6 Tips for Comparing Multiples Offers When Selling Your Home
Listing your home in a seller’s market may seem like a dream come true. With buyers eager to close, there’s a good chance you will find yourself in a position of having multiple offers to consider.
When you find yourself considering multiple offers at once, it may be overwhelming to decide which one is the best deal for you. The answer isn’t always the offer that comes with the highest dollar amount. You should take a number of factors into consideration before accepting an offer.
When selling your home, here are six tips for comparing multiple offers to help you pick the one that will be best for you and your financial goals.
1. Cash Offers
In a real estate transaction, perhaps the premier offer is all cash. With a cash offer, a buyer is offering enough money upfront to cover the entire purchase cost without needing to take out a loan or mortgage.
A cash offer is ideal for a seller, because it cuts out some of the steps that can delay the process in a traditional home sale. Waiting for appraisals and inspections that are often tied to mortgages, or even waiting for a buyer to secure a loan, can take weeks or longer.
Most buyers make cash offers using money from their savings or the sale of another property. If the cash offer is dependent on the sale of another property, you may want to proceed with caution. You may find yourself looking for a new buyer if their own sale falls through.
Cash buyers may also come in with a lower offer than others on the table. You’ll want to decide if the security and convenience of having the cash in hand over the prospect of a higher payout with a more complicated transaction matters more to you.
Check with your real estate agent to find out if there are any red flags with a specific cash offer that should keep you from accepting.
2. Mortgage Preapproval
For offers requiring a mortgage, it’s best to select a buyer with a preapproved mortgage. A buyer who has preapproval on a mortgage has already gone through the process of applying for, and being approved for, a mortgage up to a set amount. In most cases, this should speed up your escrow process and leave you less at risk of having the offer fall through on account of financing.
Preapprovals do come with some strings. Most mortgage companies require all homes to go through an appraisal process to protect their investment in the house. While the appraisal itself doesn’t take much time — the visit takes a couple of hours and the report arrives within a couple of days — it can take time to get one scheduled, particularly in a hot seller’s market.
Likewise, while a mortgage company may approve a buyer’s loan to a certain price point, it is not guaranteed they will provide the full amount. If the home appraisal puts the home’s value lower than the offer, the company will likely only provide the appraised value. Unless the buyer can come up with the cash to make up the difference, you may lose your buyer and have to start the selling process over.
Follow these tips for selling your home — including setting a listing price that will keep you from losing out on an offer because of an overly inflated asking amount.
Whether making a cash offer or paying with a mortgage, some buyers will make an offer dependent on contingencies. These contingencies are meant to protect the buyer through the process, but they can become a headache for the seller.
A common contingency includes waiting to finalize the purchase of one home dependent on the sale of another property. This makes sense for a buyer who wants to avoid paying two mortgages at the same time, but it could mean pushing back your closing by weeks or even months.
Other contingencies also link to the home’s condition. This might mean requiring a home inspection, which is separate from the appraisal and looks for potential issues with the home. Some buyers may ask you to make updates or repairs, or even provide an allowance for repainting. These repair requests can quickly add up and cut into your profit.
4. Closing Timeline
If you’re in a hurry to sell your home, or if you have a timeline you’d like to stick to for your own moving plans, then the timeline included with an offer may play a big role in whether or not you should accept.
A buyer may request a short or extended escrow for a number of reasons. It might tie to their own moving plans, or it could be related to their loan. For example, government-backed loans — such as a Federal Housing Administration (FHA) loan — can take about 60 days to go through. If that’s too much time before closing, you should consider other offers.
5. Personal Connection
Some buyers will make a personal appeal in hopes of winning over a seller. The most common practice is writing a letter that shares their story with the buyer. If you’re selling a home that is close to your heart — such as the home you grew up in or where you raised your children — you may want to know that the buyer is someone who will love and benefit from your home as much as you have.
A word of caution: Some cities or states have limitations on how much personal information a buyer can provide to avoid potential housing discrimination. Be sure to do your research before accepting a letter. This is particularly important if you’re selling your home on your own and don’t have a realtor to consult through the process. Learn more about best practices for selling your own home.
6. Offered Perks
In a truly competitive market, many buyers are so frustrated with their lack of success, they may include perks and gifts associated with their offer as an incentive for you to accept theirs.
Some buyers may offer earnest money as part of their offer. This is a percentage of the total offer price that is paid up front, and it is yours to keep whether or not the sale goes through.
Though it’s common for sellers to pay the commission fees for both the buying and selling agents, some buyers will offer to cover the commission to sweeten the deal. Learn more about realtor commission fees and how much this could save you when selling your home.