Getting in a few offers on your single listing can be incredibly exciting. After all, not only have you managed to find one interested buyer, you’ve found many to choose from! Yet as flattered as you may be to have received multiple offers, such a scenario begs for some strategy in order to ensure you negotiate with the right offer and buyer.
If all of the offer’s prices are really close, how do you choose the best offer in a multiple bid scenario?
Look for a Pre-Approval Letter
Buyers should always come into any offer situation with a pre-approval letter in hand. If you’ve got an offer or two without one, that’s an easy way to weed out the duds. If a buyer hasn’t taken the initiative to find out how much they could potentially be approved for, how can you be sure that they won’t waste your time while the home is in escrow, only to find out that they cannot get the home loan needed to pay for their purchase?
Compare Deposit Amounts
A deposit is a buyer’s gesture of good faith and a testament to how serious they are about purchasing your home. Obviously, sellers like to see higher dollar figures in this part of the contract, aside from the actual offer price. Not only should the amount be considered, but buyers in a multiple bid situation should ideally come to the table armed with a money order or certified check already in hand. That really shows they are serious, and have the verified goods to show for it.
Consider the Number of Contingencies
Many multiple bid scenarios often involve offers that are ‘clean’ – that is, they are void of any contingencies. Generally speaking, the more contingencies included in an offer, the more chances the buyer has to back out of the deal and keep the initial earnest money deposit. However, it’s worth noting that some contingencies may be worth including, such as a financing contingency. A buyer may have a pre-approval letter, but actually getting approved for a mortgage is another step altogether. If the buyer ends up being unable to secure a mortgage, the deal is dead and you’ll be stuck putting your home back up on the market again.
Identify the Type of Financing
Typically, conventional mortgages come with fewer appraisal issues compared to FHA-back home loans. If an appraisal comes in low, the lender will likely be unwilling to extend a mortgage to the buyer. The risk of this happening with a conventional mortgage is less compared to government-guaranteed loans like FHA and VA loans. Of course, an all-cash offer is the most attractive, as there are no financing issues to have to be concerned about. All-cash offers typically trump financed offers, even if the offer amount is slightly lower.
Determine How Ideal the Terms Are
Other terms on the purchase agreement may cause you to lean more towards one offer compared to another. For instance, a closing date that most closely meets your needs may hold a lot of weight. If you’ve already bought another house and are looking for a quick sale, an offer with a short closing date might be more attractive to you than a similar offer with a much more extended closing date.
Are you considering entering the luxury real estate market in Los Angeles any time soon? Our team of professionals is well-versed in this particular niche, and has already helped a number of homebuyer hopefuls achieve their aspirations. Be sure to get in touch with one of our representatives today who will be happy to answer any and all of your queries.
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(all data current as of 10/22/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.