You received multiple offers on your home? Congratulations! It may seem obvious to accept the offer with the highest dollar amount attached to it. I mean, who doesn’t want more money? Before you act too quickly, there are other factors to consider when deciding which offer will set you and your family up for the most success in such a large transition. The highest dollar offer may not be the best offer to accept and here are a few reasons why.
Financial Stability of Buyers
If an offer is more than the asking price for your home, but the buyer doesn’t have the financial backing to support that, you may be in for a bumpy closing. As an example, if your home is listed for sale at $250,000 and the highest offer comes in at $300,000, the home still needs to go through the appraisal process. If the home only appraises for $275,000, there is a $25,000 difference between the appraised value and the selling price. Someone will need to make up the difference.
In a market this hot, the buyer may waive the appraisal contingency meaning that they would make up for the additional $25,000 themselves and bring that with them to the closing. If all works out well and they have this excess cash to provide to the sale, you are in the clear! If they do not, you run the risk of the entire deal falling apart or potentially bringing the sale price down to the appraised value, losing money out of your pocket. A financially sound buyer might take your worries away. It might make sense, however, to accept an offer at a lower sale price to a buyer that is paying cash or has a higher chance of going through the financing process without any major bumps if they are not.
Some offers might request to close in six weeks. Other offers may come in and be flexible on closing date because they are currently renting or living in a more flexible situation. This is an important factor to consider. Does the requested closing date align with your plan? Would your family need to find a temporary solution for housing? Are you able to find and purchase a home by the time closing comes around?
If the offer is requesting a closing date that puts you in a rush or potentially creates a situation where you will need to move twice in a short time, get a storage unit, or displace you for a few weeks or months until you can find something more permanent, you will want to consider the costs associated. It might make more sense to accept an offer at a slightly lower sale price with a more ideal timeline for your family. It also still might be worth it to take the top dollar! Either way, it is definitely a factor to consider.
More than likely, you will have a few contingencies on the sale of your home. Does the buyer with the highest offer need to sell their house first? That could go well or it could delay your closing by weeks or even months depending on the success of their sale (items you cannot control). Did the buyer with a slightly lower offer waive the appraisal contingency? This may speed up your closing process and allow you peace of mind when it comes to the financing portion. Did the buyer with a slightly lower offer waive the inspection contingency? We are currently seeing this often. They most likely will still have an inspection, however, are signaling to the seller their intention is to not ask for repairs or replacements. THEY STILL CAN. Each of these factors is worth considering along with the monetary amount they offer.
Always Ask The Experts
Every market is different. Money is definitely valuable. These are concepts that will always ring true. The highest offer could be the best offer to accept at the end of the day. The point is that there are other factors that are worth considering and comparing to the monetary value. As much as the above discussion is applicable in many markets, it is always best to reach out to your local experts to guide you in which offers make the most sense given your location and personal situation. Sly Real Estate prides itself on being a local expert that always keeps you and your family’s best interests at the center of everything. We would be happy to walk you through the selling process and help you decipher which offer is the best for you!