A new owner may save one of two Carmarthenshire council-run care homes in Llanelli, but the other could shut.
The council has been approached by a third party interested in Caemaen, and councillors have asked for more details about the bid.
But the executive board has ruled that St Paul's, which has only four residents, should close.
Campaigners who last year marched through the town said they were disappointed with the decisions.
Stephanie Williams, secretary of the Residents Against Care Home Closures group, said it was her understanding that the bid to take over Caemaen would see it turned into a home for elderly and mentally infirm (EMI) people.
"The option to privatise Caemaen still does not help the 28 residents there as they are not classified as EMI - they just require care," she said.
"Where are they supposed to go?"
The group is calling a public meeting later this month ahead of a full council meeting needed to ratify the executive board's decision.
The council said there were 59 spare places at its care homes and there was a £1.4m overspend in its adult social care budget this year.
The annual operating costs for Caemaen and St. Paul's are £760,870 and £576,881 respectively, and it said both needed major investment to bring them up to standard.
It said its capital budget had been reduced by 20% next year with further 10% reductions in the following years "making it extremely difficult to respond to essential repairs and maintenance let alone upgrading facilities."
Council leader Meryl Gravel said: "This is a very emotive issue but we can assure residents and their families that this will be handled very sensitively and their needs will be a priority for us at all times."