9 Helpful Tips in Choosing the Best Offer for Your Home
So you’ve just put your house up for sale, and a bunch of offers starts coming in. Sifting through each bid to get the best one may feel overwhelming, especially when there’s a possibility of a good deal slipping right through your fingers.
If price were the only factor to consider, almost all sellers would have it made, as homebuyers on average paid 95% of the asking price on the home they ended up purchasing, according to the most recent HomeLight list-to-sale price ratio data. But then again, choosing the right offer is more than just saying yes to the highest bidder. There will be various risks, strategies, and considerations involved, and you wouldn’t want to be living through your regrets when your house goes to the wrong buyer.
So, to help you choose the best offer for your home, here are nine points you should consider:
Define your baselines
It’s a known fact that all home offers are negotiable. To avoid a dreary negotiation process (that will take much out of your schedule), make sure to outline the terms that fit your needs to close on the deal. If it’s the price that’s important to you, consider being flexible on your closing date and be willing to meet varying buyer concessions. You can also ensure that the deal won’t fall apart during the closing process by requiring prequalification (or a cash offer). Define your standards before comparing offers for your home.
Be open with your agent
If you’re dealing with an agent, be upfront with him or her about your list of priorities. In doing so, you’ll be able to assist your agent in weeding through your offers while considering the factors that are most important to you and your situation. And while it’s not uncommon to be hesitant to share some personal details with your agent, you needn’t be. He/She is your teammate in this whole ordeal. Remember that whether you decide to withhold some information or be an open book, trust that your agent — especially if you choose an experienced and reputable one—has your best interests in mind.
Review the contingencies in each offer
Take a close look at the contingencies that the buyers have penciled in (meaning all the steps that have to occur before you get paid). Don’t overlook these buyer conditions, as they can potentially “kill” an otherwise great offer, price-wise. The most common contingencies include the home inspection, buyer financing, and property appraisal—which all protect a buyer if major defects with the home come to light or the house doesn’t appraise during closing. In any case, contingencies aren’t black-and-white. In fact, they could have strings attached that may not work for you.
Don’t immediately rule out the first offer
In a hot and competitive market, receiving your first offer and determining whether it’s the best one is quite tricky. Do you take your time to see what the market holds, or should you pounce on the first optimal opportunity that you see? Luckily, working with a professional can help you gauge the chances that your first offer will be your best one easily. There are several factors to consider upon receiving your first offer, and if it’s deemed to be the right one, don’t get cocky and opt to wait around for something better, simply for the sake of testing the market to see what you can get. Weigh every offer seriously– the ones that come in early may have very motivated buyers behind them who are ready to go.
Keep your emotions at bay
Always treat each offer as a business deal. You must do your best as a seller to keep your emotions out of the process, or consequences could be costly to you. Remember, whatever your reason for selling your home, bringing your feelings about the house or situation into the equation will not do your wallet any favors. Don’t get your emotions to get the best of you– or encounter the risk of letting a great offer go.
Know a strong offer when you encounter one
How can you gauge the quality of other offers you may get?
Here are the top 3 ingredients in a quality offer:
- Buyer’s Financial Strength – Always make sure there’s a letter of qualification from a financial institution or mortgage lender. A dependable offer means financial strength, and that’s a factor you should be keen on
- Buyer’s Concessions – Too many buyer requests may mean long and stressful transactions. Try to avoid those kinds of offers.
- Buyer’s Flexibility – Securing a buyer who is willing to be flexible on a closing date can be important, particularly for sellers who haven’t yet secured a new home. You’ll want to capture a buyer that will give you the time to make the transition. On the flip-side, if you’re on a time crunch and need to sell fast, look for a buyer who is willing to shorten the inspection window and move up the closing date. But also consider the possibility that you’re probably going to get less cash as a result.
Cash offers are of value, but verify funds first
Considerations will be high for buyers that don’t require financing and can pay entirely in cash. Cash offers mean you won’t have to worry about a buyer’s approval for a mortgage loan falling through, and that gives you a higher level of certainty that the transaction will close. However, it will be best to verify proof of funds first before proceeding with the transaction. Sellers should also examine the whole offer in the context of their needs, neighborhood, and the market before casually accepting these cash offers.
Offers with sizable deposits are favorable
By now, you’ve probably narrowed down your stack, and all offers remain fairly equal in price, concessions, flexibility, and scope. The next factor to consider is your potential buyer’s earnest money deposit– a good-sized, good faith deposit matters. Not only can this strategy be a winning move to snag a house from other prospective buyers, but a higher deposit also benefits a buyer’s financial health (i.e., a higher deposit equals smaller monthly payments and a lower mortgage interest rate)
Get the price and terms that you want with a bidding war
A bidding war is a situation signaling that a house is sought after for various reasons. Receiving multiple competing offers is always good for a seller but having an agent who knows how to negotiate with interested buyers to get you the best deal is even better. Leverage a bidding war and get better offers, but give both parties a deadline. Otherwise, negotiations can be ongoing, which will not work for a seller who needs to move quickly.