Forecasts for the 2022 real estate market indicate the housing sector will remain hot. Sellers may find themselves in a bidding war with multiple buyers. Deciding which offer to accept can feel overwhelming. In many instances, accepting the highest offer may not be what's best for your situation. Here are five things sellers should look for in an offer.

Pre-Approval for a Mortgage

Many home sales fall through because the buyer can't secure financing. When you receive an offer, ask if the buyer has been pre-approved for a loan to purchase your home. However, most lenders will require a home inspection and appraisal before giving final approval. If an appraiser values your home below the amount offered, the lender will only approve a mortgage for the appraised value rather than the sale price. The buyer will need to make up the difference or walk away, which means you may have to start over with your home sale.

Form of Payment

There are two main ways to purchase a home. In most situations, buyers make a down payment and secure a mortgage to cover the remaining balance. Take note of the kind of mortgage buyers secure. Some mortgages, such as FHA loans, take longer to process and come with strict guidelines that will likely slow the sale.

Buyers may also make an all-cash offer. Cash offers typically speed up the transaction because buyers can set their own timelines without having to wait for a lender's input. They also come with fewer contingencies.

Contingencies

Buying real estate is a major purchase for most Americans. To protect their interests, many buyers will make an offer dependent on contingencies. If any of the contingencies aren’t met, buyers can withdraw their offer.

The most common contingency is a home inspection contingency that allows buyers to learn about problems with the home before purchasing. If an inspector finds a leaky roof or a malfunctioning HVAC, the buyer can ask the seller to make repairs before closing. Making repairs can come with a heavy price tag and lengthen the sale timeline. If you receive two offers and one waives a home inspection, that may be more appealing.

Some offers also come with a clause in which buyers will purchase the home, permitting they sell their existing property first. If you’re in a hurry to sell, you may want to look for another offer.

Timeline

Sometimes homeowners need to sell quickly, especially if they’re moving for a job. Or they may be closing on another home and can’t afford two mortgage payments. An offer with a short sale may be more attractive than one with a higher price.

After an offer is accepted, it typically takes 30 to 60 days to close. However, it may take longer if the buyer still needs to secure financing and requires an inspection. If you're on a tight timeline, there are steps you can take to sell your home faster. They include working with a top-rated agent who knows your local market and selling to a cash buyer.

If you're selling a home that won't be available for several months, you may prefer an offer that comes with a longer escrow period. That will allow you to look for a new home without having to move into temporary housing or pay to store your belongings. Keep in mind that the longer a home is in escrow, the more opportunities there are for a sale to fall through.

Closing Costs

When selling your home in a traditional real estate transaction, you'll be expected to pay closing costs. If you're using an agent, a large portion of those costs will go toward paying commission, which is typically 6% of the final sale price. If you sell your home for $300,000, expect to pay $18,000 in agent fees that will be deducted from your profit. In a hot sellers' market with fierce competition for homes, buyers may offer to pay all, or part of, sellers' closing costs.

If you're listing your home for sale by owner (FSBO), you'll avoid paying a listing agent's commission, and you can ask buyers to cover their own agent’s fee. However, by going it alone, you'll lose access to marketing services, such as the multiple listing service. Luckily, you can list your home on FSBO websites to attract buyers and get a great offer on your home.