How to Handle Multiple Offers

When you go to sell your home you may be put in the fortunate situation of receiving multiple offers to buy your property. This is a very exciting time because not only do you have someone who wants to buy your house, you also have multiple offers to choose from. It can be very tempting to simply accept the highest priced offer and call it a day, but it is important to keep the following factors in mind to make sure that you make the best choice. 

• Contingencies: When comparing one offer with another, it is important to note the contingencies that are attached to the contract. These are clauses that allow the buyer to cancel the contract and recover their escrow deposit in certain scenarios. There are a variety of different contingencies that can be included, but here are some of the most common:

• Inspection Contingency: The majority of real estate agents will include some form of an inspection contingency in their offer. This is so that the buyers have the ability to have a professional evaluate the home and make sure that there are not any issues with the structure, electrical systems, air conditioning, and more. Having a shorter inspection period makes an offer more attractive as it limits the amount of time that the buyer has to back out of the deal. 

• Appraisal Contingency: This contingency is used to ensure that the home is actually worth the price that the buyer is offering. A licensed appraiser will evaluate the home and provide an estimate of value. This is important because if an appraisal is lower than the offer there may be issues with the mortgage a buyer is getting to finance the property. Lenders typically do not like to lend more money than a house is worth, and this contingency allows the buyer to back out of the deal if they cannot get the loan that they need. 

• Sale of Buyer's Property Contingency: Most buyers need to sell their current residence in order to afford purchasing a new home. With this contingency they can make their purchase contingent on the sale of their current home, meaning they can back out if they cannot sell their property. 

• Timeline: One of the terms that buyers propose in their offer is an expected closing date. Depending on your goals you may want to accept an offer with a quicker closing so that you can move into your new property or you may want more time before closing to find a new place. 

• Financing: Offers to pay for the property in cash are generally viewed as the strongest because they do not have any limits or contingencies imposed by a mortgage company. Buyers with pre-approval letters are viewed as stronger than those without because they will be more likely to receive the loan since they are already working with a lender. 

• Earnest Money/Escrow Deposits: One way that buyers can indicate that they are serious about following through with the purchase of a property is by making a large escrow deposit. This is money that the buyer will not get back if they do not end up purchasing the property if other contingencies do not apply. Therefore putting more money down shows that they are not worried about losing it and will be likely to close on the home. 

If you are ready to list your home and start receiving offers of your own, give our team a call! We would be happy to answer any questions you may have and get you started on your journey to a successful sale. 

To learn more about how to evaluate offers, take a look at this article from NerdWallet.