homeproperty777: You’ve prepared your home for sale, worked with a Realtor to set the right price and now your hard work has paid off: you have offers on your house! In a hot real estate market it’s not unusual to receive multiple offers on a house that is properly presented and well-priced. So how do you choose the best offer for you? Read our tips on the 6 things every seller with multiple offers should consider.
Price: Does This Offer Net You the Most Money?
Price is the most important piece of the offer for many people and it’s easy to understand why: most home owners want to make as much money as possible when they sell. Smart sellers with multiple offers don’t limit their financial evaluation to just the offer price. Similar bids can have a significantly different financial outcome if one offer includes a lot of buyer concessions.
When making your selection, be sure to calculate your net proceeds from the sale for all viable offers. You’ll want to specifically subtract costs you would incur per the buyer’s offer in order to compare bids that appear to be in the same price range. This could include covering a portion of the buyer’s closing costs, inspection fees, or taxes related to the property transfer. Don’t forget to calculate the expense of making any requested repairs! Your real estate agent can advise on which concessions are standard for your area and which are special requests.
Qualification: Does the Buyer Have Appropriate Funding in Place?
When real estate agents mention the “qualification” of a prospective buyer, they’re talking about their financing and demonstration of financial resources. Selling your home can be a lengthy process; even more so when an accepted offer falls through. Your goal is to select a buyer the first time around who will be financially able to complete the purchase of your home.
Selecting an all-cash buyer removes the risk of loan approval complications. However, most home buyers will require financing assistance and many of these transactions go smoothly. Ask the following questions to better understand how your buyers stack up:
All-cash Buyers
Does the buyer have the funds on-hand to make the purchase?
It might seem obvious, but the key to closing a sale with an all-cash buyer is the buyer actually having the funds available in full and ready to be transferred to you. Proof of funds is often demonstrated via recent bank statements or, better yet, an official statement from the prospective buyer’s bank verifying that they have the cash.
Buyers with Financing
Is the buyer pre-approved?
A pre-approved buyer is likely to get a loan from the pre-approving lender, assuming nothing in the buyer’s financial situation has changed. It’s not a guarantee, but the buyer’s pre-approval letter will give you an idea of the maximum loan amount the lender would most likely approve. Compare that amount to the offer price, and consider asking questions about other financing sources the buyer intends to use if those numbers don’t align.
Does the buyer have a strong down payment?
Some home loans are contingent on the buyer providing a certain percentage of the loan upfront as a down payment. You want to be confident your prospective buyer has the funds in place to get final loan approval if you select them.
Intent: How Large is the Earnest Money Deposit?
Buyers traditionally make a deposit at the time of offer to demonstrate that they are serious about purchasing your home. Depending on the terms of the purchase contract, the seller might get to keep the deposit in the event that the buyer backs out for reasons that were not permitted under the agreement. The standard earnest money deposit is calculated as a percentage of the purchase offer price (e.g. 3%) and varies by location.
Ask your real estate agent what is customary in your area; a small earnest money deposit might indicate that the buyer is not serious about the offer on your home. A significant deposit is the buyer’s way of signaling their strong interest in purchasing your house.
Contingencies: How Likely Will the Sale Go Through?
Many offers to purchase a home will include one or more contingency clauses in the contract. These statements detail conditions that must be met in order for the sale to go through. Contingencies can include anything from a satisfactory inspection of your home to a requirement that the prospective buyer is able to sell their current house within a fixed period of time. Any contingencies in the contract inherently increase the risk that the sale will not be completed.
Work with your agent to understand the impact of different contingencies on your likelihood and timeline to close and what they typically see written into contracts for similar properties in your area. A non-standard contingency could be fine, or it could be a red flag. Offers with fewer contingencies have fewer opportunities for snags along the way and can often close faster.
Timing: Does the Closing Date Work for You?
Every offer includes a target closing date. This is the date the seller needs to be fully moved out of the house and will turn the keys over to the new owner. It’s also the date you get paid for the sale of your home. Which of the offers best fits the timeline you want or need?
Some sellers want to receive the proceeds from their sale as soon as possible and are looking for a quick close. Others need more time and would prefer either a delayed close or a rent-back agreement where the sale goes through but they continue to occupy the home, and pay rent to the new owner, for a fixed period of time. It’s all about what works for your personal situation. If you have a need for a specific closing timeline or scenario, be sure to communicate that to your real estate agent. Buyer agents often inquire about what you’ll be looking for in the winning offer; if your agent can share your closing preferences you are more likely to receive multiple offers that fit the bill, which allows you to focus on other aspects of the offers (like the price) when making your final decision.
People: Who Will Be Moving into Your Home?
For some home sellers, who moves into their house is just as important as how much they can offer. If you’re selling a home that’s been your primary residence, you probably feel a connection to the people and places in your neighborhood – and likely even the house itself! The new owner will now be a neighbor to your friends and a resident of a community you care about; you might feel a responsibility to make this a great new addition.
