There are more homebuyers than homes to buy right now. That means a lot of home sellers find themselves in the fortunate position of having multiple offers to sift through, with many offering more than listing price. Welcome to a hot seller’s market! While having a bunch of buyers throwing money and promises at you is a wonderful problem to have, you still need to know how to choose a single offer. (Hint: It’s not always the highest one.)
The strongest offer for one seller might be the highest offer price, for another it could be the slowest closing window. If the seller wants to avoid making repairs, maybe it’s the offer without an inspection contingency.
Here’s how to choose from multiple offers on your house and pave the way for a smooth sale.
Let Your Agent Be Your Expert Guide
Bidding wars aren’t as easy to navigate as you might think. While this may be your first time dealing with multiple offers, an experienced real estate agent is an old hand at this. Tap into their wisdom for strategies on getting the strongest offer for your house and closing the deal on time.
Make Sure the Buyer Can Actually Pay What They’re Offering
The buyer offering the most money for your house always moves to the front of the pack, of course. But your agent can help you determine if the buyer has the bank to make good on the offer — and if it’s really the strongest offer in terms of securing the cash to close.
Your agent can help you manage these important factors:
- Make sure the buyer is pre-approved for a mortgage
Most of the time, a buyer will need a mortgage to buy a house. If that’s the case with the offers you’re considering, check to see if the buyer is pre-approved for a home loan. A pre-approved buyer has had their finances evaluated by a lender who determined they could qualify for a mortgage. An offer from a buyer with a pre-approval letter is stronger than an offer from a buyer without one.
- Evaluate the amount of the down payment
Consider how much cash the buyer plans to put down on the house. Down payments of 20% or more of the home value tend to be the least risky for lenders to finance, which means it’s less likely your sale will fall through on the account of a loan not working out for the buyer. Thus, larger down payments typically indicate that a buyer is more financially prepared and serious about their home purchase.
- Make sure an all-cash offer is legit
If you get the holy grail of home bids, the all-cash offer, your agent can help you find out if the buyer really has the cash available to complete the deal.
- Document whether the buyer has enough cash to cover a low appraisal
If you’ve received an offer over the listing price of your house, your agent can help you ensure the buyer has the cash to complete the deal if the house doesn’t appraise for the amount they offered.
Here’s what happens when you accept an offer over the asking price: The buyer’s lender will likely require a home appraisal. If the appraised value of the home is less than the buyer’s offer price, then the buyer must make up the difference in cash at closing. If the buyer does not have the cash, the sale could fall through.
So when you are considering multiple offers for a house, your agent can determine whether a bidder has enough cash in savings to cover a low appraisal.
Review All the Contingencies
When buyers craft an offer, they usually include some conditions that must be met before they officially buy your home. If these conditions are not met, the buyer has a chance to back out of the deal. These contingencies may include getting approved for a mortgage, having the home pass an inspection or making sure the home appraises for a certain amount.
Review these contingencies with your agent and make sure you are okay with all buyer asks. As a seller, look for contracts with fewer contingencies to increase the odds of closing.
Consider the Lender
You and your agent should also consider the lender that pre-approved the buyer. If the mortgage company or bank is known in the area and has a reputation for approving buyers that acquire financing, they’re a better bet than a buyer working with a lender with little or poor reputation.
It’s a good idea to research lenders if you and your agent are not familiar with them.
Negotiate, Negotiate, Negotiate
If you have gotten many offers, you’re in a great position to negotiate. Sure, you can take the offer with the highest price and call the house sold. But your agent may be able to leverage a better offer for you.
Here’s how you do that: Once your agent presents you with all the offers you’ve gotten from buyers, you can go back to the strongest bidder and make a counteroffer. Your agent can advise you on terms that make the most sense for you to request, with the promise that if the buyer accepts, the house is theirs. The terms of the sale you might consider include:
- Negotiate closing timeline
You might want more time in your house so you can look for another one to buy. If that’s the case, you can arrange a rent-back situation that lets you continue to live in the house a month or two after the close.
- Negotiate sale price
You may get buyers who add an escalation clause to their offer that automatically outbids other buyers. This is a strong tactic to get some of the highest bidders to add a few thousand dollars to beat the competing offers.
In a super hot seller’s market, your agent may lead a bidding war for your house. They’ll ask all the people hungry for your house to submit their “best and final offer” by a deadline and let the strongest offer win. Your agent will know if this is a good idea for your market, and whether it’s a good idea to accept backup offers for your house in this scenario.
- Negotiate closing costs
You may get buyers to sweeten the deal by paying closing costs or waiving contingencies like the appraisal.
Getting multiple offers when you sell your home is thrilling, a real estate adventure story you’ll tell forever. But let an agent give your story a happy ending by using experience and knowledge of the local market to help you get the strongest offer possible for your home.
The Verso Homes Team loves working with Sellers to select the BEST offer in this hot seller’s market. Are you ready to move on to your next chapter? Send us a message, and let’s get started.