A Seller's Guide to Multiple Offers
By Kristin Brown, REALTORÂ®, Lexington, Mass.
With the real estate heating up for spring, if you're selling your home, you could find yourself in the position of receiving multiple offers on your house in a short span of time – even within one day. So, with the ball in your court, how do you decide which offer is most attractive to you?
If you are considering multiple offers, the first thing your real estate agent may want to do is to make it clear to all parties that you have or expect several offers, and that all prospective buyers should be putting forward their "best offer." Although you and your agent are under no obligation to disclose the existence of multiple offers, it will probably benefit you as negotiations begin. Since you and your agent are the only party with visibility to all of the offers, you have the upper hand – each prospective buyer, without visibility to the terms of competing offers, will be forced to put forth the very best that he or she can manage in the hope of winning the sale.
As you peruse the terms offered, here are a few things to think about that may make some of the offers more attractive than others:
• Price. At first glance, it seems intuitive that you would want to accept the offer for the greatest amount of money for your house. If you have multiple offers in front of you, you may be tempted to take the highest offer. And while a fair price is a large part of what makes an offer attractive, there are some additional terms that you should consider as well.
• Closing date. When do you want the sale to close? If you are hoping for a quick close to the sale so that you can get into a new home or just to ensure that the sale is finalized and there are no surprises, you should take into consideration what each buyer is offering in terms of the closing and possession dates. Conversely, if you need to stay in your home a while longer while you are waiting on a new home or because you want to finish out a school year, it might be wise to accept a bid that will allow you to move out at a later date. You may want to also state which closing date you want, up front so that offers come in with dates that are attractive to you.
• Buyer's financing. If you are serious about accepting an offer, you're going to want to make sure that the sale will actually go through. Your buyer's financing is of paramount importance; if a buyer is a risk to secure financing, you may want to look elsewhere. How can you determine this? Always consider a pre-approval letter over a mere pre-qualification. Pre-approval suggests a very good bet that the buyer's lender will extend financing based on a completed assessment of the buyer's risk. A buyer who is willing to put down a large amount of earnest money should also be seen as serious about the offer they are making.
• Other contingencies. You will want to examine the contingencies listed in each buyer's offer. An offer contingent upon the buyer selling an existing home is far less attractive than an offer with no such contingency. Aside from a regular home inspection, a buyer may also request additional inspections for pests, air quality, asbestos, and other features of the property. A buyer with fewer of these requests may be more attractive to you than a buyer whose purchase is contingent upon multiple inspections.
Although it may seem like there is a lot to consider when comparing multiple offers, it's an enviable position to be in. The sluggish real estate market of the past few years has meant that fewer sellers have seen concurrent multiple offers. If you are fortunate enough to end up with multiple offers to choose from, consult your real estate agent and discuss which offer best fits your needs.
Reprinted with permission from RISMedia. ©2013. All rights reserved.