The housing market is on the rebound, home prices are rising and for the first time in almost a decade, two or more offers at the same time is normal.
It’s a good problem to have if you are a seller, but how exactly, do you choose the best offer?
You may think that the best idea to take the highest offer, but you should take a step back and look at a variety of different factors when entertaining multiple offers.
For example, try looking for the most appealing (proposed) closing date and whether the bidders are willing to waive contingencies such as inspection, attorney review and mortgage approval. By waiving their contingencies, buyers have fewer “outs” and a deal is more likely to sail through the process. And if one bidder asks for a contingency to keep the deal on hold until his/her property sells, that’s an easy buyer to eliminate from consideration.
Sellers should know how much earnest money each bidder is offering. It’s not a down payment, but it is money held by the real estate agent that guards against a buyer walking away from a deal at the last minute. Also, while you may be dismissing a higher offer, remember that cash is still king. Whether or not it’s a cash deal would be a factor because you wouldn’t be waiting on a loan approval, and it may or may not be subject to appraisal.
If there are two or more offers that are roughly equivalent, a seller can respond to more than one buyer. But a buyer should be transparent about the time frame and ask for the “best and highest” offer. To negotiate good faith, you shouldn’t sit on offers for too long. Be upfront about the facts, and give everyone a deadline so they could have the possibility to strengthen their offer.
The best practice when dealing with choosing the best offer is to give everyone an even playing field.
