It’s a seller’s dream getting multiple offers pouring in all at the same time. However, when it comes time to evaluate these offers and pick the best one, suddenly things become a lot more challenging.
Here are some guidelines to evaluating multiple offers so you wind up with the best one.
Which Buyers Are Pre-Approved?
When it comes to choosing from multiple offers on your house, the highest bidder isn’t necessarily the best choice. While you might see dollar signs when an extremely high bid comes in, this doesn’t mean that the deal will go through. Maybe the buyer will get cold feet and bail on you at the last minute before you have a chance to counter offer, or maybe they just don’t have the financial backing to support such a high offer.
The last thing you want to do is go with the highest bidder only to have to put your home back on the market because their financing fell through. By accepting an offer from a pre-approved buyer, you’ll be reassured that a mortgage lender has already agreed to cover the mortgage. Of course, a pre-approval isn’t necessarily a guarantee, but it places a lot more confidence in a buyer’s ability to secure a loan versus a buyer with no pre-approval.
If none of the bidders are pre-approved, you should get more detailed information about their finances, and set a time limit for them to apply for a loan before finalizing the purchase agreement.
Who’s Got the Biggest Deposit and Down Payment?
There are a bunch of factors to look at when evaluating the best offer. Of course, the offer price is a biggie. But there are also other things to look at, such as the size of the deposit and down payment. When it comes to the deposit, the bigger the better (obviously!). Buyers who put a fat deposit up front are showing that they’re serious about the house, and showing up with a deposit in the form of a certified check at the time of offer presentation is even more impressive. If they are unable to follow through with the agreement after your home has been sold firm, you keep that deposit amount.
A sizable down payment also shows the seriousness of the buyer. Anything from 20% and up signifies the real deal. At the end of the day, what you’re looking for are liquid assets; that is, those that are readily available, such as cash in the bank. This is much more attractive than ‘frozen’ assets which are funds that are tied up in investments and stocks, and not readily accessible.
Which Closing Date Jives With Your Needs?
Agreeing on a closing date that suits your needs is an important factor that goes into determining which offer to choose. Let’s say you’ve already bought a house, and you take possession of it next month. Ideally, you’d like a closing date in or around the date your new mortgage comes into effect. You might get an offer with a very attractive price, deposit and downpayment, but if they can’t close until four or five months down the road, you’ll have two mortgages to carry for a few months, which can be really costly.
On the other hand, let’s say you haven’t bought a house yet, or haven’t even started looking. An offer with a tight closing date won’t give you nearly enough time to find the right home, and take possession of it.
If the closing date comes before you’re ready to move out of your home, identify what the lender’s rent-back policy might be. A rent-back is the amount of time you’re allowed to remain in your house after the close of escrow. These time frames are usually 30 days, although some lenders might permit up to 60 days.
Use the Terms of Other Offers to Negotiate With Your Best Buyer
If you’ve got a few offers to look at, the prices might range from low-ballers to well over-asking. Obviously, the more offers you get, the more you have to work with. Once you’ve gone through all the terms of each offer and identified the ones that stand out above the rest, your real estate agent can go back to the buyers’ agents and tell them how many offers have been registered, and will let the top two buyers know that they are in the running to win the bidding war.
This will potentially make these buyers want the house even more, after which you could realistically squeeze a little more money out of them. If you’ve got a low-priced offer that has a quick closing and zero contingencies, your agent can leverage these terms with the higher-priced buyers. Taking all prices and terms of each offer and trying to get one buyer to give you the best of each can have you walking away with a very attractive deal.
A multiple offer scenario is a desirable spot to be in when you’re selling your home, but it can be a complicated one if you don’t have an experienced real estate agent helping you call the shots. A good Realtor who is familiar with all of these issues and can help you evaluate and pick the very best offer out of the bunch. When you’ve got more than one interested buyer coming in at the same time, you’re more likely to get the most favorable terms and conditions for a successful sale.