It is a well known fact that many criminals and scam artists use FSBO's as easy targets so you are doing the right thing by trying to educate yourself in this matter.
For example most real estate professionals will ask a new potential customer to meet them at their office during business hours and while others are at the office. There they will ask for identification, proof of funds or evidence of lender qualification. Since you are not in the business, you will not be able to meet people in an ofice so I might suggest trying to find out as much as you can about them before having them come to your home and I would never open my door to a stranger asking to see the property if I had not had the opportunity to check them out yet.
There are background check services available on line, however you will have to pay for that so again, not being in the business I would think you would only want to do that if you really thought you were ready to do business with someone.
These days, being pre-qualified may not be enough, you may want to ask that they show evidence of pre-approval or loan commitment if they intend to finence the purchase. As far as cash is concerned, in my owne experience I am finding that there are a lot of cash buyers these days, many of which are investors so I don't necessarialy see that as being suspicious.
I hope all of this helps.
If they are paying "CASH" - a currently dated letter from the Bank stated the funds available with contact information that you can call and verify.
Once entering into a contract, a serious Buyer will have no problem to put a deposit into Escrow....
If you have questions along the way, feel free to contact me with a specific Buyer and I can always advise you.
A pre-approval letter unfortunately doesn't mean much unless the buyer has already given all required financial info to the bank/ lender... and make sure the pre-approval is less than 60 days old.
If the buyer is paying cash, get an recent asset statement to prove that they do have the funds to close.
In this current housing market, most serious buyers will have a Realtor representing them since there is no cost to the buyer for representation. Realtors will make sure that their buyer(s) are qualified before showing them any homes.
When a buyer makes an appointment to view the property you can ask them to bring a pre-approval letter. Tell them that this a prerequisite to showing the home. Anyone that is truly qualified will have no problem presenting you with a copy of the letter.
You should probably hire an agent, because I'm quite confident that you need one.
Prepare a contract that requires a reasonable deposit to be held by a neutral party(title company) and keep the time frames for inspections and other contigencies short.
There are many ways to protect yourself and to determine if a buyer is serious but the deposit and proof of funds should be enough to give you some level of comfort. If they do not want to do either then you have a problem.
If you don't have a great deal of experience I'd suggest consulting a professional.
You can ask for a loan aproval letter, or bank letter of reference.
You may additional ask, since the buyer is offering cash, for proof of funds which should be a letter of cash on deposit with his lender, or an account verification where his funds are being held.
Most court records are now public and online so that you can search for judgements, or criminal, civil charges that have been put to record. This is done by court documentation and can be searched by name.