Receiving multiple offers on a home for sale isn’t a bad thing at all. In fact, it’s a great “problem” to have! While getting more than one offer might be a positive thing, it doesn’t mean the choice between them will be easy. It might seem like choosing the highest offer would be the smartest move, but that’s not always the correct assumption. Sometimes an offer with a higher dollar amount will have more contingencies, which can make a slightly lower cash offer with no contingencies look way better. Here are some other things to keep in mind when trying to choose your buyer in a multiple-offer situation.
Know Your Priorities
Every buyer and seller has his or her own priorities, and sometimes those priorities don’t match up. For example, the seller might need to move out as quickly as possible, while the buyer might need a longer escrow period while they try to sell another home. This is a case in which multiple offers come in handy. If you have a bottom line you need to meet or a specific date you need to close by, you can choose the offer that suits that priority best.
Make Sure Buyers Are Qualified
An offer that includes an approval letter and/or a sizable earnest money deposit is probably the most serious one. An offer that’s solid as far as financing but might come in a little under the others is definitely one that should earn consideration. On the other hand, you might want to look twice at a buyer who offers the most but isn’t at least pre-approved. You have no way of knowing if they can actually obtain financing for that amount, and if they end up not qualifying, it sends you back to square one.
Listen to Your Heart, But Be Logical
Sometimes buyers will include a personal letter with an offer. This isn’t uncommon at all in multiple offer situations, especially when a family knows they might be up against an investor with cash and deep pockets. Maybe the cash investor can offer you more money and a quick closing, but what’s the right move for you? Would you prefer to see a young family give your house new life and make lots of memories there? Or would you rather help an investor out in his or her venture? A personal letter might appeal to your emotional side, but don’t let that overpower the facts. If that sweet little family includes a lot of contingencies in their offer, it might not be in your best interest to accept. There’s really no right or wrong answer here. It’s completely up to you!
Why does the buyer want your house? Is it because they have family around the corner? Is it a short walk to school for the kids? Is it just a highly desirable area in general? If someone has a good enough reason for wanting to buy your home, they’re more likely to scale back on the contingencies and bring their best, most serious offer to the table the first time.
Trust in Your Agent
Your real estate agent should be able to help you suss out the pros and cons of each offer that comes in. If they’ve been in the business long enough, they might also know a bit about the buyer’s agent. If they’ve worked with that specific buyer’s agent in the past, they might know if transactions tend to go smoothly or if it’s hard to get them to answer questions or comply with instructions. Your agent should also know who the best lenders, inspectors, and other vendors are. They’ll be able to recognize any red flags (e.g. a lender who typically takes too long to close) and help guide you in your decision.
When your home is on the market and multiple offers roll in, a great opportunity can quickly turn into a setback if you don’t choose carefully. The big key takeaway? Don’t just choose the buyer with the highest price; choose the buyer with the best terms all around.