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When you think about selling your home, you usually just think about final sale price, number of offers and days on market.
Maybe your go-to before-bed ritual is to scroll through Zillow and Redfin to see how much your neighbor’s house sold for and how many days it took. Maybe you gossip with your other neighbor about how many offers they got—shaking your head and exclaiming when you hear there were 10+ offers for a home that was frankly neglected for years.
I’m here to tell you that the highest price is not always the best choice. And you honestly don’t need 10 offers, my friends: you need one good one. Finally, its much better to get a good price with fantastic terms than to sell in 5 days. Sometimes waiting a bit is the right strategy.
Why shouldn’t you just select the highest offer? Let’s step back a bit. Proposed sale price is just one element of an offer. Other factors that come into play include:
Length of escrow?
Can the buyer’s lender close in 20 days or are they asking for 45 days? The longer the escrow period the more opportunity for someone to change their minds.
Any rentbacks?
A rentback means your buyer will allow you to remain in the home after close of escrow – sometimes free of charge and other times for a nominal fee. Most lenders have a limit of a 59-day rentback.
Contingencies…
Is the buyer asking for an inspection, loan or appraisal contingency? Contingencies are another opportunity for the deal to go south.
Offers or requests to pay aspects of closing costs.
If you plan to not offer a buyer’s agent commission, anticipate seeing a buyer request for you to pay 2.5% of the sale towards closing costs to cover their agent’s fee.
Who issued the pre-approval letter?
Is the pre-approval from a solid lending institution with a good reputation or is it an out-of-state or unknown lender? I’ve had buyers lured by fantastic rates only to hear on day 14 of a 30-day escrow period that their chosen lender could not, after all, lend on the property. (We got it done in time, though.)
Buyer’s ability to pay down payment and closing costs…
Does their Proof of Funds show any wiggle room or are they going down to the wire to make the proposed sale price?
Before we review offers on any of my listings, I always sit down with my clients and talk in detail about what each of these elements mean and how they may or may not play out in the scenarios before us.
There’s no use accepting an unusually high offer if the buyer isn’t going to be able to get a loan and backs out midway through. If you have to regroup and put the listing back on the market you’ve just lost valuable time. And other buyers may question what’s happened, assuming it was some fault of the property or the seller.
What we want is the highest offer with the best terms and a smooth, boring escrow period.
Reach out if you want to chat in more detail about my strategies.
