In a sizzling hot real estate market, you could have a bit of a problem. You could have multiple offers when selling your home! Having multiple offers can be a curse and a blessing when you have to pick the best one.
Common sense tells us that the highest offer would be the obvious choice. But, the offer amount is only part of the equation. You need to evaluate the entire offer by its financial credibility and terms. Sometimes a seller might pick an offer because it contained a personal letter from the buyer explaining why they really, really want the home.
Check out this interesting article about a ranch house that sold in Orange County.
Below I will create a quick checklist of things you should consider when reviewing and accepting the best offer.
If you’re doing a For Sale By Owner, this checklist will be a great start for you.
Seller Checklist For Choosing The Best Real Estate Offer
I have personally been on both sides of the transaction of buying and selling a home with multiple offers. I sold a house once that got three offers on the same weekend. I also bought my most recent home where it had thirteen offers in total.
In both scenarios, my realtor was professional and knew how to handle the deal when things got chaotic. Being successful at selling your home with multiple offers is about being 50% mentally prepared and 50% having a top-notch realtor representing you.
Overall, A strong offer will contain:
- Financial strength from the buyer (such as an earnest deposit, pre-approval on a mortgage, or all cash).
- Realistic buyer concessions that both sides can negotiate on.
- Flexibility for a move-in date.
- Agreement to equitably divide up the costs to fix something major that might come up in the home inspection.
The better you negotiate with the buyer, the more favorable terms you’ll get as a seller. And sometimes a higher price. For help, check out my article on Negotiation Secrets For Buying Real Estate, it directly relates to sellers too!
HERE’S THE CHECKLIST I USE WHEN EVALUATING OFFERS
1) Don’t Take Offers Personally – Remember! It’s just business, and you’re going to get all kinds of different types of offers. Some might seem like a lowball and others might even be insulting. Set your expectations ahead of time, so you have some baselines established. For example, you know the lowest price your willing to accept. Or if someone wants you to pay for the closing costs, you’ll be prepared to counter back for a higher sale amount.
2) Be Creative; Offers Are Not Set In Stone – Be creative with each offer, so it meets the expectations of both you (as the seller) and the buyer. Every real estate transaction is different. Never limit yourself by thinking you cannot modify the existing offer by splitting the costs of repairs, increasing the purchase price, or any other item for that matter.
3) The Buyers Offer Should Speak Motivation – Does the offer make the buyer look motivated to really follow through on the purchase? Did they send a personal letter with their offer? If the home has a school nearby that the parents absolutely have to get their kids in or its close to work, these are great reasons for a buyer to be motivated.
4) Low Appraisal and Multiple Offers – If you’re planning on multiple offers, and you have a gut feeling the house won’t appraise, then get a waiver of appraised value contingency in your contract. Traditional mortgage lenders won’t approve a loan for a higher amount over the assessed value. Instead, the buyer will most likely use all-cash or creative financing to complete the purchase.
5) Take Care Of The Buyer Who Overpaid – If a buyer knows they overpaid you’ll want to go the extra mile to address any issues during escrow. It’s best to let your realtor communicate with the buyer first, then step in if needed. If major problems get reported in the home inspection report, help out in facilitating the repairs.
6) Equally, Represent All Offers – Make sure it’s communicated that every offer is on a level playing field. Not only is this professional, but it’s also the right thing to do! Your realtor should also be encouraging this behavior.
7) Consider Picking The All Cash Deal – Always consider picking the all-cash deal if the price is right and the buyer is ready to close fast. In my opinion, this is the strongest reason to pick one offer over another if the terms and contingencies are identical.
8) A Sloppy Sales Contract – You may want to consider skipping a contract that has a lot of scribbles, white out or sloppy mistakes on it. That could reflect poorly on the buyer’s realtor. It could also mean the buyer can’t make up their mind and is unsure of the deal. I was buying a house one time, and I found out that I lost the deal because my realtor used white-out on the contract. They were reusing the same contract and just changing out the property address and purchase amounts. So yes, it does happen, and I found a new realtor.
9) Look Out For Strange Contingencies And Expiration Dates – Definitely, rely on your realtor for this one. They’ll know the conditions of the market and what is the norm for contingencies and tight deadlines (expiration dates). If something looks far out of left field, you might be better off rejecting the offer altogether, especially in a seller’s market.
10) Flexibility For A Move In Date – A lot of people want to time their move-in date. It helps to cut down on rental costs or accommodate other lifestyle changes. So if you can, work with the buyer on this request, if it’s reasonable.
Quick Tip: Once an offer is accepted on both sides, you’ll be dealing with the buyer’s expectations for getting all the inspections, appraisals, repairs, and title paperwork completed.
There’s a lot of detail and expertise required for picking the best offer and negotiating a deal. Having multiple offers in front of you can be a very stressful time. Think about the various items we discussed in this article, relax and then make a decision.
If you only got one offer, then that makes things much simpler now doesn’t?