When you list your home on the MLS, it's not unusual to get a flood of buyers making offers on your home.
It’s surely not a bad problem to have, but when you’ve got a extensive list of offers in front of you, you’ll quickly be asking yourself:
“Which one do I pick?”
At first glance, you could say that whoever offers the most money is the best choice. But there are many more factors at play with a good deal rather than just the price.
In this article we’re going to cover what to look for when choosing between multiple offers so you can effectively select the best offer for you.
Among your pool of buyers, there may be one or more that will offer cash.
When buyers offer cash, they do not need to be approved for a mortgage or wait for an appraisal, leading to a higher likelihood that the sale closes quickly, and for the agreed amount. (You will want to ask for documents confirming assets to pay cash).
But for the majority of buyers; a mortgage will be necessary.
When comparing offers, it’s important to know that buyers who are pre-approved are preferable to buyers who haven’t arranged financing prior to submitting an offer.
Being pre-approved doesn't always mean that the buyer's capacity to follow-through with the purchase of your home has been confirmed, so a call to their lender is important to determine the level of information provided for the Pre-Approval.
*A high offer doesn’t mean anything if the buyer gets denied by the mortgage company, and it could be a couple weeks before you find out *.
Oftentimes when buyers make an offer, they’ll have a contingency that, if not met, allows them to back out of the deal.
Contingencies are a necessary aspect of most home sales, after all, the buyer needs to do their due diligence and ensure nothing is wrong with the house.
Contingencies can include the following:
Buyer Home Sale Contingency
However, offers with fewer contingencies are preferable as they give the buyer less opportunity to back out of the deal. An offer with too many contingencies may be a red flag.
If you’re selling your home, chances are you’re looking for a new place to purchase.
If you still need a bit of time to find a new home, you may favor a buyer who can accommodate you. Some buyers will offer occupancy (a rent-back) where they allow you live in the house for up to 60 days after the closing while you search for a new home.
However, if you’ve already packed your things and hired a moving company en route to a new house, you may want to go with a buyer who is either pre-approved or offering cash. This will likely ensure that the deal can close in a comparatively faster timeframe.
As of the time of writing, real estate is largely a seller’s market.
With more offers hitting seller inboxes, buyers have to be competitive with their offers, and as such they’ve increasingly offered more deal “sweeteners” to win over sellers.
An example of a deal sweetener would be an escalation clause, where a buyer offers to outbid another buyer by a certain amount in order to keep the sale.
They may also, as described earlier, allow you more time to move out and search for a new home.
Not all offers are created equal; depending on factors like contingencies, mortgage qualification, and type of financing - the best Purchase Agreement may not be the one that offers the most money.