Factors Sellers Should Consider When Comparing Offers
When selling your home, you may think the only thing that matters in an offer is the amount. Are they offering full asking? Over? Under? While this is certainly one of the most important aspects to look at, there are other factors to consider that can be very important as well. Let’s look at a few of these factors.
1. How are they paying?
While you do want an offer that’s full asking (or even above that), you also want to know how the buyer plans to pay. If they are going through a lender, you’ll want to see their pre-approval letter. This should be included in the offer. This means the lender is ready to back them for said amount. Even if an offer is at or slightly below asking, if it’s an offer with pre-approval and up against an offer without, it’s worth considering.
If the buyer is offering cash, that can be a great deal. It can mean less hassle and time waiting for the mortgage to be fully approved. But also be aware that in return for cash, the buyer has leverage to negotiate and they could ask for things such as a decrease in overall price or some other perk.
2. What’s the earnest amount offered?
The earnest amount is like a deposit the buyer will put down that your brokerage will hold until the sale goes through. It’s then applied to the down payment. It’s a good faith deposit, showing that the buyer is serious about purchasing your home. The nice part is, if something happens and the sale doesn’t close, you often will get to keep this deposit. The higher this earnest amount, the better. It shows the buyers are more committed to going through with the sale.
3. How many contingencies are added?
Contingencies are extra terms or benchmarks added in along the sale process that the seller must satisfy in order for the sale to go through successfully. The home inspection and appraisal are the two most common contingencies added in to offers and contracts. The home inspection means that if large issues are found with your home, the buyers could require that you repair those items or they are allowed to walk away from the sale. And the appraisal establishes that the home is worth the sale price. If it’s found not to be, you will have to renegotiate the sale price.
These contingencies aren’t necessarily working against you. However, the fewer the contingencies, the better. The sale will go through quicker without these and there will be fewer chances for a buyer to back out.
4. What’s the closing timeline?
Chances are if you’re selling, you might also need to find a new home for you and your family. This might lead to time deadlines or pressure to sell by or on a specific date. So consider what the buyers can offer for a closing timeline and closing date. If a buyer is flexible and can work with your timeline, this could really benefit you even if their offer is slightly less compared to another.
Keep all these aspects of selling in mind when you start receiving offers. Weigh the pros and cons of an offer, not only limited to the initial payment offered.