This weekend I accompanied a client to an open house in Hopkinton that was clearly going to result in multiple offers on the home. The home was in a great location and in a desirable neighborhood. The home was abuzz with activity, and there were a handful of potential buyers out in the yard, deep in conversation with their buyer’s agents discussing bidding strategies. It’s a great situation for the home seller. But once the flurry is over, how do they pick from among all these offers? And how to they know which offer will be most likely to go through?
Home sellers should consider multiple factors when choosing the best offer.
The price. What is each buyer offering to pay for the home?
The financing. Is the buyer getting a mortgage to pay for the home or are they paying cash? (As surprising as it may seem, we are seeing more instances of buyers paying cash to purchase their home. This is great for the home seller because they don’t have to wait for the buyer to get a mortgage approval from a lender before they know for sure that the sale is going through.)
However, it’s still most common for buyers to need a loan. If that is the case, you’ll want to know how much of a downpayment the buyer putting down on the home. A higher downpayment is better because it increases the chances that the lender will approve the mortgage.
The preapproval. All offers to purchase your home should be accompanied by a preapproval letter from a reputable lender.
The contingencies. Most offers to purchase real estate include an inspection contingency, which gives the buyer an opportunity to have the inspected by a licensed home inspector within a short period of time (typically 7-10 days), and a mortgage contingency, which gives the buyer time (often around 30-45 days) to secure a mortgage on the home.
Some offers will include addition contingencies. For example, an appraisal contingency would allow the buyer to walk away from the deal, or renegotiate the price, if the lender’s appraisal of the home ends up being lower than the sale price. A home sale contingency would allow the buyer to walk away from the deal if they are unable to sell their current home.
If the offers on your home include either of these two contingencies, be sure to talk with your listing agent about the risks of accepting such an offer. Every home sale is different and there are situations where accepting these terms makes sense. However, in multiple bid situations, such offers are often ruled out.
Closing date. What date does the buyer want to close on the home? If the proposed date doesn’t work for you, are they flexible about accommodating a different date?
If you’ve received multiple offers on your home, talk with your listing agent about each of the above factors before deciding on your next move. If one offer stands out from the rest, you may want to have your listing agent negotiate with that one buyer. If no one offer stands out above the rest, it’s not uncommon to have your listing agent ask each bidder to come back with their best and final offer before you choose which buyer to work with. At that point, some buyers may stick with their original offer while others may sweeten the deal with a higher price.
Hopefully this review process will help ensure that you get the highest value for your home and have a smooth home selling process.
Reprinted from my MetroWest Daily News column in Metrowest Homes, a real estate resource for residents of Dover, Holliston, Hopkinton, Sherborn, Southborough, Sudbury, Wayland, Westborough, Weston & beyond.
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