Since going on the market, your home has been on the receiving end of multiple offers. How will you know which offer to take in this scenario? A better question might even be: How can I discern a strong offer from those that aren’t?
Let’s say you’ve set your price at $200,000 and a buyer comes in offering $225,000. At face value, this seems like a strong offer that you shouldn’t pass up. The reality is that buyers can sometimes let their emotions get in the way of sound judgment; they might throw out an offer and not realize that they’re probably overpaying until you’ve gone under contract. Consequently, they decide to withdraw their offer.
By this point, you may have already made the mistake of accepting an offer like this with a few different buyers. Really, the highest priced offer isn’t always the best offer. The best offer, then, is the one that’s actually going to close.
This is where your agent comes in: They should be able to pick up on clues during the showings, the offer process, negotiations, and inspection. A professional, experienced agent will be adept at reading the buyer.
Now, if the offer price is too high, it probably won’t appraise, which means the buyer will not be able to obtain a mortgage. One of three things will happen at that point: They’ll have to come up with additional money, you’ll have to go lower in price (which usually happens), or you’ll have to reenter the market; all three of these options are less than ideal.
A cash offer way above asking price, on the other hand, can be good because you won’t need to bring in an appraiser; you’ll want to know if this is in the contract or not.
As a seller, try not to be enticed by an offer that’s a few thousand dollars higher; a good offer with the highest probability of closing should take priority. Once you’ve made up your mind to take an offer and you’ve gotten through attorney review, the emotional fatigue will give you eagerness to close.
What if a buyer includes a mortgage contingency in their offer? If this is the case, keep in mind that the buyer will have that contingency all the way up until closing. This means there will be some uncertainty until the day comes.
Between an offer that’s $200,000 in cash and another that’s $225,000 with a mortgage contingency, you should strongly consider taking the cash offer because you can be sure that the deal will close.
Another thing to look for in an offer is the behavior of the buyer. Plainly put, you want to work with an “easy” buyer. What do I mean by that? Well, some seller clients and I recently worked with a buyer who had been to the home three or four times and was hung up on one item, in particular.
They asked about the item to no end, and it completely turned my sellers off. When it came time to select an offer, my seller didn’t even consider this buyer’s because of how difficult they had been. This is the type of buyer you’d do well to avoid.
I hope today’s message helped you better understand what kind of offer you should look for. If you have any questions about this or about anything else real estate-related, feel free to reach out to me. I look forward to hearing from you!