How to Evaluate Offers When Selling Your Home FSBO

Price Is Important, but It Is Not Everything

When you receive an offer on your home, the natural instinct is to look at the price first. And price does matter — it is the biggest number in the deal. But experienced sellers know that the terms surrounding the price often determine whether the deal actually closes and how much money you walk away with.

A $500,000 offer with strong financing, few contingencies, and a 30-day close can be worth more to you than a $520,000 offer with a financing contingency, a home sale contingency, and a 90-day close. Here is how to break down every component of an offer so you can compare them properly.

Evaluating the Buyer's Financial Strength

The first thing to examine is whether the buyer can actually pay the price they are offering. A pre-approval letter from a lender should accompany every financed offer. But not all pre-approvals are created equal.

Look at the lender — is it a recognized bank, credit union, or mortgage company? A pre-approval from a local lender who has verified income, assets, and credit is far stronger than a cursory online pre-qualification. Check whether the pre-approval amount covers the offer price. And notice the date — a pre-approval letter that is 90 days old may no longer reflect the buyer's current financial position.

Cash offers eliminate financing risk entirely. If a buyer is offering cash, ask for proof of funds — a recent bank or brokerage statement showing they have the money available. A cash offer for slightly less than a financed offer is often the stronger deal because there is no risk of the loan falling through.

Understanding Contingencies

Contingencies are conditions that must be met for the sale to go through. Each contingency gives the buyer a legal exit from the contract — and each one adds risk for you as the seller. The most common contingencies are inspection, financing (or appraisal), and the sale of the buyer's current home.

An inspection contingency gives the buyer the right to have the home professionally inspected and to request repairs or credits based on the findings. This is standard in most transactions and reasonable to accept. The key is whether the contingency gives the buyer broad rights to cancel for any reason, or whether it is limited to specific issues above a dollar threshold.

A financing contingency means the deal depends on the buyer securing a loan. If their financing falls through, they can walk away and get their earnest money back. This is normal for financed offers, but the shorter the financing period, the less risk for you.

A home sale contingency means the buyer needs to sell their current home before they can buy yours. This is the riskiest contingency for a seller because you are essentially waiting on two transactions to close. If you accept an offer with a home sale contingency, make sure there is a kick-out clause that allows you to continue marketing and accept a better offer with a defined notice period.

Earnest Money Deposit

The earnest money deposit (also called "good faith deposit") is the amount the buyer puts down to show they are serious. It is held in escrow and applied to the purchase price at closing. If the buyer backs out without a valid contingency, you may be entitled to keep the earnest money as damages.

A larger earnest money deposit signals a more committed buyer. In most markets, earnest money ranges from 1-3% of the purchase price. A buyer putting down 3% is showing more skin in the game than one putting down 1%. If you receive two otherwise similar offers, the one with the larger earnest money deposit is generally the stronger commitment.

Also pay attention to when the earnest money is due. Some contracts require delivery within one business day of execution, others within three days. A buyer who delays delivering earnest money is a warning sign — it can indicate financial uncertainty or second thoughts about the purchase. The sooner the earnest money is deposited into escrow, the more committed the buyer typically is.

Closing Timeline

The proposed closing date affects your plans — whether you need to move quickly, whether you need time to find your next home, or whether you need the proceeds by a certain date. A typical closing takes 30-45 days for financed offers and 14-21 days for cash offers.

A faster close reduces the time the deal is at risk from external factors — interest rate changes, buyer cold feet, unexpected inspection issues. But if you need more time, a longer close is not inherently bad as long as the buyer is well-qualified. The key is alignment with your needs. If you are buying your next home and need the proceeds by a certain date, the closing timeline is a critical evaluation factor.

Be cautious of unusually long closing timelines (60-90 days) without a clear reason. Sometimes a buyer requests a long close because they need to sell their current home first, because their financing is complex, or because they are relocating from out of state. These are legitimate reasons, but they all add risk. If the buyer needs 90 days to close and does not explain why, ask. The answer tells you a lot about how likely the deal is to actually close.

Appraisal Risk

If the buyer is getting a loan, their lender will order an appraisal. If the appraisal comes in below the contract price, the lender will only lend based on the appraised value. This creates a gap that someone has to cover — either the buyer brings additional cash, you reduce the price, or you meet in the middle.

Some buyers include an appraisal gap guarantee, which means they agree to cover some or all of the difference between the appraised value and the contract price out of pocket. An offer with an appraisal gap guarantee is stronger than one without, especially in a market where prices are rising faster than comps can support.

If you priced your home based on solid comp data, the appraisal should come in close to your price. But if you are in a competitive market where offers have pushed the price above recent comps, appraisal risk is real and you should weigh this when evaluating offers above your asking price.

Comparing Multiple Offers

When you have multiple offers, create a simple comparison chart. For each offer, list the price, earnest money, financing type, contingencies, closing date, and any special terms. Then assign a rough net proceeds estimate by subtracting any credits or concessions the buyer is requesting.

Factor in risk. Rank offers by likelihood of actually closing — a cash offer with proof of funds and no contingencies is near-certain to close. A financed offer with a home sale contingency has multiple points of failure. Sometimes the most likely offer to close successfully is worth accepting even at a slightly lower price.

If you have multiple competitive offers, you can ask all buyers to submit their best and final offer by a deadline. This transparent process often improves both price and terms, and it gives every interested buyer a fair chance.

Knowing When to Counter vs. Accept vs. Decline

Accept an offer when the price is at or above your target, the buyer is well-qualified, contingencies are reasonable, and the timeline works for you. There is real risk in getting greedy and losing a strong buyer while waiting for a better offer that may never come.

Counter when the offer has potential but needs adjustment — whether that is price, closing date, contingency periods, or repair credits. A counteroffer keeps the negotiation alive and signals that you are engaged. Keep counters specific and reasonable. Countering on too many terms at once can overwhelm the buyer.

Decline when the offer is far below market value, includes unreasonable contingencies, or comes from a buyer who cannot demonstrate financial capability. A polite decline is better than a counter on an offer that is not close to workable — countering a lowball offer can anchor the negotiation at the wrong price point.

Seller Concessions and Credits

Many offers include requests for seller concessions — the buyer asks you to pay a portion of their closing costs, buy down their interest rate, or provide a home warranty. These concessions reduce your net proceeds even though the offer price stays the same. A $500,000 offer with $15,000 in seller concessions is really a $485,000 offer from your perspective.

Calculate the net proceeds for every offer by subtracting concessions, any agreed-upon repair credits, and your own closing costs from the offer price. This is the number that actually matters. Two offers at different prices can yield the same net proceeds once concessions are accounted for — or the lower-priced offer with no concessions can actually put more money in your pocket than a higher-priced offer loaded with credits and concessions.