Buying Process
Writing an Offer: Contract Terms, Step by Step
Purchase contract forms, required disclosures, deposit handling rules, attorney review periods and statutory rescission rights are set by state law, and several states require a licensed attorney at stages a licensee may not handle. Use your brokerage's current approved forms and confirm the procedure for your jurisdiction.
An offer is not a bid. It is a written proposal that, on acceptance and delivery, becomes an enforceable contract for the purchase of real property, and almost everything that goes wrong later is traceable to a term nobody read at the front end.
This page walks the document in the order it operates: what makes it a contract, what terms it has to settle, what each contingency protects, how the deposit must be handled, and which common tactics carry legal exposure.
What Makes the Document a Contract
Contract formation is the part of this that is tested on the exam and ignored in practice, and it explains most of the sequencing rules below.
A valid contract for real property generally requires competent parties, mutual assent, a lawful object, consideration, and, because of the statute of frauds, a writing signed by the party to be charged that identifies the property adequately. Earnest money is not what makes the contract binding. The promise to buy is the consideration; the deposit is security for performance.
Mutual assent requires unqualified acceptance of the offer as written, communicated back to the offeror. Change a single term and you have not accepted, you have made a counteroffer, which legally terminates the original offer and puts the power of acceptance in the other party's hands. That is why a seller who counters cannot then accept the buyer's original price if the buyer walks: there is nothing left to accept.
Delivery controls. In most jurisdictions acceptance is effective when it is communicated to the offeror or their authorized agent, and a signature sitting in someone's folder is not communication. Contracts also commonly specify the method and the deadline, and the deadline generally runs from delivery rather than from signing. An offer can be revoked any time before acceptance is communicated, which is the practical reason expiration times are short.
Once formed, the terms are the terms. A licensee filling in blanks on a brokerage-approved form is performing a licensed function in most states; drafting bespoke provisions, adding clauses that allocate legal risk, or advising on the legal effect of a term is generally the practice of law and is outside what the license permits. Where the deal needs a provision the form does not have, the answer is counsel, not creativity.
The Terms a Written Offer Has to Settle
An offer that leaves any of these open invites a dispute or fails for indefiniteness. Work the list before the form goes out.
Identification of the parties and the property. Legal description or the identifier your jurisdiction accepts, not just a street address, and every person on title named as a party. A married seller's spouse may have to sign even if not on title, depending on the state's homestead or marital property rules.
Price and how it is funded. The stated purchase price, the deposit, any additional deposit and when it is due, the loan amount and type, and the balance due at settlement. Financing type matters beyond the buyer: some loan programs carry property condition requirements that affect what the seller must repair.
What conveys with the property. Fixtures pass with the real estate and personal property does not, and the dividing line is a recurring source of argument. Anything the buyer expects to remain, and anything the seller intends to remove, gets named in writing rather than assumed from the showing.
Time. Acceptance deadline, contingency periods and their expiration, the settlement date, and when possession transfers. Possession is not automatically simultaneous with settlement, and an occupancy arrangement after closing is a separate written agreement, not a courtesy.
Allocation of costs. Transfer taxes, title work and title insurance, survey, recording, inspection fees, and any prorations. Who customarily pays what varies by state and even by county, and custom is not a term until it is written down.
Contingencies, each with an expiration and a stated consequence. A contingency without a deadline is a problem for both sides; a contingency without a stated remedy is worse.
Delivery mechanics and notice. Where notices go, by what method, and what counts as receipt. In jurisdictions with an attorney review period or a statutory rescission right, the offer must also respect that window rather than paper over it.
What Each Common Contingency Protects
A contingency is a condition that must be satisfied or waived before performance is owed. Each one protects a specific risk, and waiving it transfers that risk to the buyer.
Inspection
Gives the buyer a defined period to investigate condition and, depending on the form, to terminate, to request repairs, or to negotiate. Read which of those the form actually grants: a right to inspect is not the same as a right to cancel. Waiving it does not waive the seller's duty to disclose known material defects, but it does leave the buyer with no exit for what an inspection would have found. Where the form allows inspection for information only, the buyer keeps the knowledge and gives up the leverage.
Financing
Conditions the purchase on the buyer obtaining a specified loan on specified terms by a stated date. Its value depends on how it is written: a contingency tied to a loan type and rate ceiling protects more than one tied to any financing at any terms. A preapproval is an underwriting opinion on the borrower, not a commitment on the property, and it does not substitute for the contingency.
Appraisal
Separate from financing, even though both involve the lender. It addresses the gap between contract price and appraised value, and the form should say what happens when there is one: renegotiation, a buyer obligation to cover a stated amount of the shortfall, or termination. Waiving the appraisal contingency while keeping the financing contingency leaves the buyer owing the difference in cash.
