Due to low inventory and high demand, 2021 has been a solid seller’s market. In a seller’s market, receiving multiple offers on a home is a common occurrence, but how should a seller handle this situation for the best possible outcome? Here is some guidance on what to do when you, as the seller, have more than one offer.
Look For Pre-Approval Instead of Pre-Qualification
An offer may be the highest number in the room, but if the lender hasn’t approved the number, that bid could turn into wishful thinking. When looking at offers on your home, choose from those who are pre-approved for a loan instead of those who are pre-qualified. Pre-approved means the lender has reviewed the borrower’s finances more comprehensively or is in the process of doing so when they provide a loan amount. Whereas, pre-qualification is an estimate without a close look at the borrower’s finances.
Review The Contingencies on Offers
When offering to purchase your home, most buyers will include contingencies in the contract that must be met for them to follow through. Common contingencies include getting approved for a mortgage, having the home pass various inspections, and making sure the home appraises for a certain amount. Some contingencies are good for both parties, while others can create more space for the buyer to back out of your deal. Choose the buyer with the fewest contingencies that will hamper the sale of your home. In competitive situations, some buyers may waive the appraisal amount contingency. If this happens, you’ll want to document they have the cash available to cover the difference between the appraisal amount the lender will finance and the actual purchase price.
Consider How They Are Paying for the Home
A cash offer isn’t necessarily the best choice every time, but it can often mean fewer hassles and more guarantees. In these cases, make sure to have documentation upfront proving the buyer has the cash readily available. This saves you from relying on an offer with a high chance of falling through.
The majority of buyers, however, will be using a lender for a mortgage. It’s important to talk to your agent about the lender the potential buyers are using. You want their lender to have a good reputation in the community for closing deals quickly and thoroughly. If it’s someone the real-estate professionals you’re working with have never heard of, ask the buyer for more information before accepting their offer.
Compare Closing Timelines
Buyers and sellers may have different pacing for how quickly they want to vacate or occupy the home. Establish ahead of time whether you’ll want a rent-back agreement, or if you’re in a hurry to close. This will help you sift through various offers to find one that makes the process less stressful. Let buyers know your timeline upfront, so those who are willing to make accommodations will include it in their offers.
Need Advice As a Seller?
If you’re considering selling your home, reach out to us here or contact us at 949-392-6400. We can help you navigate how to wisely use your leverage as a seller in this market, and help you decide what offers are best.