Orion LoveIf you have two offers on your house, the higher price isn’t automatically the better deal. What you really care about is how much money ends up in your pocket and whether the buyer makes it to the closing table. A bigger offer can leave you with the same money and more risk, and a sale that falls apart can cost you far more than a clean offer ever would.
When I help a seller compare offers, I break every one down the same way. Here are the five things to look at before you pick one.
1. What will you actually walk away with?
The offer price is only the starting point. What matters is your net: what’s left after your loan payoff, commissions, closing costs, and anything the buyer asks you to cover.
Say one buyer offers more but wants help with their closing costs, and another offers a little less and asks for nothing extra. Once you do the math, those two offers can be much closer than they looked. That’s why I bring a net sheet with every offer. Line the offers up by what you’d actually walk away with, and the best one is much easier to spot.
Why would a buyer offer full price and then ask for money back? A concession is money you agree to give the buyer at closing, usually toward their closing costs or to buy down their interest rate. Picture a buyer who saved enough for the down payment and has nothing left over. For that buyer, a concession is what makes buying your house possible at all. Judge it by your net and by how strong the rest of the offer is.
2. How solid is the buyer?
A pre-qualification usually means the buyer told a lender their numbers and the lender said that sounds fine. A pre-approval usually means the lender has actually looked at things like income and credit. Lenders don’t all use these terms the same way, and neither letter is a promise to lend. A big purchase or a new credit card before closing can still derail the loan.
So for my clients, I call the buyer’s lender. It takes a couple of minutes and says more than any letter. These are the questions worth asking:
- What have you actually verified: income, assets, and credit?
- Has an underwriter reviewed the file yet?
- Is anything outstanding that could slow this loan down?
- What type of loan is it?
Cash or financed? A cash offer takes the lender out of the equation: no loan approval and no lender appraisal, so less can go wrong. That doesn’t make a financed offer weak. Just know that with FHA and VA loans, the appraisal also looks at the home’s condition, and flagged items may have to be addressed before the lender will close. If your house needs work, understand what the buyer’s financing requires before you accept.
3. What strings are attached?
A sale contingency means the buyer has to sell their own house before they can buy yours, so your sale is tied to theirs. I wouldn’t say no right away; in a slower market, that offer deserves a real look. But find out where their house stands. One that’s already under contract is far less risky than one that hasn’t even listed. Before you accept, know exactly what you’re waiting on.
4. Does the timeline work for you?
More money isn’t always better if the closing date forces you to move twice. If you’re buying another home and need the closings to line up, or you just need more time to move, an offer that fits your timeline can be worth more than a higher price.
One option is post-closing occupancy (often called a rent-back): you sell, then stay for a short time after closing and pay the buyer rent. Figure out what timing works for you before you start comparing.
5. What happens if the appraisal comes in low?
If the buyer is getting a loan, the lender orders an appraisal to confirm the house is worth the price. If it comes in low, the lender only lends on that lower value, and now there’s a gap. You can lower the price, the buyer can cover the difference in cash, or you can split it. If you can’t agree, your contract decides whether the buyer can walk.
That’s why an offer far above what similar homes have sold for isn’t always great news. One term helps here: appraisal gap coverage, where the buyer agrees ahead of time to cover a shortfall up to a set amount. Not every buyer has the cash for it, but an offer with gap coverage can be much stronger than one without.
Two offers, side by side
Here’s how that plays out with two example offers (round numbers, not a real sale):
| Offer one | Offer two | |
|---|---|---|
| Price | $460,000 | $450,000 |
| Closing-cost help you pay the buyer | $10,000 | None |
| Price after that help | $450,000 | $450,000 |
| Buyer has to sell a home first | Yes | No, already sold |
| Can close on your date | Not stated | Yes |
| Appraisal has to support | $460,000 | $450,000 |
Offer one looks higher, but after the concession the money is the same. Your loan payoff and closing costs come out of both, and any cost figured as a percentage of the price runs slightly higher on offer one. Meanwhile it carries more risk: the buyer’s house still has to sell, and the appraisal has to support a higher price. I’d take offer two. When the money is roughly equal, go with the offer that’s more likely to close.