How to Make a Competitive Offer on a House: 12 Strategies That Win in Hot Markets

You've found the house. It checks every box. But so have six other buyers, and the listing agent is already talking about "best and final offers" by Friday.

This is reality in competitive housing markets. According to the National Association of Realtors, roughly 1 in 3 homes sold in recent years received multiple offers. In hot metro areas, that number climbs to over 60%.

Winning in this environment isn't just about offering the most money. It's about structuring your offer so the seller feels confident choosing you over everyone else. Here are 12 strategies that actually work.

1. Get Fully Preapproved (Not Just Prequalified)

This is table stakes. A prequalification letter tells the seller you talked to a lender. A [preapproval letter](/blog/preapproval-vs-prequalification) tells them a lender verified your income, pulled your credit, and is ready to fund the loan.

Go one step further if you can: ask your lender for an underwritten preapproval, where an actual underwriter has reviewed your file. This eliminates most financing uncertainty and signals to the seller that your loan is essentially a done deal, pending the appraisal.

Pro tip: Have your lender call the listing agent directly to vouch for the strength of your application. A two-minute phone call from a loan officer can separate your offer from the pack.

2. Offer Above Asking Price — But Strategically

In a multiple-offer situation, offering list price is essentially offering the minimum. But you don't want to wildly overpay either.

Work with your agent to analyze comparable recent sales (comps) and understand the property's fair market value. Then decide how much above market value you're comfortable going.

Here's a framework:

• Moderate competition (2–3 offers): 1–3% above asking price often wins.
• High competition (4–8 offers): 3–7% above asking may be necessary.
• Extreme competition (10+ offers): Expect winning offers 10%+ above asking in desirable areas.

These are rough guidelines. The right number depends on your local market, the specific property, and how it was priced relative to comps.

3. Use an Escalation Clause

An escalation clause automatically increases your offer in set increments above competing offers, up to a maximum you specify.

Example: "Buyer offers $425,000 and will escalate in increments of $2,500 above any bona fide competing offer, up to a maximum of $460,000."

This lets you stay competitive without blindly overbidding. If the next-highest offer is $430,000, you'd win at $432,500 — not $460,000.

When Escalation Clauses Work

• Multiple offer situations where the seller is comparing price
• When you're confident in your maximum number and don't want to leave money on the table
• When the listing agent has confirmed they'll accept offers with escalation clauses

When They Don't

• Some sellers and agents don't like escalation clauses because they reveal your maximum willingness to pay
• In some states, listing agents aren't required to share competing offers to trigger the clause
• A seller might counter at your max anyway, knowing you're willing to go there

Always include language requiring the seller to provide proof of the competing offer that triggered the escalation.

4. Cover the Appraisal Gap

This is one of the most powerful moves in a competitive market. When you offer above asking price, there's a risk the home won't appraise at your offer price. If that happens, the lender will only fund a loan based on the appraised value, and you'll need to cover the difference in cash.

An appraisal gap guarantee tells the seller: "If the home appraises below my offer price, I'll cover the difference (up to $X) out of pocket."

Example: You offer $450,000 on a home listed at $425,000. The home appraises at $435,000. With an appraisal gap guarantee of $15,000, you'd bring an extra $15,000 in cash to cover the gap between the appraised value and your offer price.

How much gap coverage to offer:

• Enough to cover the realistic difference between your offer and the likely appraised value
• Only what you can actually afford in cash — don't overcommit
• Consider capping it at a specific dollar amount rather than offering unlimited coverage

5. Increase Your Earnest Money Deposit

The standard earnest money deposit is 1–3% of the purchase price. In competitive markets, bumping this to 3–5% or more signals serious commitment.

Why it matters: earnest money goes toward your down payment and closing costs. You're not spending extra — you're putting more skin in the game upfront. If you back out for a reason not covered by your contingencies, the seller keeps the deposit. A larger deposit tells the seller you're confident and committed.

In some ultra-competitive markets, buyers are offering earnest money deposits of $25,000–$50,000+ on properties in the $500,000–$800,000 range. This is a strong signal, but only do it if you're confident in the deal.

6. Shorten Your Contingency Periods

Standard timelines for contingencies are:

• Inspection: 10–14 days
• Financing: 21–30 days
• Appraisal: Typically tied to financing

In a competitive market, tightening these timelines shows the seller you'll move fast:

• Inspection: 5–7 days (coordinate with inspectors before submitting your offer to ensure availability)
• Financing: 14–21 days (talk to your lender first to confirm they can meet this timeline)
• Appraisal: Ask your lender to order it immediately upon accepted offer

Important: Don't shorten timelines if your lender can't actually deliver. A missed financing deadline gives the seller grounds to cancel the contract.