It is not typical for a seller to meet the prospective buyers in-person. Lucky for you, many buyers now include an introduction letter with their offer. If this is something that’s important to you, take time to read the letters and imagine each prospective buyer in your home. If all other things are equal, there’s nothing wrong with picking the buyer you believe is the best fit for your neighborhood and home.
Price is the most important piece of the offer for many people and it’s easy to understand why: most home owners want to make as much money as possible when they sell. Smart sellers with multiple offers don’t limit their financial evaluation to just the offer price. Similar bids can have a significantly different financial outcome if one offer includes a lot of buyer concessions.
When making your selection, be sure to calculate your net proceeds from the sale for all viable offers. You’ll want to specifically subtract costs you would incur per the buyer’s offer in order to compare bids that appear to be in the same price range. This could include covering a portion of the buyer’s closing costs, inspection fees, or taxes related to the property transfer. Don’t forget to calculate the expense of making any requested repairs! Your real estate agent can advise on which concessions are standard for your area and which are special requests.
Qualification: Does the Buyer Have Appropriate Funding in Place?
When real estate agents mention the “qualification” of a prospective buyer, they’re talking about their financing and demonstration of financial resources. Selling your home can be a lengthy process; even more so when an accepted offer falls through. Your goal is to select a buyer the first time around who will be financially able to complete the purchase of your home.
Selecting an all-cash buyer removes the risk of loan approval complications. However, most home buyers will require financing assistance and many of these transactions go smoothly. Ask the following questions to better understand how your buyers stack up:
All-cash Buyers
Does the buyer have the funds on-hand to make the purchase?
It might seem obvious, but the key to closing a sale with an all-cash buyer is the buyer actually having the funds available in full and ready to be transferred to you. Proof of funds is often demonstrated via recent bank statements or, better yet, an official statement from the prospective buyer’s bank verifying that they have the cash.
Buyers with Financing
Is the buyer pre-approved?
A pre-approved buyer is likely to get a loan from the pre-approving lender, assuming nothing in the buyer’s financial situation has changed. It’s not a guarantee, but the buyer’s pre-approval letter will give you an idea of the maximum loan amount the lender would most likely approve. Compare that amount to the offer price, and consider asking questions about other financing sources the buyer intends to use if those numbers don’t align.
Does the buyer have a strong down payment?
Some home loans are contingent on the buyer providing a certain percentage of the loan upfront as a down payment. You want to be confident your prospective buyer has the funds in place to get final loan approval if you select them.
Intent: How Large is the Earnest Money Deposit?
Buyers traditionally make a deposit at the time of offer to demonstrate that they are serious about purchasing your home. Depending on the terms of the purchase contract, the seller might get to keep the deposit in the event that the buyer backs out for reasons that were not permitted under the agreement. The standard earnest money deposit is calculated as a percentage of the purchase offer price (e.g. 3%) and varies by location.
Ask your real estate agent what is customary in your area; a small earnest money deposit might indicate that the buyer is not serious about the offer on your home. A significant deposit is the buyer’s way of signaling their strong interest in purchasing your house.
Contingencies: How Likely Will the Sale Go Through?
Many offers to purchase a home will include one or more contingency clauses in the contract. These statements detail conditions that must be met in order for the sale to go through. Contingencies can include anything from a satisfactory inspection of your home to a requirement that the prospective buyer is able to sell their current house within a fixed period of time. Any contingencies in the contract inherently increase the risk that the sale will not be completed.
Work with your agent to understand the impact of different contingencies on your likelihood and timeline to close and what they typically see written into contracts for similar properties in your area. A non-standard contingency could be fine, or it could be a red flag. Offers with fewer contingencies have fewer opportunities for snags along the way and can often close faster.
Timing: Does the Closing Date Work for You?
Every offer includes a target closing date. This is the date the seller needs to be fully moved out of the house and will turn the keys over to the new owner. It’s also the date you get paid for the sale of your home. Which of the offers best fits the timeline you want or need?
Some sellers want to receive the proceeds from their sale as soon as possible and are looking for a quick close. Others need more time and would prefer either a delayed close or a rent-back agreement where the sale goes through but they continue to occupy the home, and pay rent to the new owner, for a fixed period of time. It’s all about what works for your personal situation. If you have a need for a specific closing timeline or scenario, be sure to communicate that to your real estate agent. Buyer agents often inquire about what you’ll be looking for in the winning offer; if your agent can share your closing preferences you are more likely to receive multiple offers that fit the bill, which allows you to focus on other aspects of the offers (like the price) when making your final decision.
People: Who Will Be Moving into Your Home?
For some home sellers, who moves into their house is just as important as how much they can offer. If you’re selling a home that’s been your primary residence, you probably feel a connection to the people and places in your neighborhood – and likely even the house itself! The new owner will now be a neighbor to your friends and a resident of a community you care about; you might feel a responsibility to make this a great new addition.
It is not typical for a seller to meet the prospective buyers in-person. Lucky for you, many buyers now include an introduction letter with their offer. If this is something that’s important to you, take time to read the letters and imagine each prospective buyer in your home. If all other things are equal, there’s nothing wrong with picking the buyer you believe is the best fit for your neighborhood and home.
