How to Review and Respond to Offers on Your Home in California

Orlando Garcia, REALTOR® | The GO Team Real Estate Services | HomeSmart Realty Group

Getting an offer on your home is exciting. It means your pricing and marketing worked — a buyer is serious enough to put it in writing. But accepting the right offer is where the skill comes in. The highest number isn't always the best deal, and a weak offer at a strong price can cost you more in the end than a slightly lower offer that closes cleanly.

Here's how to read an offer like a pro and decide what to do with it.

What's in an Offer

A California Residential Purchase Agreement is a multi-page contract that covers every aspect of the transaction. The key terms to focus on:

• Purchase price. The headline number — but not what you actually pocket. More on that below.
• Earnest money deposit. The buyer's good-faith deposit. A higher deposit usually signals a more committed buyer.
• Contingencies. Conditions the buyer can exit the contract under. Inspection, appraisal, and loan are the three main ones.
• Financing type. Conventional, FHA, VA, or cash. This affects timelines, appraisal requirements, and risk.
• Closing timeline. How many days to close. Standard is 30–45 days; some buyers need more time, some can close faster.
• Seller concessions. Is the buyer asking you to cover any of their closing costs? This reduces your net proceeds.
• Personal property. What appliances or fixtures is the buyer expecting to stay with the home?

Price vs. What You Actually Net

The purchase price is not what you walk away with. Before you get excited about a number, do the math. Subtract your mortgage payoff balance. Subtract agent commissions (typically 2–3% on the seller's side). Subtract escrow and title fees (roughly 1–2% total). Subtract any outstanding liens, HOA dues, or past-due property taxes. Subtract property tax prorations through the closing date. Subtract any seller concessions you agreed to.

What's left is your net. Your agent should prepare an estimated net sheet for every offer you're seriously considering. This is the number you're actually making your decision on.

Evaluating Buyer Strength

Understanding Contingencies as a Seller

Every contingency in a buyer's offer is a legitimate exit door. During the contingency period, a buyer can back out for covered reasons and recover their earnest money. From a seller's perspective, more contingencies mean more uncertainty — more ways the deal can fall through after you've taken your home off the market.

An offer with an inspection contingency, appraisal contingency, and loan contingency is standard — and protects a buyer in all the right ways. An offer where the buyer has waived some or all of these is cleaner for you, but riskier for them. Evaluate the buyer's strength before putting too much weight on contingency removal. A buyer who waives contingencies but can't actually close is worse than a buyer who keeps them.

Cash Offers — The Tradeoffs

Cash offers are appealing for their certainty. No loan to fall through. No appraisal condition requirements. Faster close possible. But cash offers often come in below market price — buyers know they're bringing you certainty and they price that into their offer.

Whether a cash offer at $30,000 below list is better than a financed offer at list depends on how confident you are in the financed buyer, your own timeline, and what the escrow period looks like. Sometimes the discount is worth it. Sometimes it isn't. Run the numbers and think about risk, not just price.

Multiple Offer Situations

When you receive more than one offer — which happens in Downey's market on well-priced, well-prepared homes — you have options. You can accept the best offer outright. You can counter one offer. Or you can issue a "best and final" request, inviting all buyers to submit their highest and best offer by a set deadline. Best-and-final situations often push the final price higher as buyers compete, but they also create urgency and can cause some buyers to walk away.

Your agent will advise on the right approach based on the offers in front of you. The goal is to maximize your outcome — price, terms, and certainty combined.

How to Counter

You can counter price, terms, or both. A counter offer is a new offer — the original offer is no longer binding once you issue a counter. You can counter on price, ask the buyer to remove a contingency, adjust the closing date, or request they cover their own closing costs. Every counter restarts the negotiation clock and gives the buyer the right to walk away. Be thoughtful about what you ask for — unnecessary counters on small points can frustrate buyers who were close to yes.

Red Flags in an Offer

Watch for offers that ask for an unusually large number of seller concessions. Watch for buyers with very small down payments using a lender no one has heard of. Watch for offers that have very long contingency windows without explanation. Watch for buyers who submit an offer without a pre-approval letter at all. None of these are automatic deal-killers, but all of them warrant a closer look before you sign.