A plain-English look at comparing offers, from ALC Realty
Picture this: you’ve listed your home, and two offers land on the same evening.
Offer 1 is $665,000. The buyer is using a VA loan, is asking you to put $15,000 toward their closing costs, and wants 50 days to close.
Offer 2 is $652,000. Conventional loan, 20% down, no requests for help with closing costs, and a 30-day close.
Most sellers lean toward Offer 1 right away. It’s $13,000 more, so what’s to think about?
Quite a bit, as it turns out. The price at the top of a contract and the money you actually walk away with are two different numbers. When we line these offers up side by side, the “smaller” one comes out ahead. And that’s before we even get to the appraisal.
Step one: compare what you keep, not what they offer
To keep the math simple, let’s make two assumptions:
- Listing-side commission of 3%. This is just for illustration. Commissions are always negotiable, and there’s no set rate.
- It costs you $95 a day to keep owning the house. If you’ve already moved, every extra day means another day of mortgage interest, insurance, utilities and taxes.
| Offer 1 | Offer 2 | |
|---|---|---|
| Purchase price | $665,000 | $652,000 |
| Seller credit to buyer | −$15,000 | $0 |
| Commission (3%, illustrative) | −$19,950 | −$19,560 |
| 20 extra days of holding costs | −$1,900 | $0 |
| What you’re really comparing | $628,150 | $632,440 |
Costs that are the same either way, like your mortgage payoff and title fees, don’t change the comparison, so we’ve left them out. What’s left is clear: Offer 2 puts about $4,290 more in your pocket.
Why? Two reasons:
- The credit comes right off the top. A $15,000 credit on a $665,000 offer is really a $650,000 offer, which is already below Offer 2.
- You pay commission on money you never keep. Because commission is figured on the contract price, you’re paying 3% on that $15,000 credit too. That’s another $450 out of your pocket.
Add in 20 more days of carrying the house, and the higher offer quietly becomes the lower one.
This isn’t a VA problem
It would be easy to walk away thinking “VA offers are worse.” That’s not the lesson here.
Run the same VA buyer at $665,000 with no credit and a 30-day close, and that offer nets $645,050, about $12,600 more than Offer 2. Every bit of the difference in our example comes from the credit and the longer timeline, not the loan type.
VA buyers are a valued part of our market here in the New Orleans area. Ruling them out, or any financing type, just means fewer people competing for your home.
Seller credits aren’t a red flag either. With today’s interest rates, plenty of buyers need a little help with cash at closing, and lenders allow it within limits. VA caps certain seller concessions at 4% of the home’s value, and the buyer’s normal closing costs don’t count toward that cap. Conventional loans allow 3% to 9% depending on the down payment. The $15,000 in our example is about 2.3% of the price. Totally normal.
So the question isn’t “Is this allowed?” It’s “What does this do to my bottom line?” And now you know how to answer that.
Then there’s the appraisal
Here’s the part most sellers don’t see coming.
Say the two most recent comparable sales in your neighborhood closed at $648,000 and $655,000. Offer 2 fits comfortably within that range. Offer 1 is $10,000 above the highest one.
That matters because a lender will only lend based on the lower of the purchase price or the appraised value. If Offer 1’s appraisal comes back closer to the recent sales, somebody has to make up the difference. Either the buyer brings more cash, you lower the price, or you meet in the middle.
This is where the loan type does come into play. VA contracts generally include an escape clause that lets the buyer walk away with their deposit if the home appraises below the price. FHA loans carry a similar protection. Conventional buyers usually have an appraisal contingency too, but it’s negotiable and can be shortened, capped or waived.
So if the appraisal comes in low on Offer 1, you may find yourself renegotiating, or back on the market weeks later.
So which offer should you take?
There’s no one-size-fits-all answer. Sometimes the higher offer really is the better deal, and sometimes a smart counteroffer can make it one. You might reduce the credit, shorten the closing timeline, or talk through how a low appraisal would be handled before you sign.
The key is to look past the headline number and see the whole picture: your net, your timeline, and your risk.
That’s exactly what I do for every seller I work with. When offers come in, I’ll put them side by side on a net sheet so you can see what each one actually means for you, and we’ll decide together.
Thinking about selling in the New Orleans area? Let’s talk at myNOLAhome.com.
Alicia Lagarde Craig, ALC Realty
The figures in this post are examples for illustration only. Your actual costs, commission and loan terms will vary. This is general information, not legal or financial advice.