Selecting the best offer isn’t as straightforward as it seems.
If you are selling your place in a “hot” real estate market, it is possible you will find yourself receiving multiple offers from buyers. While this can be a challenge for those making the purchase, it is a fortunate (and ideal) position for the owner. Yet selecting the best offer is not quite as straightforward as choosing the highest bid. If your end goal is walking away with a strong contract, it is important to evaluate each part of an offer to make sure you are making the best possible decision. Consider the following:
Examine Each Buyer’s Contingencies
When making an offer, buyers often include several contingencies for the purchase, such as having the home pass an inspection, getting approved for a mortgage and making sure the home appraises for a certain amount. From a seller’s perspective, the fewer of these contingencies, the better, as they provide more opportunities for a prospective buyer to back out of the sale.
Weigh the Closing Periods
Depending on when you want to close on your sale and ultimately move out of your home, you will want to select a buyer who is willing to seal the deal within your ideal time period. A buyer who is willing to close within a few weeks, for instance, may be more desirable than one who wants to close a few months later (or vice versa). Since you have the upper hand as a seller, these are considerations that you can easily make.
Compare Loan Types and Financing
Once each offer is submitted, your agent should do their due diligence and call the lenders involved in financing to confirm that a buyer received pre-approval and that there are no red flags. The goal is to give you a clearer picture of the type of financing the buyer plans to leverage. Ultimately, know that an all-cash offer is a best-case scenario, while the strength of a buyer’s down payment is another important indicator of a solid offer.
Review Any Extras
To edge out the competition, some buyers may offer to pay some of their closing costs or wiggle in an escalation clause that entails a buyer automatically outbidding another offer by a specific amount. These types of “extras” can help tip the scales if you’re weighing offers of a similar amount.
Take a Closer Look at the Earnest Money
When a buyer is serious about making an offer, they will put down earnest money that goes above and beyond the industry standard. Because the earnest money deposit is part of the down payment, receiving money up front rather than down the road can speak volumes about how interested a buyer is in your home.
While getting multiple offers for your home is an exciting prospect, considering multiple aspects of each offer is important to help you land the best contract. Connect with one of ALA’s experienced real estate attorneys for further guidance throughout the real estate transaction process.