In Texas, most resale purchases run on the TREC One to Four Family Residential Contract, and the feature that protects you most is the option period: a short window, typically 7 to 10 days, when you can walk away for almost any reason and keep your earnest money. An offer is more than a price, and most negotiations are won on terms like earnest money, option fees, closing dates, and seller concessions. This guide walks through every moving part with concrete numbers so you know what each line in an offer actually does.
Sellers and their agents use the same playbook from the other side. If you are listing, my seller guide covers pricing and presentation, and the offers and negotiation guide has more depth on strategy.
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How to Negotiate the Price of a Home (New & Existing Homes)
Patrick's negotiation framework for resale and new construction, with examples of what moves sellers.
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1. The anatomy of a Texas offer
Every written offer has the same skeleton: a purchase price, deposit money, an option fee and period, a financing contingency, an inspection/option clause, a closing date, and title details. Here is what each piece means and what is normal in San Antonio and the Hill Country.
- Purchase price. What you will pay. In the current San Antonio market, homes sell at roughly 94% of their original list price average, so offers below list are common and sellers expect them in most price ranges.
- Earnest money. Good-faith deposit held in escrow by the title company, commonly about 1% of the purchase price. On a $350,000 home that is $3,500. Bigger earnest money signals a serious buyer and matters in multiple-offer situations.
- Option fee and option period. A Texas signature. You pay the seller a negotiated fee, often $100 to $500, for the right to terminate the contract for nearly any reason during the option period, usually 7 to 10 days. If you terminate in that window, the seller keeps only the option fee and your earnest money returns. If you move forward, the option fee typically applies toward the purchase.
- Financing contingency. Standard TREC language says the sale depends on you getting financing on the terms in the contract, usually with 20 to 25 days to satisfy it. You can waive or shorten this to strengthen an offer, but only with a loan officer who has already verified your file.
- Closing date. Typically 30 to 45 days from contract in this market. Sellers with their next home already under contract often need a specific date.
- Title and prorations. Who pays for the owner's title policy is negotiable in Texas and is a genuine bargaining chip, often a $2,000 to $3,000 item on a mid-priced home.
2. Counteroffers: how the back-and-forth actually works
A counteroffer rejects your offer and proposes new terms; your offer expires when you receive it unless you accept. You can counter back, and that back-and-forth is where the deal is really made. Response deadlines in Texas are commonly 48 to 72 hours, and there is no obligation to respond at all.
Worked example: the counteroffers round
A home lists at $350,000. You offer $342,000 with $3,500 earnest money, a $250 option fee, and a 10-day option period. The seller counters at $348,000 with a $4,000 credit toward your closing costs and a 45-day close. You counter at $346,000 with the same closing cost credit and a 35-day close. If the seller accepts, that full exchange becomes the binding contract. Notice the negotiation moved on three fronts at once: price, concessions, and timing. The buyer who only negotiates price leaves money on the table.
A note on strategy: when multiple buyers are interested, a seller's agent may send the same counteroffer to several parties at once, a "multiple counteroffer" situation. You then have a deadline to respond, and your response should improve your strongest terms, not just your price. This is where having an agent who writes dozens of these a year pays for itself.
3. Contingencies: your protection, your power
Contingencies are conditions that must be met before you are bound to close. Treat them as both protection and bargaining power.
- Option period (inspection/termination). Your time to inspect, evaluate, and walk for nearly any reason. Use every day of it: general inspection, sewer scope, foundation look, title review, and your own walking tour after dark to check traffic and noise.
- Financing contingency. Protects your earnest money if your loan falls through through no fault of your own. The strongest offers pair it with a lender pre-approval and a verified file, so sellers know it will not be used as an excuse.
- Appraisal contingency. Protects you if the home appraises below contract price. In competitive situations buyers sometimes waive it or cap the gap they will cover. More on that below.
You can shorten or waive contingencies to compete, but every waiver is a bet. My five contract terms guide explains which waivers first-time buyers should almost never agree to.
4. Escalation clauses: bidding without overpaying
An escalation clause says: "I offer $340,000, but if you receive a higher legitimate offer, I will beat it by $2,500 up to a maximum of $355,000." It keeps you competitive while capping your exposure. In Texas, escalation clauses are usually handled through a separate addendum, and sellers typically need to show you the competing offer to trigger the escalation.
