How to Evaluate Multiple Offers
You’ve followed your REALTOR's advice and completed necessary repairs and improvements that increased your home’s curb appeal. Your home is priced right, cleaned, staged and ready for potential buyers. All this effort could mean multiple offers on your home. If you find yourself in this enviable position, congratulations! But, now’s not the time to take the easiest route and automatically choose the highest bid. It’s important to understand how to evaluate multiple offers.
While it’s very exciting to get several offers on your home, it’s important to remember that the highest price isn’t always the best option. You might be wondering, “How can that be? I did lots of work to get the most out of my home!”
Sometimes higher offers also come with requests for higher closing costs (money the seller pays from the proceeds of the sale) or with more contingencies, conditions or actions that must be met for the sale of your home to become binding.
Let’s think through some of the possible contingencies that might derail the sales agreement.
Most sales agreements will have at least one contingency; it’s likely to complete inspections of your home when making an offer. These can include a home and structural inspection, radon inspection, pest or mold, chimney, septic or well water inspection. Accepting an offer with one of these contingencies means the buyers have the right to inspect your home and walk away if they find something unsatisfactory – or if you can’t negotiate a resolution.
Other important factors to consider are whether your buyer is pre-approved and what type of mortgage they plan to obtain to purchase the home. Pre-approved buyers have gone through a process that’s more involved than pre-qualification, and these buyers have, at minimum, demonstrated they are financially capable of purchasing your home.
The type of mortgage can also make a difference in whether the sale is likely to go through. Your REALTOR® likely knows the reputation of various lenders and can help you understand how this can impact the sale of your home. FHA, VA and zero down payment loans often have more property and inspection requirements. Although these are perfectly legitimate options, it’s important to think through how the buyer’s choices and the lender they use may impact the timeline of the sale.
That leads to the next point – timing. What is the request closing date? Do terms of the agreement meet your needs or have any flexibility built in? Does the buyer have a home to sell? Any home sale includes deadlines and dates to keep in mind. Choosing an offer that fits within your needs for moving or buying another home will greatly reduce your stress. Sometimes that’s worth more than a few thousand dollars.
Lastly, take a moment to consider the earnest money a potential buyer is willing to commit to purchasing your home. A buyer chooses how much they want to put down, and this ranges dramatically based on your home’s list price. Although not required, a strong earnest money deposit is roughly 5% of the purchase price. An offer with a sizable earnest money deposit indicates both your buyer’s ability to afford your home and their interest in securing the deal.
There are many choices and considerations to make when selecting between multiple offers. That’s why it’s important to think through all your options and what’s best for you and your situation. You might discover the very best offer isn’t necessarily the highest, but the one that truly fits your needs.
Need expert advice evaluating your offers?
Your listing agent at Coldwell Banker Pryor Realty is ready to help! Our experienced agents in Chattanooga, Dayton and Spring City can help you sell your house, from start to finish. Contact us today!