How do I evaluate a purchase offer on my home?

When an offer comes in on your home, the instinct is to go straight to the price. Understandable. The number is the biggest line item. But evaluating a purchase offer on price alone is one of the most common mistakes FSBO sellers make, and it costs some of them real money even when the price looks good.

Five components drive the actual outcome of a transaction: price, financing, contingencies, timeline, and terms. A high price with shaky financing is worth less than a slightly lower price from a well-qualified cash buyer. An offer with multiple contingencies and a long closing timeline may give you headaches that a cleaner offer doesn't, even if the number on page one looks better.

Financing: verify the pre-approval. Is the buyer paying cash or financing? If financing, what type of loan? Conventional, FHA, VA, and USDA loans all have different appraisal requirements and property condition standards. FHA and VA loans in particular have appraisal requirements that can flag condition issues and potentially require repairs before the loan can close. None of this is disqualifying, but it factors into how you evaluate the offer. Request a copy of the pre-approval letter and verify the lender, approval amount, and date.

Contingencies determine your risk level. The most common are the home inspection contingency, the financing contingency, and the appraisal contingency. Each one gives the buyer a defined exit from the contract under specified conditions. More contingencies mean more chances for the deal to fall apart. A cash buyer with no contingencies is lower risk than a financed buyer with three. That difference in risk has real value when you're comparing offers.

Timeline affects your planning, your carrying costs, and your logistics if you're buying another home simultaneously. An offer at your asking price with a 90-day closing and a home sale contingency may not serve you as well as a lower offer that closes in 30 days and is clean.

Seller concessions require careful reading. Many offers include a request for seller-paid concessions, a specific dollar amount the buyer asks you to contribute toward their closing costs, prepaid expenses, or their agent's commission. These concessions come directly out of your net proceeds. A $400,000 offer with $10,000 in seller concessions is economically a $390,000 offer. Factor them in when comparing offers side by side.

Watch out for verbal agreements during negotiations. Text messages, casual phone calls, and notes exchanged outside the formal contract are not legally binding real estate contract amendments. Every change to price, repair credits, closing dates, or included items must be written into a formal signed addendum. Sellers who agree to something verbally and then assume it's reflected in the contract have been surprised at the closing table more than once. If it isn't in writing, it doesn't exist.

Use the Offer Comparison Worksheet in the JoeFSBO toolkit to lay out multiple offers in a structured format. Looking at everything on one page in the same framework makes the right decision far clearer than reading through three separate contracts while trying to hold all the variables in your head at once.