for you:

- Help you determine a competitive offer price based on market conditions.
- Negotiate on your behalf to give you a better shot at securing the home.
- Guide you through contingencies and paperwork so you don't miss any key details.

💲 Make a Strong Offer (Without Overpaying)

You don’t want to lowball the seller and lose the home, but you also don’t want to overpay. So, how can you find the sweet spot?

✔️ Start with a Competitive Offer Price

- Look at comparable homes (comps) in the area to understand what similar homes are selling for.
- Ask your agent for advice—if it’s a hot market, you may need to offer slightly over the asking price.

✔️ Put Down a Bigger Earnest Money Deposit

Earnest money is a deposit that shows the seller you’re serious. The higher your earnest money, the more competitive your offer looks. Typically, this is 1%–3% of the home's price, but in a bidding war, increasing your deposit can make your offer stand out.

✔️ Limit Contingencies

Contingencies are conditions that must be met before the sale goes through. Common ones include:
- Financing contingency (making sure your loan gets approved)
- Inspection contingency (allows you to back out if major issues are found)
- Appraisal contingency (ensures the home's value matches the price)

While these are important, too many contingencies can make sellers nervous. If you're confident, consider waiving minor contingencies to make your offer more attractive.

⏳ Be Flexible with Closing Dates

Sellers appreciate flexibility. If they need more time to move, offering a flexible closing timeline could give you an edge.

Some sellers want a fast closing to move on with their lives, while others may need extra time to find their new home. Work with your agent to tailor your closing date to fit the seller’s needs—this small gesture can help set you apart.

✉️ Write a Personal Letter to the Seller

In competitive markets, adding a personal touch can make a difference. Writing a heartfelt letter to the seller can make your offer more than just numbers.

Here’s what you can include:
- Why you love the home and how you picture yourself living there.
- Any personal connection you feel to the house or neighborhood.
- A little about yourself and your family (but keep it professional).

Many sellers have emotional attachments to their homes, and your letter can help them feel good about passing it on to you.

🔥 Consider an Escalation Clause

An escalation clause can help you outbid other buyers without going overboard. It works like this:

> You offer $400,000 but include a clause stating you’ll go up to $420,000 in case of competing bids, increasing your offer in increments of $2,000.

This way, you can automatically stay ahead of other bidders without bidding too much right away.

🏡 Be Ready to Act Fast

In a hot market, hesitation can cost you the home. If you find a property you love, be prepared to move quickly. Have your finances in order, stay in constant communication with your agent, and be ready to submit your offer immediately.

If multiple offers are expected, ask your agent if a "highest and best" offer is necessary from the start. This means putting your strongest offer forward first, rather than negotiating back and forth.

📑 Review the Offer Contract Carefully

Once your offer is accepted, you’ll be signing a contract that outlines all of the terms. Before signing, review everything with your agent to ensure there are no surprises.

Pay close attention to:
- The purchase price
- Any contingencies
- The closing date
- Any included appliances or fixtures

A solid review can save you from unexpected headaches down the line.

✅ Keep Emotions in Check

We get it—home buying is exciting and emotional. But falling in love with a house too early can lead to overbidding or ignoring issues. Stay level-headed and stick to your budget.

If your offer isn’t accepted, don’t lose hope! The right home will come along, and you'll be ready when it does.

✨ Final Thoughts

Buying your first home is a thrilling journey, but it also comes with challenges—especially in a competitive market. The key is to be prepared, strategic, and flexible.

By getting pre-approved, making a strong yet reasonable offer, limiting contingencies, and working with a great real estate agent, you can increase your chances of winning the home you love.

Stay patient, stay confident, and before you know it—you’ll have the keys to your dream home in hand!