Appraisals and Financing
What the buyer’s loan type means for you, how FSBO appraisals work, and where financed deals fall apart
When a financed buyer makes an offer on your Oklahoma FSBO home, you’re not just accepting their price. You’re accepting their financing contingency as part of the deal. The loan type determines how the appraisal works, what repairs you might be required to make, how long the process takes, and under what circumstances the buyer can walk away with their earnest money.
As a FSBO seller in Oklahoma, understanding what you’re agreeing to when you accept an offer with a specific financing contingency will save you from expensive surprises.
The loan approval timeline
All four of the most common financing supplements — Conventional, FHA, VA, and USDA — share the same basic approval timeline, and it starts running from the Time Reference Date (usually three days after the last signature on the contract).
Within 5 days of the Time Reference Date, the buyer must apply for the described loan. Within 10 days (the default, though it can be specified differently in the contract), the buyer’s lender must deliver a written statement of conditional loan approval to you.
That conditional approval is not a final loan commitment; it confirms:
If that written conditional approval doesn’t arrive within the specified time, you have the right to send the buyer written notice of your intent to cancel the contract. Once you do, the contract terminates on the fourth day after that notice is delivered unless the buyer gets their approval letter to you before the fourth day expires.
Track that calendar. Include reminders (that’s what we do!). FSBO sellers without an agent are often the ones who don’t notice the approval deadline passing.
The Appraisal
For any financed buyer, the lender will order an independent appraisal of your property before it will fund the loan. The appraiser works for the lender, not for the buyer and not for you. Their job is to confirm that the property is worth at least as much as the purchase price, so the lender isn’t lending more than the home is worth.
If the appraisal comes in at or above the purchase price, the transaction moves forward. If it comes in below the purchase price, the contract provisions kick in, and what happens next depends on which loan type you’re dealing with.
A conventional loan is not backed by a federal agency. It follows guidelines set by Fannie Mae or Freddie Mac, and lenders typically require stronger credit and a larger down payment than government-backed programs.
Appraisal: If the property appraises below the purchase price, the buyer has three days after receiving notice of the appraised value to cancel the contract and get their earnest money back. If they don’t cancel within that window, the contract remains in force.
In practice, a low appraisal on a conventional loan usually means one of three things:
You’re not automatically required to drop your price. But the buyer isn’t automatically required to make up the gap either.
Property condition: Conventional loans have fewer mandatory property condition requirements than government-backed loans. The appraisal focuses primarily on value. Individual conventional lenders can still require repairs as a condition of funding if the appraiser notes significant deficiencies, but the Conventional supplement doesn’t include the formal 5-day repair negotiation provision that FHA, VA, and USDA supplements do. If a conventional lender requires repairs, how that gets handled is a matter of negotiation between the parties, not a structured contract timeline with an automatic termination consequence.
An FHA loan is insured by the Federal Housing Administration. It allows buyers to put less money down (as little as 3.5%) and qualify with lower credit scores than conventional financing. In Oklahoma markets where many buyers are first-time or lower-down-payment purchasers, FHA is common.
Appraisal and the amendatory clause: The FHA financing supplement includes a required Amendatory Clause. It states that the buyer is not obligated to complete the purchase and cannot forfeit their earnest money unless the lender delivers written confirmation that the appraised value of the property is not less than the purchase price. The buyer can choose to proceed anyway, but they’re not required to.
Appraisal-required repairs: This is where FHA transactions most often surprise FSBO sellers. FHA appraisers are required to flag property conditions that affect habitability, safety, or structural soundness. If the FHA appraiser requires repairs, and those repairs are not otherwise mutually agreed between you and the buyer, the contract gives both parties five days from being notified to agree on an arrangement for the repair costs. If no written agreement is reached in that five-day window, the contract terminates and the earnest money goes back to the buyer. This is the same mechanism as VA.
Unlike the Conventional supplement, the FHA supplement includes an explicit repair provision with a built-in contract deadline. The appraiser’s required repairs are a transaction requirement with contractual consequences, not something that gets noted and left to the parties to sort out informally.
Seller contributions: The FHA supplement includes a provision for seller-paid closing costs, the same mechanism as VA. If agreed in the contract, you can contribute toward the buyer’s FHA closing costs, prepaid expenses, escrow deposits, and origination fee up to a stated dollar amount. This is negotiated at the offer stage.
Mortgage Insurance Premium: FHA loans carry a Mortgage Insurance Premium (MIP) rather than private mortgage insurance (in a conventional loan with less than 20% downpayment). It’s built into the loan. Not something you deal with directly, but it affects the buyer’s total monthly payment and sometimes their qualifying amount.
VA loans are guaranteed by the U.S. Department of Veterans Affairs for eligible active-duty service members, veterans, reservists, and certain surviving spouses. They require no down payment and no private mortgage insurance. In areas with a significant military or veteran population, like Shawnee and Central Oklahoma, VA offers are common.