Title and Survey
Gives the buyer a period to review the title commitment and survey and to object to matters that impair marketable title, with a mechanism for the seller to cure or for the buyer to exit. Easements, encroachments, restrictive covenants and unreleased liens surface here rather than at the showing. Where an association governs the property, the governing documents and any resale package carry their own statutory delivery and review periods in many states.
The Deposit Is Trust Money, Not Your Money
Earnest money handling is one of the shortest paths to a license suspension, and the rules are strict in every jurisdiction.
Funds received in connection with a transaction belong to the parties, not to the brokerage. State law dictates who may hold them, most commonly the broker in a designated trust or escrow account, a title company, or an attorney, and it sets a deadline for delivery that is typically counted in days and often begins at acceptance rather than at receipt. A licensee who holds a deposit in a personal account, or in the brokerage's operating account, has commingled funds. Using them for any purpose is conversion, and both are independent grounds for discipline regardless of whether the money is eventually returned.
Disbursement is equally regulated. The holder generally may not release a disputed deposit on one party's say-so. Most states provide a specific procedure, which may include written mutual release, an interpleader action, or a commission dispute process, and the holder's obligation is to follow it rather than to decide who is right.
The size of the deposit is negotiable and it signals commitment, but it also sets the buyer's exposure. If the contract makes the deposit the seller's sole remedy on default, the buyer's downside is bounded. If the contract preserves other remedies, it is not. Buyers should know which version they signed before they choose to walk.
Where a contingency is exercised properly and on time, the deposit is customarily returned. Where a buyer terminates without a contractual basis, the seller typically has a claim to it. The word doing the work in both sentences is the written contingency and its deadline, which is why the calendar dates matter more than the conversation.
Tactics That Carry Legal Exposure
Four practices that circulate as competitive advice and that create liability the person recommending them does not carry.
Buyer letters addressed to the seller. Personal narratives commonly reveal familial status, religion, national origin, disability or other protected characteristics, and a seller who selects on that basis has a fair housing problem the licensee may share. A growing number of brokerages and listing agents refuse them outright, and at least some jurisdictions have legislated on the practice. Declining to transmit one is a defensible position.
Escalation provisions. They are contract terms, not tactics, and they need a stated cap, a definition of the competing offer that triggers them, and a mechanism for the buyer to verify that such an offer exists. Some listing services and some brokerages restrict them; some sellers are advised not to accept them because acceptance can create a dispute about what the price actually is. They also disclose the buyer's ceiling.
Waiving inspection to win. This shifts the entire condition risk to the buyer, and the buyer, not the licensee, absorbs it. If a buyer insists, document the recommendation you gave and their instruction in writing. An advisory memo in the file is the only protection a licensee has when the furnace fails in month two.
Communicating the terms of a competing offer. Whether a listing licensee may disclose the existence or content of other offers is controlled by the seller's instruction and by state rule, and disclosing terms without authorization breaches confidentiality. Ask for the seller's written direction on this before offers arrive rather than improvising when they do.
Offer Questions That Come Up in Practice and on the Exam
Is a verbal acceptance binding?
Generally no for a contract conveying an interest in real property. The statute of frauds requires a signed writing, so a verbal yes is not enforceable and either side can still walk. It can, however, have practical consequences, and a licensee who reports a verbal acceptance to a client as though the property were under contract has created a misrepresentation problem.
Can a seller accept two offers at once?
A seller can only be bound to one purchase contract at a time. What sellers can do, where the form permits and the state allows, is accept one offer and hold others as backups under a written backup agreement that becomes primary only if the first contract terminates. An unqualified acceptance of a second offer while the first is live creates two contracts and a lawsuit.
What happens if a deadline falls on a weekend or holiday?
The contract usually says, and the answer differs between forms: some count calendar days with a rollover to the next business day, some count business days throughout. Whether a day counts from delivery, from acceptance, or from the following day is also form-specific. Read the computation-of-time paragraph before you calendar anything.
Can a buyer back out during an attorney review period?
In the states that have one, the review period generally allows either party's attorney to disapprove or modify the contract within a short statutory window, which effectively permits exit. Those states also typically restrict what a licensee may do during that period. If you practice in one, the procedure is not optional and improvising around it is unauthorized practice of law.
Who writes the offer if the buyer has no agent?
An unrepresented buyer may prepare their own offer, and a listing licensee may fill in a brokerage-approved form at the buyer's direction where the state permits, while disclosing clearly whom they represent. What the listing licensee may not do is advise the unrepresented buyer in a way that breaches duties owed to the seller, or draft legal provisions. Several states restrict this arrangement more tightly than others.
How is this tested on the license exam?
Contract formation, counteroffers terminating the original offer, the statute of frauds, contingency mechanics and trust-fund handling are heavily weighted on the general portion, and deposit deadlines, required forms, review periods and disbursement procedure appear on the state portion. RE License Prep drills both, starting from a free diagnostic, with your PassMap™ ordering the remaining work. Full access is $79 one time with a 30-day money-back guarantee.