Key points
- Judge every offer by what you net and how likely it is to close, not by price alone.
- Cash usually means fewer contingencies, but a cash buyer can still inspect and cancel in the option period.
- You can decline or counter any offer, including a low one.
- Concessions come out of your proceeds, so subtract them before comparing prices.
- With several offers, set one deadline for final terms and consider a backup contract.
How do I know if a buyer's offer is good?
An offer is good when it nets close to what the market supports and is likely to reach closing. Price is one line. The rest of the contract decides how much of that price you keep and how much risk you carry.
What to check on every offer
- Price, minus any seller concessions, repair credits or items the buyer asks you to pay
- Financing: cash, conventional, FHA or VA, and the size of the down payment
- The lender's preapproval letter, or proof of funds for cash
- Earnest money amount and the option period length and fee
- Appraisal terms, including whether the buyer has waived the right to end the contract over a low appraisal
- Closing date and possession, including any request for a lease
- Whether the purchase depends on the buyer selling another home
Ask your agent for an estimated net sheet for each offer. It turns the terms into one figure you can compare. The comparable sales from your pricing review then tell you whether the price itself holds up.
Should I accept the first offer on my house?
Accept it if it holds up against recent sales and your net sheet. A first offer is not a bad offer by default. It often comes from a buyer who has been waiting for exactly this kind of home.
The risk of holding out is that interest fades after the first weeks. The risk of rushing is accepting weak terms. A counteroffer on the points that matter, price, option period or closing date, is often the middle path.
Can I reject an offer that's too low?
Yes. No offer obliges you to accept, and in Texas an offer becomes a contract only when both sides have signed and it has been delivered. You can decline, let it expire, or counter.
A counteroffer is usually worth sending. A low first offer sometimes reflects a buyer testing the waters, and a firm counter backed by recent sales can bring them up. Keep decisions tied to price and terms. Fair housing law forbids treating buyers differently for who they are.
How to counter a low offer
- Look at the recent closed sales the buyer's agent is likely using, and find where they differ from your home.
- Counter on price with those sales in hand, so the buyer's agent can explain your number to the buyer.
- Use the other terms as trading room: a longer closing, a smaller concession, a shorter option period.
- Set a response deadline so the negotiation does not drift for days.
Is a cash buyer better than someone with a mortgage?
Often, but not always. Cash removes the risk that the loan is denied and usually removes the lender's appraisal, so a cash contract is more likely to close and can close sooner.
A cash buyer still usually has an option period, so they can inspect and cancel like anyone else. Some cash offers come in lower because the buyer expects a discount for certainty. Compare the cash net against a financed offer with a strong down payment and appraisal terms. The gap may be smaller than it looks.
Ask for a recent bank or brokerage statement, or a letter from the institution, showing funds that cover the price. Investor offers that need a short closing should still show proof of funds.
What makes a financed offer strong?
A financed offer is strong when the loan is likely to be approved on time and a low appraisal will not end the deal. You can judge both before you sign.
- A preapproval from a lender who has reviewed income, assets and credit, not just a prequalification
- A lender your agent can call, who confirms the file and the timeline
- A larger down payment, which leaves more room if the appraisal comes in low
- Appraisal terms in the TREC Addendum Concerning Right to Terminate Due to Lender's Appraisal that limit or waive the buyer's right to walk away over value
- A closing date the lender says it can meet
- No sale-of-other-property contingency, or a buyer whose current home is already under contract
FHA and VA loans are sound financing, but their appraisal rules come from federal requirements, and the appraiser may call for repairs before the loan funds. That is worth knowing when you compare them with conventional or cash offers.
What are seller concessions in real estate?
Seller concessions are money the seller agrees to pay toward the buyer's closing costs, prepaid items, rate buy-down or repairs. They are paid at closing and reduce your proceeds dollar for dollar.
Buyers ask for them when cash to close is tight. Loan programs cap how much a seller may contribute, so your agent and the buyer's lender check that a request fits. A concession can help an offer work, but always compare prices after subtracting it.
Sometimes a concession is the cleaner choice. A buyer who asks for a credit toward closing costs instead of a lower price may still need the price to appraise, so check the appraisal terms too. After an inspection, a repair credit at closing often replaces work you would otherwise have to schedule and supervise before moving out.
What happens if I get multiple offers?
You choose how to respond: accept the strongest, counter one buyer, or tell every buyer's agent that you have several offers and set a deadline for final terms. Be careful about countering more than one buyer at a time, because two buyers could both accept.
- Set a clear deadline and tell every agent the same thing.
- Compare final offers on net proceeds, financing strength, appraisal terms, option period and closing date.
- Accept one, and consider the TREC Addendum for Back-Up Contract with the runner-up.
- Respond to the others so they know where they stand.
A backup contract moves into first position if the first contract ends, which is most useful during the option period. For the whole sale from listing to funding, see selling your home, or call Andy at 469-682-2387 when offers arrive.
Questions people ask
Is the highest offer always the strongest?
No. A higher price that comes with a large concession, weak financing or no protection against a low appraisal can net less or fail to close. Compare net proceeds and the likelihood of closing.
Can I counter a cash offer?
Yes, the same as any offer. You can counter the price, the option period, the closing date or anything else. Ask for proof of funds before you sign.
How long do I have to respond to an offer?
As long as the buyer allows. Buyers often set a response deadline, and a buyer can withdraw an offer any time before you accept it. Respond in writing through your agent, and do not let a good offer expire while you wait for another one that may not come.
Do seller concessions affect the appraisal?
The appraiser sees the contract, including concessions, and the lender applies its program's limits. Concessions do not raise the appraised value. A higher price paired with a concession still has to appraise. Your agent and the buyer's lender should check that the numbers fit before you sign.
Andy Scott is a Dallas Realtor and founding member of the GPS Group at Dave Perry-Miller Real Estate. He grew up in Dallas in a real estate family, has been licensed since 2005, and has helped buyers and sellers for more than 20 years. About Andy · Sell your home
