What is earnest money?

It's a good-faith deposit that shows the seller you're serious. It's held in escrow and typically applied toward your down payment or closing costs at closing.

What happens if the appraisal comes in low?

An appraisal contingency gives you options, such as renegotiating the price, covering the gap, or in some cases withdrawing while protecting your deposit.

First-Time Homebuyer

Intermediate

6 min read

Making an Offer on a Home

Once you find the one, a well-structured offer helps you compete without overexposing yourself. Here's how the pieces fit together.

The building blocks of an offer

Offer price, informed by comparable sales
Earnest money deposit showing good faith
Financing and appraisal contingencies that protect you
Inspection contingency and requested closing timeline

Balancing competitiveness and protection

In a strong market, buyers sometimes waive contingencies to stand out. That can be risky. The goal is a compelling offer that still protects your deposit and your financing if something unexpected comes up.

Key takeaways

Contingencies exist to protect your money and your financing.
Earnest money signals seriousness and is credited at closing.
A local agent's read on the market shapes a smart offer.

Test your knowledge

3 quick questions. Score 70% or higher to complete this lesson.

1. What is earnest money?
2. What do contingencies in an offer primarily do?
3. If the appraisal comes in low, an appraisal contingency lets you:

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Written by

Joel Olson

Founder, Blueprint Home Loans LLC · Florida Mortgage Broker · Individual NMLS #1410944

Joel founded Blueprint Home Loans on an education-first philosophy: help buyers understand their options and make confident, informed decisions. With more than 20 years in financial services, his goal isn't to sell a mortgage — it's to build a plan around your life.

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First-Time Homebuyer

Understanding the Mortgage Process

Financial Planning

Closing Costs Explained

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This lesson is educational and is not a commitment to lend, financial advice, or a guarantee of approval. Program guidelines, rates, and eligibility vary by lender, location, and individual circumstances and change over time. Speak with a licensed mortgage professional for guidance specific to your situation.