When you have found a desired property and have arranged a suitable mortgage (or at least agreed to it in principle with your lender) you are ready to make an offer. When you make an offer, you're negotiating an important investment. Understanding the process will help you get the best possible advantage in your negotiations.

There are two types of offers you can make on a home, Firm or Conditional.

• A Firm Offer to Purchase is often preferable to the seller, because it means that you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours.
• A Conditional Offer to Purchase means that you have placed one or more conditions on the purchase, such as "subject to home inspection" or "subject to sale of buyer's existing home."

The process of making the offer usually follows the steps below:

1. Submit the offer to the seller or the seller's real estate agent. Your real estate agent will have all the standard documents available to make the offer. Pre-approval for a loan could also make all the difference. If you secure pre-approval before making an offer, you'll be in a stronger position to negotiate and have an edge over the competition. When you make an offer, present a certificate or letter confirming your pre-qualified status.

2. A "good faith deposit" (also known as "earnest money") is also usually required to demonstrate your commitment to the transaction. The amount of the deposit varies from contract to contract. Your agent can give you a good idea of how much should be offered. This deposit is then applied against the purchase of the home when the sale closes.

The seller will then reply to the offer in one of three ways:

• Accept your offer
• Reject your offer
• Make a counter-offer

3. The counter-offer may be in reference to the price, the closing date, or any number of variables. The offers can go back and forth until both parties have agreed, or one of you ends the negotiations.

4. Your real estate agent will act as a liaison by presenting your offer and conveying the seller's response or counter-offers to you. When you and the seller have both signed your agreement to the same terms, you have a legally binding contract.