Highest vs BEST Offer. Which to Choose?
Before you List Your Home, Have this conversation with your Realtor....
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Homeowners who are listening to the reports or even hearing stories from their neighbors know we are currently in one the hottest sellers markets in history. Have you heard terms like “Highest and Best, Bidding wars”, multi-offer situations”?
It’s no secret that both buyers and sellers are prospering during this time. Especially with the super low interest rates right now.
In the Greater Lakeland area there are 8 buyers for every home on the market right now. For every 10 homes sold this past quarter, sellers of 9 of those 10 had a very interesting choice to make:
Which offer to accept!
So if you’ve done all the proper preparations, your home is in good condition..strap in!, Because chances are you will have fast and furious buyers coming out of your ears! And you too, will be in this complex decision making situation.
Hint: The Highest Offer is not always the Best Offer.
The very first thing your Realtor should do is publish a date and time to give buyers agents a deadline to get their offers in, and your Realtor should let all the buyers agents know you will need at least 2 days to make your decision. This will give your Realtor time to verify the credentials of the offer you like most.
By doing this initial step, takes a lot of pressure off of you to make a rushed decision. Remember, you, as seller are in the drivers seat.
As a homeowner, one thing you need to avoid is the temptation to crank up listing price too high. The reason for this is simple: Most likely your buyer will be financing their purchase, and the home must appraise for at or above the contractually agreed upon price.
Although both parties have agreed on a sales price, doesn’t mean the home will appraise for that amount. If the appraisal comes in lower than the agreed upon price, the buyer has to come up with additional cash at closing..which is rare OR you as seller will have to lower your sales price to the appraised value amount.
Which brings us to the # 1 reason why the highest offer is not always the Best offer.
If you consider a higher offer, and your buyer is financing, put the risk back on the buyer by having your Realtor put in your contract that the buyer will agree to pay any differences, should the home not appraise for the contractual purchase price.
If your buyer agrees to this, Here’s the important part: Ask for documentation to prove they have the additional funds if needed, and a letter from their lender with the new qualifications.
When looking at all of the offers, don’t loose sight of the big picture.
Let’s talk about some factors to consider other than price:
Look at their financial strength:
Do they have cash to back up their higher offer?
Are they offering a bigger earnest money deposit or larger down payment?
Is the offer All Cash?
If you answer Yes to one or more of these, this may be an offer to put on the ‘short list’ to consider.
Is the buyer asking you to pay towards their closing costs?
Are they offering the minimum down payment based on the type of financing they qualify for?
Does their preapproval letter have a higher interest rate? *This may indicate they have a weaker credit score and does not qualify for the primo rate.
Is the offer contingent on the buyers current home selling?
If you answer yes to one or more of these, this may be an offer to put on the bottom of the stack for now.
Beware of Pitfalls:
Although you have several offers to choose from, don’t let this sense of empowerment go to your head.
Don’t string buyers along, it could backfire on you. Some buyers will withdraw their offer if they feel like you’re taking too long. That’s why I mentioned earlier to have preset times to respond.
Countering an offer can be risky too! Strongly consider the number of serious offers you have in hand before upping your ante. It could easily backfire on you and leave you with zero.
But if you only have a couple of offers, countering is quite acceptable. If you have an experience Realtor, they will know how to best advise you.
We’ve only talked about a few of the complexities of deciding how to choose the best offer. Because there are so many facets to consider, it’s best to have this conversation with a seasoned Realtor Prior to even putting your home on the market.
Make sure your representative is crystal clear of the points that are most important to you based on where your next chapter in life takes you.
Im Lisa Kelly with Premier Realty. I hope I gave you a few things to think about before putting your home for sale in this hot sellers' market.
If you’d like a free 15 minute consultation with me personally, I’d love to talk with you! You have my promise: No obligation, no selling what so ever..just your questions answered.
Click on the book now link below to check my calendar, then choose a date and time that works best for you.