7. Consider Waiving Contingencies (Carefully)

Waiving contingencies makes your offer stronger but increases your risk. Think carefully before removing protections.

Inspection Contingency

• Lower risk approach: Get a pre-inspection before making your offer. You'll pay $300–$600 out of pocket whether you win the house or not, but you'll know what you're buying. Then you can confidently waive the inspection contingency.
• Moderate risk: Keep the inspection contingency but commit to not requesting repairs under a certain dollar threshold (e.g., "Buyer will not request repairs for items under $5,000").
• High risk: Waive the inspection entirely. Only do this if you're very experienced, the home is newer construction, or you've had a chance to bring a [contractor](/blog/diy-vs-contractor) through during the showing.

Financing Contingency

Waiving financing is risky unless you can genuinely pay cash if your loan falls through. If you waive the financing contingency and your mortgage is denied, you'll lose your earnest money deposit and could be sued for breach of contract.

Appraisal Contingency

Waiving the appraisal contingency means you're committed to paying your offer price regardless of what the appraiser says. This only makes sense if you have cash to cover a potential gap.

8. Be Flexible on the Closing Date

Ask the listing agent what timeline the seller prefers. Some sellers need to close quickly (divorce, job relocation, estate sale). Others need extra time because they're buying their next home and the timing is tricky.

Offering flexibility on the closing date costs you nothing but can mean everything to the seller. Common options:

• Rent-back agreement: Let the seller stay in the home for 30–60 days after closing while they find their next place. You own the home but lease it back to them, often at a nominal rate.
• Quick close: If the seller wants speed, committing to a 21-day close (with your lender's confirmation) can win you the deal.
• Seller's choice of date: Simply write in the offer: "Closing date at seller's convenience, between 21 and 60 days from acceptance."

9. Write a Clean Offer

Every unusual request or non-standard clause gives the listing agent a reason to set your offer aside. Keep it simple:

• Use the standard purchase agreement for your state
• Don't ask the seller to pay closing costs
• Don't ask for personal property (furniture, appliances) unless the listing includes them
• Don't include excessive addenda or unusual legal language
• Don't ask for repairs or credits before you've even inspected

A clean, straightforward offer tells the seller and their agent: "This deal will close without drama."

10. Have Your Agent Call the Listing Agent

Information is power. Before submitting your offer, your agent should call the listing agent to learn:

• How many offers are expected?
• What does the seller care about most — price, speed, certainty, or flexibility?
• Is the seller looking for any specific terms (rent-back, quick close, etc.)?
• When is the offer review deadline?
• What's the seller's situation (relocating, downsizing, estate sale)?

This conversation can shape your entire offer strategy. If the seller's top priority is a 60-day close with a rent-back, and you're the only buyer offering that, you might win without being the highest bidder.

11. Consider Cash or Alternative Financing

If you have the ability to make a cash offer, you immediately jump ahead of most financed offers. Cash eliminates financing and appraisal risk, simplifies the closing process, and can close in as few as 7–14 days.

Even if you plan to get a mortgage, some buyers make a cash offer and then take out a mortgage after closing (a delayed financing strategy). This carries its own risks and costs, so consult with your lender and financial advisor first.

Alternative approaches:

• [Portfolio loans](/blog/portfolio-lending-guide): Some lenders will fund the loan from their own portfolio rather than selling it to Fannie Mae or Freddie Mac. These loans can close faster and may not require a traditional appraisal.
• Bridge loans: If you need to sell your current home to buy the new one, a [bridge loan](/blog/bridge-loan-for-real-estate) provides temporary financing so you can make an offer without a home-sale contingency.
• Cash offer programs: Companies like Ribbon, Homeward, and others will make a cash offer on your behalf and then transfer the home to you with your mortgage. These come with fees (typically 1–3% of the purchase price) but can make your offer dramatically more competitive.

12. The Personal Touch — Does It Still Work?

You've probably heard about "love letters" — personal letters to the seller explaining why you love their home. The reality is complicated.

The case for: In some situations, especially when a long-time homeowner has emotional attachment to the property, a thoughtful letter can tip the scales between similar offers.

The case against: Many real estate attorneys and agents discourage love letters because they can introduce fair housing concerns. If a buyer mentions their family composition, race, religion, or national origin, the seller could face accusations of discrimination if they chose that offer over others.