Appraisal and the amendatory clause: The VA supplement includes a VA Amendatory Clause stating that the buyer is not obligated to complete the purchase and cannot forfeit earnest money if the contract price exceeds the reasonable value established by the VA. The VA refers to its appraisal result as “reasonable value” rather than “appraised value.” The buyer can choose to proceed above the VA value, but is not required to.
Appraisal-required repairs: If the VA appraisal requires repairs that are not otherwise mutually agreed, you and the buyer have five days to reach a written agreement on how to handle the costs. No agreement in five days means the contract terminates and earnest money returns to the buyer. This is the same mechanism as FHA.
VA Funding Fee: VA loans carry a VA Funding Fee that is either paid at closing or rolled into the loan. This is the buyer’s obligation, not yours, but it affects the total loan amount.
Seller contributions: The VA supplement includes a seller contribution provision, same structure as FHA. If agreed in the contract, you can contribute toward the buyer’s VA closing costs, prepaid expenses, escrow deposits, and origination fee up to a stated dollar amount. This is negotiated at the offer stage.
One practical note: VA appraisers use the Minimum Property Requirements set by the VA. These are specific. The VA wants to ensure the property is safe, sound, and sanitary. An older home with deferred maintenance is more likely to produce a VA appraisal with required repairs than a newer or well-maintained home.
USDA loans are backed by the U.S. Department of Agriculture and are available to buyers purchasing in designated rural areas. The primary qualification is the property’s location: the home must be in an eligible area as defined by USDA guidelines. Not all Oklahoma homes qualify, but many outside of Tulsa and Oklahoma City’s immediate metro areas do. Shawnee and Pottawatomie County are currently grandfathered in for USDA eligibility. Buyers should still verify their specific property at the USDA eligibility map or with a mortgage lender, but if you’re selling in this area, USDA is a real financing option for your buyers.
Appraisal Same three-day cancellation right as conventional. If the property appraises below the purchase price, the buyer has three days after being notified to cancel and receive the earnest money back.
Appraisal-required repairs: If the appraisal requires repairs not mutually agreed upon, five days to reach written agreement; no agreement means termination and earnest money to buyer. Same negotiation window as FHA and VA.
Loan Closing Costs: Buyer pays standard closing costs:
USDA loans carry two fees in lieu of traditional mortgage insurance: an upfront guarantee fee paid at closing (which can be rolled into the loan), and an annual fee added to the monthly payment. The buyer’s lender can provide current rates for both.
Seller contributions: USDA borrowers are financing 100% of the purchase price, which means they may have very little cash available for closing costs and prepaid expenses. Expect a seller contribution request. It won’t appear in a dedicated supplement provision the way it does on FHA and VA, instead, it gets written into Paragraph 5 (Additional Provisions) of the USDA supplement. That’s something to factor into your net proceeds calculation before you accept.
What to watch: USDA processing times are often longer than conventional or even FHA. If your buyer is using a USDA loan, build that into your closing timeline expectations. Closings that would take 30-35 days with other financing may take 45-60 days with USDA, due to the additional federal government review layer.
A cash buyer doesn’t need lender approval and doesn’t need an appraisal ordered by a lender. That doesn’t mean they won’t get one. Some cash buyers hire their own appraiser for their own information, but the transaction isn’t contingent on an appraised value unless they specify that in the offer.
Cash offers typically mean faster closings, fewer contingencies, and no appraisal risk on your end. They’re worth more than their face value, especially in situations where appraisal risk is meaningful (recently renovated homes, atypical properties, or markets with limited comparable sales).
When a buyer claims to be paying cash, ask for proof of funds before you accept. A bank statement, brokerage account statement, or letter from a financial institution verifying available funds is standard. The earnest money deposit doesn’t verify cash availability for closing.
What to watch: Proof of funds is only good for that day. There’s still the potential risk that the buyer could withdraw the funds later. The contract, however, is still binding on the buyer’s ability to pay cash.
Seller-paid closing costs
FHA and VA financing supplements include built-in provisions for seller-paid buyer closing costs. USDA buyers who are financing 100% of the purchase price almost always need seller contributions as well. Those might be written into Paragraph 5 (Additional Provisions) of the USDA supplement rather than a dedicated provision. These are all negotiated at the offer stage.
This reduces your net proceeds. Run the math on what the net looks like before you agree. A buyer offering $210,000 with $5,000 in seller-paid closing costs nets you roughly the same as a $205,000 offer with none. Know your number before you make a decision on the offer.
Seller contributions on conventional loans are also possible and are handled the same way, written into Paragraph 4 (Additional Provisions) of the Conventional supplement.
When to get help
If a buyer’s loan type is unfamiliar to you, or if you receive an appraisal with required repairs and don’t know how to respond, that’s a reasonable time to consult a real estate attorney or a REALTOR® on a limited basis. The five-day window on appraisal repair disputes is short. Getting the wrong advice or no advice in that window can cost you the deal or lock you into terms you didn’t intend to accept.
The title company handling your closing can answer procedural questions. They cannot give legal advice, but they’ve seen every loan type and most scenarios.