Several offers on your house? How to choose

Yes, the housing market has started to cool. Even so, in most places across the country, salespeople find themselves in an enviable position. With housing inventory still tight and prices still high, chances are you’ll end up with several entertaining offers on your home.

While we all love options and a bidding war on your listing is certainly flattering, this situation can make a seller’s head spin. Is the highest bid always the best bid? Here, estate agents offer tips on how to compare potential buyers and what to consider before picking a winning offer.

With multiple bids, does the highest bidder win?

“The first thing people look at is price, but that can be very myopic,” says Kimberly Allard, broker and real estate agent at Century 21 Professionals in Massachusetts. “Someone can give you anything [amount] they want to, but if they can’t support how they’re going to fund it, it’s basically a useless number.

Price matters, of course, but a homebuyer’s offer is more than just a number. When you sell your home, there are contingencies, timelines and financing to consider. A qualified real estate agent can help you assess all of the factors at play, says Allard. Here are some questions she recommends asking every bidder:

  • What percentage of the purchase price does the loan represent?
  • What type of loan is it?
  • Do they renounce any inspection?
  • Are the contingency dates tight?
  • What is the requested closing date?
  • Does the buyer have a house for sale?
  • How much is their security deposit?
  • Is the offer legible and on state-approved forms?
  • Is all the required information attached?

Obviously, there’s a lot to think about beyond who offers the highest purchase price. Let’s take a closer look at some of the most important factors when considering multiple offers.

Consider contingencies

A home sale usually comes with various contingencies, clauses that allow either party to opt out if certain conditions are not met by a specific date. Most offers include an inspection contingency, for example, which allows the buyer to have the home inspected – and possibly roll back if they find any major issues.

Much depends on the applicable deadlines. “For sellers, the contingency timeframes a buyer has in the offer are often considered as important as the offer price,” says Beatrice de Jong, agent and consumer trends expert at Opendoor in California. “From the seller’s perspective, these contingencies can be frightening because it means the buyer can walk away from the contract.”

When comparing multiple offers on a home, as a general rule, less and shorter is better. Fewer contingencies means there are fewer obstacles between you and the closing table. And shorter lead times mean the buyer is serious. “Buyers asking for longer than usual rush times are seen as a red flag by the seller and may send the message that this buyer is already considering canceling,” de Jong said.

Review each buyer’s finances

You should look at the potential buyer’s overall financial situation, not just their offer price. This means considering the following:

  • Loan Status: “You want pre-approval, not pre-qualification,” Allard says. “Pre-approval verifies credit, assets and income. The lender saw the pay stubs and statements. Your agent may also be involved here, adds de Jong: “The seller’s agent usually calls the lender to make sure there are no expectations of delays or issues with the buyer’s financing. “
  • Advance payment: When it comes to down payment amounts, more is usually better. A small means that a large part of the financing for the purchase of a house is based on a loan, and this loan can come with obstacles that can interfere with the sale. De Jong says to look for “a bank statement showing proof of funds for the initial deposit.”
  • Current housing situation: If the buyer has to sell their current home before they can buy yours, they will likely include a contingency to that effect. You could be waiting a long time for their sale to materialize.
  • Ability to close a valuation gap: When people get a mortgage, their lender has the home professionally appraised to make sure it serves as proper security for the loan. But what if your home assesses too low? Allard recommends asking, “If there is a discrepancy between the bank’s valuation, how does the buyer plan to handle this?” Would they be able to bridge the gap? Especially if your buyers get into a bidding war that exceeds the home’s fair market value, make sure the buyer you choose will be able to cover the difference.

Ultimately, a potential buyer’s financial situation extends far beyond their bid price. Your agent should help you dig deeper to get a clear idea of ​​each part when comparing multiple offers on your home.

Is a cash offer always better?

If you are approached with an all-cash offer, you may be able to avoid all of the financing hassles. Because it eliminates the need to work with a mortgage lender, it can significantly streamline the process.

That doesn’t mean it’s always the best though. To start, be sure to check that the cash buyer has enough cash to honor their offer. Ask for proof of funds and also consider all the other details of their offer. Do they waive reviews? Are there any contingencies that could affect you negatively?

“At closing, no salesperson walks away with a bag of thousand-dollar bills,” says Allard. “No one escapes a fence with [actual] cash.” So while an all-cash offer may seem tempting, weigh it like you would any other offer. This may actually be your best and safest option, but it may not be. not be the case.

View closing deadlines

Time is money, and it might be worth accepting a slightly lower offer to make the closing schedule work as smoothly as possible for you.

“The time it takes for the buyer to close can be important for a seller,” says de Jong. For example, speed is key “if they need funds fast to buy their next home – or if they prefer a longer time to pack up and move out.”

Ultimately, closing times can make or break a deal. Make sure you understand what your key collection schedule would look like with each offer you are considering. It might be worth getting a little less money for a deal that fits your schedule better.

At the end of the line

Getting multiple offers on your home puts you in an enviable position. That said, the decision you then have to make is important. Be sure to look well beyond the offer price to identify the best deal for your unique situation. Your real estate agent should be of great help here.

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