How to Choose the Best Offer

by c21commonweath_ldowling 16. September 2019 15:38

Sellers should consider more than timing and price when choosing between multiple offers on their home. While it’s commonly said the first offer is the best offer, you should also think about a buyer’s financial ability to close the deal, contingencies, and closing costs. With these things in mind, you’re more likely to secure an offer with favorable terms.

Finances

The amount of money a buyer is willing to put down on a deposit is your first clue into an offer’s potential. Serious buyers put down more money up-front when they want to see the deal through. If another buyer isn’t as committed, they may put down a smaller deposit so they can walk away without major financial repercussions.

Also consider whether the buyer is paying with cash or through financed loans. If they’re paying with cash, make sure they possess documentation showing they have the money. Buyers paying with financed loans should be preapproved and meet the lender criteria for getting a mortgage.

Contingencies

Contingencies protect buyers from unforeseen changes, allowing them to back out of a deal if they no longer want to buy the house. If multiple buyers are bidding on your property, compare their contingency offers to avoid any messy situations down the road.

Home Sale Contingency

This is a common contingency clause that says the buyer’s purchase is contingent upon the sale of their own home—they’ll only go through with the deal when their current home sells. Check the length of a prospective buyer’s home sale contingency clause to avoid stalling your own sale. If another buyer doesn’t offer a home sale contingency clause or they include one with a shorter waiting time, choose their offer instead.

Inspection Contingency

Most buyers require you to make certain repairs before they agree to purchase your house. You’ll likely go through another round of negotiations after their inspection. Think about whether the cost of repairs is worthwhile or whether you should wait for a buyer who thinks your home is move-in-ready as is. 

Financing Appraisal Contingency

Loan institutions hire appraisers to make sure a house is worth what a buyer may pay for it. If the appraiser’s price comes in low (which is common during a bidding war), you’ll have to lower your sales price, contest the appraisal, or move forward with another deal.

Closing Costs

Sellers must pay real estate commissions and a plethora of closing costs associated with their sale. Sometimes, a buyer will negotiate paying for a portion of your closing costs if they’re set on purchasing your home. This can go the other way too—a buyer may ask you to pay some of their closing fees. Whatever scenario you find yourself in, make sure you factor in all closing fees before accepting an offer.

Rely on a Professional Real Estate Agent

If you’re not sure how to proceed after receiving your first few offers, get advice from a licensed real estate agent. They can help you compare your offers and negotiate terms so you make the smartest decision.

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