There is nothing you can do to protect yourself from a deal falling through. If their house doesn't sell, the earnest money will go back to them. That is the whole point of the contingency.

With that in mind, you need to decide if you want to accept the offer.

You can accept their offer with a "kick out" clause. You would still market your home, and if you get another offer, the first buyers would have to remove their contingency or lose the house to the new buyers. The fact that they have a buyer lined up is a huge plus.

I would definetly do a kick-out clause as terriks mentioned along with specific details as to how that should be handled as in what proof the buyers have to provide to show they can remove the contingency. Make clear to them that until the contingency is removed that you will continue to market the house.

Also check on what happens in your MLS? Can you continue to do showings? or does it automatically remove you if you go pending?

"I would definetly do a kick-out clause as terriks mentioned along with specific details as to how that should be handled as in what proof the buyers have to provide to show they can remove the contingency."

The usual kick out does not require an proof from the buyer, but gives them X days to waive the contingency in writing or the contract is null and void.

The seller must supply proof of a bona fide offer to purchase.

I have supplied it as a written contract that is contingent on the first contract being waived according to the kick out clause.

A copy of the backup offer is delivered to the first buyer to start the clock running.

http://realtytimes.com/rtpages/20050214_kickout.htm