Several states, including Oregon, have passed or considered legislation limiting or banning love letters in real estate transactions.

If you do write one: Stick to what you love about the house and the neighborhood. Don't include photos of your family or mention protected characteristics.

Putting It All Together: Sample Competitive Offer

Here's what a strong competitive offer might look like on a home listed at $450,000 in a moderate-to-hot market:

• Offer price: $472,000 (approximately 5% above asking)
• Escalation clause: Up to $485,000 in $2,500 increments
• Appraisal gap coverage: Up to $15,000
• Earnest money: $15,000 (approximately 3% of offer price)
• Down payment: 20%
• Loan type: Conventional, fully underwritten preapproval
• Inspection period: 5 days, with a commitment not to request repairs under $5,000
• Financing contingency: 17 days
• Closing date: Seller's choice between 21 and 45 days
• Rent-back: Available for up to 30 days at no cost
• [Seller concessions](/blog/seller-concessions-guide) requested: None

This offer balances competitiveness with reasonable risk management. You're strong on price, flexible on terms, and you've preserved basic protections while showing the seller you're serious.

What NOT to Do in a Bidding War

Don't Blow Your Budget

The adrenaline of a bidding war can push you past your financial comfort zone. Before you submit any offer, set a walk-away number and stick to it. There will be other houses. There is no "the one" — there are many homes that can work for you.

Don't Skip the Title Search

Never waive the title contingency. A clouded title — with liens, encumbrances, or ownership disputes — can cost you tens of thousands of dollars or even the property itself. This is non-negotiable.

Don't Ignore Red Flags

If the listing agent is evasive about the property's condition, the seller's disclosure has concerning items, or the price seems too good to be true, proceed cautiously regardless of competition.

Don't Rely on One Strategy

The strongest offers combine multiple strategies. Offering $5,000 above asking is fine. Offering $5,000 above asking with appraisal gap coverage, shortened timelines, flexible closing, and increased earnest money is compelling.

When to Walk Away

Sometimes the best offer is no offer. Walk away if:

• The price has been bid up beyond what the property is worth to you
• You'd need to waive contingencies you're not comfortable losing
• Your gut says something is wrong with the property
• Winning would stretch your finances to the breaking point

Overpaying for a home is one of the most expensive mistakes you can make. A few months of continued searching almost always costs less than years of paying a mortgage on a home you overpaid for.

Frequently Asked Questions

How much over asking should I offer?

There's no universal answer. It depends on how many competing offers there are, how the home was priced relative to comps, and local market conditions. Work with your agent to analyze recent comparable sales and determine a fair offer price that you're comfortable with.

Can I still negotiate after winning a multiple-offer situation?

Technically yes, but it's risky. If you win a bidding war and then try to renegotiate after the inspection, the seller may reject your request and move to a backup offer. Only renegotiate for significant issues — structural problems, major system failures, or safety hazards.

What's the difference between "highest and best" and regular offers?

"Highest and best" means the seller is asking all interested buyers to submit their strongest offer by a deadline. There's typically no further negotiation — the seller picks the best overall offer (which isn't always the highest price).

Should I offer an odd number like $451,337 instead of $450,000?

Some buyers believe odd-number offers stand out or signal a carefully calculated maximum. In practice, listing agents care more about the overall terms than whether the price is a round number. It doesn't hurt, but don't overthink it.

Is it worth competing if there are 20+ offers?

It depends. With that many offers, you'd likely need to come in significantly above asking with extremely favorable terms. If you can comfortably do that, go for it. If winning would require stretching beyond your budget or waiving protections you're not comfortable losing, it's okay to pass.

How do I know if the listing agent is being honest about the number of offers?

You don't, entirely. But most listing agents are truthful because misrepresenting the number of offers is an ethical violation that could cost them their license. Your agent can often gauge the situation by talking to the listing agent and checking market activity on the listing.

The Bottom Line

Winning in a competitive market is about more than just money. It's about presenting yourself as the buyer who will close on time, with the fewest possible complications, at a price the seller finds attractive.

Price opens the door. Terms close the deal. Structure your offer around what the seller actually needs, protect yourself where it matters most, and be ready to walk away when the numbers stop making sense.

Related Articles

• Bridge Loans Explained: How They Work, What They Cost, and When They're Worth It
• [[Home Buying Contingencies](/blog/contingencies-explained) Explained: Every Clause You Need to Understand Before Signing](/blog/contingencies-explained)
• [[Down Payment Assistance](/blog/down-payment-assistance-programs) Programs in 2026: Complete Guide](/blog/down-payment-assistance-programs)