When selling a house, it’s important to understand what makes a good offer from a buyer. While the sale price is important, that alone isn’t a guarantee of the best offer. Factors like contingencies, the closing timeline, and the earnest money deposit are also important.
A real estate agent can help you determine what’s a good offer in your market, and they can take the lead in negotiating with buyers.
If you're looking for a realtor, we can help you connect with top agents in your area. These agents are skilled negotiators and offer full service for half the typical listing fee (1.5% vs. 3%), potentially saving you thousands on your home sale.
1. Higher net proceeds
Net proceeds (how much money you'll walk away with from your sale) will likely be your main consideration when reviewing offers. Your net proceeds aren't the same as the sale price a buyer offers; they're the sale price minus closing costs, seller credits, and any other expenses.
Your real estate agent will use a seller’s net sheet to help you understand how much money you’ll actually pocket based on each buyer’s offer. You can also use a home sale calculator to learn how to calculate your net proceeds.
For example, you could get two offers with the same sale price of $800,000. The first offer asks you to cover $20,000 in closing costs, a home warranty, and the termite inspection. The second offer doesn't ask you to cover these additional costs.
Even though the sale price is the same, the second offer is the better deal since it will leave you with higher net proceeds.
2. Fewer contingencies
A major component of any offer is real estate contingencies. Generally, the fewer contingencies attached to an offer, the better it is for the seller. In a best-case scenario, a buyer will make an as-is offer with no contingencies, which means they’re buying the home in its current condition and can’t ask for repairs or money back if issues arise.
However, as-is offers are rare, and you’ll usually have to agree to at least an inspection contingency. When negotiating a home sale, however, it may be possible to waive the appraisal contingency. That can end up saving you a lot of money if the appraisal comes in lower than the sale price, in which case the difference will be covered by the buyer.
Cash offers are also appealing because they don’t include financing contingencies (i.e., a mortgage approval). Assuming the other terms are the same, you want to go with the cash offer versus the financed offer because there's no risk of the deal falling through due to financing issues.
3. Conventional financing
If a buyer isn't offering cash, the next best thing is that they have conventional financing. Generally, conventional financing is considered the strongest loan type compared to alternative financing, such as Federal Housing Administration (FHA), Veterans Affairs (VA), or United States Department of Agriculture (USDA) loans.
While FHA, VA, and USDA loans aren’t bad — and they shouldn’t be a deal breaker when considering an otherwise strong offer — they tend to have more restrictions than conventional loans. For example, USDA Loans can only be used for properties in eligible areas.[1]
You should talk with your listing agent about whether a buyer’s financing will likely be an obstacle to getting a deal you’re satisfied with.
4. Higher earnest money deposit
Offers with a higher earnest money deposit are also better when selling a house. When buyers put down more earnest money, the deal is less likely to fall through since the buyer stands to lose a larger sum of money.
While the size of an earnest money deposit isn’t likely to be the most important factor in an offer, it's worth paying attention to. All else being equal, if you’re comparing two offers and one comes with $500 in earnest money and the other with $5,000, you’ll want to go with the latter offer since the buyer is less likely to cancel after going under contract.
What is considered a high earnest money deposit will vary depending on local market conditions. When you choose a realtor for selling your house, they should be able to provide guidance about what standard earnest money deposits look like in your area.
5. Standard or shorter closing timeline
The closing timeline may be an important consideration for you as the seller. In many cases, a quick close is considered ideal since it means you’ll get cash from the deal sooner and there’s a lower risk of the deal falling through.
A loan officer on Reddit shares, “Faster closing = less chance of something going wrong. In my experience, things go bad when stagnant. Also, getting your money earlier can be important if the seller needs it to buy a new house, pay off a spouse in a divorce, etc.”
Closing timelines can vary by market, so you should judge the quality of offers based on your market’s average. When you find a real estate agent for your sale, they should be able to inform you of the standard closing timelines for your area.
For example, if 30 days is normal where you’re selling, then a closing that is 30 days or less is ideal. But you may want to reconsider an offer with a closing in 60 or 90 days, which provides more time for the deal to fail or for a dramatic change in the market.
FAQ
Is 90% of the asking price a good offer?
In a buyer’s market where homes take longer to sell, a 90% offer can be attractive. But in a seller’s market where homes are in high demand, an offer that's 10% below asking will likely be too low. Learn more about how to sell a house, including negotiating offers.
What might make an offer weak?
An offer may be weak if it's well under the asking price or if it has too many contingencies. Offers that are dependent on financing approval are also typically weaker than all-cash offers. However, what’s considered a weak offer varies by market, so you’ll want to find a real estate agent for local guidance.
Who typically presents an offer to the seller?
Offers are typically presented to the seller by the listing agent. If the buyer has an agent, the buyer’s agent will give the offer to the listing agent, who then shows it to the seller. Both agents will negotiate on behalf of their clients. Learn more about how to negotiate a home sale.
