Choosing the Best Offer in 5 Easy Steps
Deciding between competitive offers on your home can be stressful. You’ll want to review each offer carefully, weighing the pros and cons of all terms before choosing one to accept. Here, we outline five steps to choosing the best offer to meet your expectations.
Have a plan, come out on top.
When you have multiple offers coming in for your house, you’ll need to have a plan for carefully reviewing each offer to determine which best fits your situation and gives you the most profit.
1. Define your baselines.
Remember, all offers are negotiable. To avoid a complicated negotiation process, you’ll want to outline the terms that fit your needs to close on the deal. If price is the most important to you, you may need to be flexible on your closing date or willing to meet varying buyer concessions. Or maybe you want to make sure the deal won’t fall apart during the closing process by requiring a prequalified or cash buyer. Whatever it is, just make sure you define your standards before comparing offers.
2. Decide on a strategy.
Whether you’re working with us or selling on your own, you’ll want to have a timeframe to close on the sale and plan the review process accordingly. For the fastest sale, you could decide to accept offers on a first-come, first-served basis. However, you may miss out on a better offer down the road. You could also inform potential buyers that you’re considering multiple offers. If you choose this strategy, you’ll also want to set a date for when final offers will be considered so buyers know when to have their highest and best offers made by. Whichever strategy you choose, it’s important to be transparent with interested buyers to avoid issues during the closing process.
3. Carefully consider price and payment type.
When the offers start coming in, it may be tempting to go for the all-cash buyer or the highest price, but you’ll want to take everything into consideration to make sure you’re making the most profit from the sale.
Price – Keep in mind that the offer number is not the profit you’ll be making from selling your home. You’ll need to subtract the cost of taxes, fees, commission, mortgage loan interest, home improvements, and closing costs.
Type of payment – When choosing a reputable buyer, you want a financially overqualified buyer. This can be cash, with proper documentation, which requires no lender and therefore removes many of the closing steps that could cause the sale to fall through. You can also r
Pre Approval - ensure that buyers attache a pre-approval letter to their offer, showing that they’ve already qualified for a loan by a reputable lender. There are different types of financing, so make sure you know how each affects you as a seller.
Earnest Money – While it won’t affect the overall profit of your sale, the earnest money a buyer is willing to put down shows both interest and reliability. The higher the earnest money, the less likely a buyer is to leave the deal since they’ll be forfeiting that money if they do.
4. Review terms and conditions of the sale.
After going over the price of each offer and how the buyer will be paying, you’ll want to look over any contingencies and concessions.
A contingency stating the buyer will purchase the home if and when they sell their existing home is usually an easy contingency to avoid. In slow markets, however, you may have to accept this contingency. Just make sure it ends has a reasonable end date – 30 days is generally acceptable.
The inspection contingency states that the buyer has a set time to inspect the home and ask you to repair any red flags. This is a very normal contingency, and usually comes with mini-negotiations regarding the different repairs to be made. However, in a multi-offer situation, you may be able to avoid this contingency altogether.
The most difficult contingency to avoid is the financing appraisal contingency. The buyer’s lender will hire an appraiser to inspect the home and place a value on it to make sure the home is worth the loan amount and that the buyer has met the loan requirements.
Concessions – Some buyers will set terms in the offer that require you to cover some of the closing costs, make specific renovations, or ask that certain appliances, furniture, etc. be left as part of the deal. Make sure you’re willing to meet these concessions and can afford to do so. On the other hand, in a hot market, a buyer may be willing to pay part of your closing costs.
5. Factor in the timing and interest.
The last step to choosing the right offer is making sure that the terms align with your timeline. Ideally, you want to get to the closing stage as quickly as possible, so a buyer willing to close in a few weeks may be more attractive than someone who wants to wait a couple of months until their lease is over.
Along with timing, make sure you’re selling to a highly motivated buyer. A buyer with family in the area, a new job, or interest in the school district may be more attractive than a buyer with a higher price but little interest in the home or area. Not only will this ensure that the deal goes through, but you’ll have peace of mind knowing your home will be inhabited by someone who really want to be there.
Remember to keep your baselines in mind throughout the process of reviewing different offers. Consider each factor of the terms of sale and ask yourself if that aligns with your overall goal of closing the sale. In general, it’s best to look at the big picture and choose the most qualified buyer whose offer isn’t too far below your expectations.
Once you decide on an offer, you can accept it or make a counteroffer with new terms and conditions. If you have a second choice, you can also make a counteroffer if they are willing to be a backup, should anything fall through with your first choice offer.