Tips for Sellers to Decide Between Multiple Offers
It might seem absurd to some, but deciding which offer to take when selling your home is not as straightforward as it sounds. Some people might think, well, why not take the biggest offer?
But, it's not always that simple because the size of the financial offer should not be the only thing that guides your decision. You hold all the cards in this complex and emotional transaction, and it's in your best interest to try and avoid some of the common pitfalls many home sellers face in this situation.
Here, our team of seasoned real estate agents at Century 21 North East has a few tips for you in case more than one buyer has made an offer on your home.
Consider the buyer ready to work with a shorter contingency period
The contingency period refers to the period a seller gives a potential buyer after they have submitted their offer. During this period, the buyer has time to engage their mortgage lender, inspect the house, and review the seller's disclosure packet. If the contingency period is too long, it might extend your closing time. The buyer could also find some issues with the house, which they might have missed in the first place, hence complicating the deal. On the other hand, a shorter contingency period may deter buyers from purchasing your home because they want to be satisfied before buying the property. There is always a lot to think about in this situation, but in case you have questions on what contingency period to set as a seller, ask our real estate experts at Century 21 North East.
Which buyer is willing to make the highest earnest-money deposit?
Buyers use earnest money deposits to prove their good faith when they get into an intent to purchase contract with the seller. The deposit is usually held in an escrow account until the point of closing. This earnest money deposit shows the seller that the buyer is serious about purchasing their home and will follow through on their promise to pay it.
Offers with larger down payments are less risky for sellers
If a buyer is ready to put down more money, that's a clear sign of their healthy financial standing. This type of buyer is less likely to go back on a deal, have better access to mortgages, and is more likely to cover any unanticipated inspection or appraisal costs. So yeah, the size of the down payment matters for you as a seller.
Remember, the price isn't everything
While it's tempting to take the highest offer, there are other factors to consider. For instance, the number of contingencies included in a request can significantly impact how solid it is and what would happen if one of those contingencies isn't met. For example, having a standing contingency on the sale of another home could mean that a buyer will never actually be able to purchase your home even if they want to.
Consider the buyer's motivation
If you're working with multiple buyers with similar financial offers, look into their motivations. Some buyers are relocating and need to move quickly. Others perhaps want your home because it's a hot property in the market. Some buyers are genuinely in love with your home. These factors can be just as important as the numbers on an offer form. Then again, your home is more than just the walls and roof. It carries some level of emotional attachment to it. So, if you can come out of the home sale process feeling good about your decision, you've ideally won.
If one of the potential buyers requests that you fix certain issues before the sale closes, this could guide your decision. Do you want to pay for repairs yourself? Are you willing to negotiate on the asking price if there are significant issues? In some cases, it makes more sense to accept an offer from a buyer who isn't making demands on inspection issues.
Understand your market
Talk to your agent about the real estate market in your area. Their intel might be of great value. They can answer questions like, does the current market favor buyers or sellers? What is the likelihood that buyers will receive multiple offers when purchasing a home? Are prices rising or falling? Various offers may signify that a bidding war is about to begin, and that could mean you take a slight step back and think about how to make the best of it.
Know your competition
Before you decide between your offers, you should first know what the competition looks like in your market. This will give you an idea of how strong your offers are and if any variables separate those offers from one another. Once you know what else is out there, it's easier to decide which offer to take.
Try to bridge the gap between appraisal and sales price
When buyers apply for a loan, they need to get an appraisal on your property so the lender knows how much they should lend them based on the value of your home. The problem is that some buyers may lowball their offer without getting an appraisal first and then try to bridge the gap between their offer with what your home is worth. When this happens, it can put you in a bad situation because you don't receive as much money as you expected.
Make sure all offers are legitimate
A legitimate offer is a signed contract from a buyer whose credit and finances have been reviewed by a lender and approved for a loan equal to or greater than the offer amount.
Suppose there is an offer from a buyer who has not yet been pre-approved for a loan. It is vital to get them pre-approved before accepting their offer.
Your personal connection with each buyer
The purchase of a home is a very emotional experience. Therefore, your emotions as a seller play an essential role in the decision-making process, especially if you have lived in the home for years and you're attached to it.
Ask yourself which buyer you think would take care of the house as much as you did. Which buyer would be happy there? Which buyer seems most excited about moving into the home? That personal connection can help you determine which buyer will make the best fit.
If you've found yourself in a multiple offer situation, you should know that it's normal to feel a bit confused. In the end, it's all about what works best for you as a seller.
Need advice on buying or selling a home in New England? Talk to an agent at Century 21 North East today!