An offer is a conditional proposal to buy or sell an asset or property for a set price that becomes legally enforceable once accepted. There are certain requirements for an offer to be valid—most notably, that the conditions are clearly stated. The most common “offer” is a home offer made by a prospective buyer to a seller.

Legally, the “offeror” makes an offer, while the person receiving the offer is the “offeree.” An offer can be made verbally or in writing.

Someone who has listed a home for sale will accept offers from prospective buyers. Alternatively, an online advertisement, such as an ad for a two-bedroom rental apartment for $1,000 a month, could be considered an offer, too. Making an offer is the first step toward forming a contract. (You should always include the six basic elements of any offer.)

Let’s say Tom has an interest in purchasing a condo in his city. Tom searches online and finds an ad for a newly built condo at a purchase price he’s comfortable paying. The ad itself is an offer by the seller to sell their home to a potential buyer. However, Tom may make a counteroffer that is below the asking price, creating a new offer that would have to be accepted by the seller.

An offer is the first of six factors that create a contract:

An offer can be for money or for services. Offers can be made via a letter, newspaper, fax, email, or behavior, among others. An offer isn’t technically considered an “offer” until it’s received by the offeror—and it won’t move forward toward an enforceable contract until it’s accepted.

For Tom’s condo sale, the offer is forthright: The seller placed an ad with a Realtor that offered the condo for sale with a particular price. Tom either accepts the value listed or counteroffers with a lower price, which the owner can accept or decline.

Many offers include an acceptance deadline. Unless stated otherwise, the assumed deadline for acceptance is 30 days after making an offer. (Note that offers can be rescinded if the offer hasn’t been accepted within a reasonable amount of time.) Offers can include a variety of conditions and terms, such as price, delivery date, discounts, or quantity.

Once the offer is accepted, both parties are in a legally enforceable agreement. However, an offer is very different from a solicitation—referencing that you might sell something isn’t considered an offer. But saying that you would sell an item for a set price on a particular date is.

Some offers have an acceptance time limit. And an offer can be revoked at any time prior to acceptance. The offer can also be terminated due to:

A counteroffer also terminates the original offer by changing the terms.

For example, if Tom offered a lower sale price for the condo, the original offer would be terminated, and the new offer would reflect the lower selling price. The two parties may continue to negotiate using additional offers, with the goal of finding a mutually beneficial arrangement. During a bidding war in a competitive market, a seller may be fielding multiple home offers.

A home-buying offer has all the standard elements, such as offer price, terms, and an acceptance deadline. But it’s worth noting that verbal offers aren’t legally binding in real estate sales, so a written offer must be made. In many cases, this is done by the real estate agent or broker. States have different requirements for what an offer should include, but broadly, you’ll propose a purchase price and down payment information and outline any other terms, such as credits or discounts for closing costs.

Investors writing home offers can follow these six effective strategies to ensure their offer is accepted.

A real estate offer is signed by the potential buyer so that, if accepted by the seller, it becomes a legally binding sales contract. Thus, an offer should include all conditions and issues you hope to address. Make sure to include the address, target closing date, contingencies, time limit, and payment method, such as a cash offer or conventional mortgage. A real estate offer will generally come with an earnest money deposit, which shows good faith.

Common contingencies might include home inspection contingencies or financing contingencies. For example, if financing falls through or if there’s an unacceptable home inspector’s report, then the offer would be void.

In the buying process, the seller can accept or reject the offer or make a counteroffer. If a counteroffer is made, the buyer can then accept the counteroffer, reject it, or make their own counteroffer. An offer to purchase a home can generally be rescinded right up to the point of acceptance by the seller.