The risk: if your escalation step is too small ($500), a slightly higher competing offer pushes you to your cap faster. If the cap is too high, you can win a home at a price above what it appraises for, and you eat the difference. A common structure is a $2,000 to $5,000 step with a cap you can actually finance, meaning the numbers work at your maximum even with a 95% loan. When I structure escalation for a buyer, I run the payment and cash-to-close at the cap before we ever submit it.
5. Appraisal gaps: when the value comes in low
The lender will only lend against the appraised value. If you contract at $360,000 and the appraisal comes in at $350,000, you have a $10,000 gap. Your options, in order of preference for most buyers:
- Renegotiate the price down to value. Sellers often agree when the appraisal gap is modest, since a re-negotiated deal beats a terminated one.
- Cover the gap in cash. You bring the difference as extra down payment, effectively. On the example above you would need $10,000 more cash at closing.
- Dispute the appraisal. Provide additional comps and ask the lender for a reconsideration of value. It works sometimes and costs nothing but time.
- Walk away. If you kept your appraisal contingency or a capped appraisal-gap clause, you exit with your earnest money. That is exactly what the protection is for.
In hot pockets of the market, buyers preemptively offer an "appraisal gap addendum" that says they will cover the first $5,000 or $10,000 of any shortfall. That is a real negotiating tool, and it is also real risk: cash you never planned to spend. Structuring it correctly is a job for someone who sees appraisals come in every week.
6. Seller concessions: how they work and what the limits are
A seller concession is the seller paying a share of your closing costs, such as title fees, lender fees, prepaids, or even buying down your interest rate. It is the most underused tool in this market, where homes sit longer and sellers are motivated to close.
Program limits matter, and they are based on the loan type:
| Loan type | Max seller contribution |
|---|---|
| FHA | Up to 6% of the purchase price toward closing costs |
| VA | Up to 4% of the purchase price |
| USDA | Up to 6% of the purchase price |
| Conventional | 3% with a down payment under 10%; higher tiers for larger down payments |
Worked example: what 3% is worth
On a $320,000 FHA purchase with 3.5% down, a 3% seller concession is $9,600. Typical closing costs on that purchase run roughly $6,000 to $8,000, so the concession can cover almost all of them, which is the difference between needing $20,000 in cash and needing $12,000. Ask for concessions as a complement to price, not instead of it: some sellers will hold firm on price but happily give a closing cost credit, because a credit does not lower their net as much as a price cut does once commissions are calculated.
Concessions can also fund a temporary rate buydown, where the seller pays to reduce your rate for the first year or two. My buydown guide explains the 2-1 and 3-2-1 structures, and this post shows how concessions stack with down payment assistance.
7. Know your walk-away point before you write the offer
Every negotiation has a number where you should stop, and the time to set it is before you are emotionally attached. The option period is your cheap exit; after it expires, walking away costs your earnest money. Decide in advance: the maximum price you can finance comfortably, the maximum gap you will cover, and the repairs you will not absorb. When I help a buyer write an offer, those numbers go in the strategy before the offer does, and the inspection report is reviewed against them line by line.
My home inspection negotiation guide covers the repair phase, and this negotiation guide goes deeper into comps, timing, and when to stand firm.
The dual-license edge: because I originate loans and negotiate contracts, I can tell you on the spot whether a concession fits your loan program, whether an escalation cap will survive the appraisal, and exactly how any counteroffer changes your cash to close. That keeps negotiation and financing from working against each other.
Frequently Asked Questions
What is the option period in a Texas real estate contract? Tap to expand
How much can a seller contribute to my closing costs? Tap to expand
Should I use an escalation clause in my offer? Tap to expand
What happens if the appraisal comes in low? Tap to expand
How much earnest money should I offer? Tap to expand
Continue Your Home Buying Education
More resources from Patrick on offers, contracts, and negotiation.
How to Negotiate the Price of a Home
Comps, concessions, and knowing when to walk
5 Contract Terms to Be Careful With
Protections first-time buyers should not waive
Home Inspection Negotiation
Using the report to save money or walk away
Interest Rate Buydowns
Turning concessions into a lower payment
Ready to write an offer that wins and still fits your budget?
I structure the offer and the financing together, so the price, concessions, and loan program never fight each other. Let us map your strategy before you compete.
Patrick Kevin Fagan
Loan Officer and Realtor | AXEN Realty LLC | San Antonio and Texas Hill Country
Licensed Sales Agent | 454749 | TX
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Patrick covers offers and negotiations on screen in How to Negotiate the Price of a Home (New & Existing Homes). Watch it on The Mortgage Patriot channel, and subscribe for a new video every month.
Watch the Video on YouTubeSincerely, Patrick Kevin Fagan