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Accepting an offer on your house is a major milestone, but not all offers lead to a successful closing. Based on our experience assessment, a deal that appears strong on the surface can collapse due to weak buyer qualifications or problematic contract terms. The highest offer price is not always the best offer; the most secure offer comes from a well-qualified buyer with straightforward terms. Recognizing critical warning signs can protect you from delays and financial loss. According to the National Association of Realtors, 11% of home sales face delays, often related to financing, underscoring the need for careful evaluation.
A red flag is any term, condition, or circumstance within a purchase offer that signals a heightened risk of the deal falling through. These risks can range from a buyer’s lack of financial preparedness to contingencies that give them too much leverage to walk away without penalty. Identifying these issues early allows you to negotiate better terms or reject an offer in favor of a more reliable buyer.
Earnest money is a deposit made by the buyer to show they are serious about purchasing the property. If the deal falls through due to the buyer failing to meet agreed-upon terms, the seller may be entitled to keep these funds. A low earnest money deposit—significantly less than the standard 1% to 3% of the purchase price—can be a major red flag. It may indicate the buyer is not fully committed or lacks the financial reserves to see the transaction through. A strong deposit demonstrates financial seriousness and provides you with compensation if the buyer defaults without cause.
In today's market, offers from out-of-state or virtual buyers are common. However, an offer from a buyer who has never physically toured the property introduces risk. They may have an idealized view of the home and could be more likely to back out after a property inspection reveals unexpected flaws. If you consider such an offer, discuss protective measures with your agent, such as a shorter inspection period or a non-refundable earnest money deposit after inspection.
A home-sale contingency is a clause making the purchase of your home contingent on the successful sale of the buyer’s current home. This creates a chain of dependency that can cause significant delays or cause your deal to collapse if the buyer’s home doesn’t sell. If you entertain an offer with this contingency, insist on a "kick-out clause," which allows you to continue marketing your home and accept a better offer if one emerges.
A standard inspection period typically lasts 7 to 10 days. A buyer who requests a significantly longer period, such as 21 days, may be signaling uncertainty or shopping for other properties. An extended contingency period keeps your home off the market longer and increases the chance the buyer will find a reason to withdraw. Stick to a reasonable timeframe to maintain momentum.
This is often the most critical factor. A pre-qualification letter is a preliminary estimate, but a pre-approval letter from a reputable lender means the buyer’s finances (credit, income, debt) have been verified. Be cautious of offers that rely on financing from obscure lenders or that are contingent on the sale of another asset. Cash offers, or those with strong pre-approvals, present the lowest risk. The table below outlines key differences:
| Financing Type | Level of Verification | Risk to Seller |
|---|---|---|
| Cash Offer | Proof of Funds Provided | Very Low |
| Pre-Approval | Credit & Income Verified | Low |
| Pre-Qualification | Basic Financial Info Discussed | Moderate |
| Contingent Financing | Depends on Another Event (e.g., sale of a home) | High |
An offer significantly above your asking price is enticing, but it can be risky. The buyer’s lender will order an appraisal—an independent assessment of the home’s market value. If the appraisal comes in below the offered price, the lender will only finance the appraised value. Without appraisal gap coverage—a clause where the buyer agrees to pay the difference in cash—the deal will likely need to be renegotiated, often downward, or it may fall apart.
An offer packet filled with errors, missing signatures, or inconsistent dates can indicate an inexperienced buyer or a negligent agent. Sloppy paperwork often leads to legal and administrative delays down the line. A clean, complete, and professionally prepared offer reflects a buyer who is organized and serious about proceeding efficiently.
To avoid problematic deals, prioritize offers from financially verified buyers with minimal, standard contingencies. An experienced real estate agent is invaluable for evaluating buyer strength and negotiating protective terms. By focusing on the solidity of the offer rather than just the top-line number, you significantly increase your chances of a smooth and timely closing.
