Much of the country is currently experiencing a strong sellers’ market. Homes are moving quickly and it’s quite likely a property may receive multiple offers. This is a strong position for you if you have your home on the market, but you need to be wise when judging which offer is actually the best one.
It is natural to want to take the highest price, but be smart and look at the whole offer to judge if it is really the best option. You want an offer that has a good chance of closing successfully and is not weighed down by unreasonable or undesirable contingencies.
Take this scenario, for example: One offer is $5,000 above the next, but includes a contingency for inspections and mortgage appraisal. The buyer making the second offer has conducted a pre-inspection and is willing to take the home as-is and waive the appraisal. You may decide the $5,000 difference is not worth the potential problems and take the second offer.
Another example: one offer is considerably higher, but is only putting down 5%. A lower offer that includes 20% down may be the better choice for you. A low down payment can mean the buyers are not really serious about your house and will pull out of the deal if they find something they like better.
Perhaps you receive one offer with conventional financing and another a few thousand dollars higher with FHA financing. This may be significant to your decision especially if you are in a hurry to close the deal because of a job transfer or other reasons. FHA loans have more stringent guidelines than traditional loans and therefore more risk for slower closing dates. It might be better to take the lower offer to dodge potential complications.
You want to avoid accepting any offer with risks that it could backfire. If your buyers get cold feet after your house has been off the market for several days, you are back to square one. The next buyers in line will assume something is wrong and momentum for selling your home could be stalled.
The following sliding scale is a good illustration of the worst to the best scenarios you could expect if multiple buyers offer the SAME price for your home:
- All cash, no contingencies
- All cash, pre-inspected
- Big down payment, inspection and appraisal waived
- Big down payment but contingent on inspection and other contingencies
- Contingent on low down payment, inspection, appraisal, title and HOA review, low earnest money and asking for closing costs
As always, count on your agent to help you evaluate the strength of each offer you receive.. Enjoy being in the driver’s seat while selling your home in this competitive market. The tables may turn as you begin the search for your next house!