It’s practically the dream situation for home sellers: You put your house on the market, and you quickly receive multiple purchase offers. It’s not uncommon in a seller’s market, where there are more buyers than there are homes for sale, and it gives the seller leverage.
How you proceed with that leverage is up to you. You could simply accept the offer with the highest purchase price. You could counter-offer each prospective homebuyer, prompting a bidding war that will likely drive up the price. Or you could feel out each bidder, pulling the levers that will benefit you the most.
It’s an enviable position to be in, but deciding to simply accept the highest offer might not always be in a seller’s best interest. If you’re a home seller, here’s what to consider in a multiple-offer scenario.
Cash is king
The old saying is that a bird in the hand is as good as two in the bush. That adage can certainly apply when it comes to any real estate transaction.
The large majority of home purchases that fall through do so because of financing. A lender might make demands of the buyer that they can’t meet. Or the lender sets standards for the property that you might not be willing or financially able to meet.
But cash offers on your property remove the lender from the equation. An offer that’s contingent on financing hinges on more parties. A cash offer eliminates the possibility that there will be some mortgage-related snafu. If mitigating the risk of an agreed-upon purchase is important to you, a cash offer for your home should be weighted accordingly.
Even if you don’t have an all-cash offer, potential bidders with more cash could be valued higher than others. A buyer who can put 20 percent down is less likely to fail the financing hurdle than someone who’s putting 10 percent down, as a higher down payment might mean the difference between qualifying and not qualifying for your purchase price. You might not be immediately privy to a buyer’s cash-on-hand position, but it’s worth trying to ascertain, and a savvy buyer’s agent in a competitive multiple-offer situation might be eager to divulge it.
Timing is everything
Nobody enjoys making multiple mortgage payments, but it’s not uncommon. If the purchase of your next home is set to close in, say, 30 days and the buyer of your current home wants a 90-day closing period, you could end up making two months’ worth of payments on two properties.
Conversely, if your home sells quickly – before you’ve found your next one – a quick close could mean you don’t have a place to readily move into. That could mean moving your possessions twice, renting a storage facility, or moving into your mother-in-law’s basement indefinitely.
As a seller in a multiple-offer scenario, you have leverage. That leverage includes dictating the timeline of events as it pertains to closing and move-in dates. An offer with a price that isn’t quite as high as another might have more value if it involves flexibility that accommodates your preferred timing.
There are other contingencies
The financing contingency is the biggest pitfall to successful real estate transactions, but there are others that can play a big role, too.
Homebuyers are protected by other contingencies, such as appraisals and home inspections. A buyer who is willing to waive their right to a home inspection or an appraisal might be more attractive to sellers than one who is not.
Waiving a home inspection means a buyer can’t back out simply because an inspector found some sort of deficiency in the home. Waiving an appraisal contingency can mean that if the home doesn’t appraise for enough to meet a lender’s approval for a loan, the buyer can bring more cash to the table to square things.
It’s prudent for any seller to at least consider a buyer’s willingness to waive contingencies when weighing multiple offers.
The bottom line
When selling a home, receiving multiple purchase offers is a great position to be in. But there are a few things to consider beyond just the face dollar value of each offer.