As a homeowner, you should know the worth of your home in dollars. Apart from the personal and sentimental value it holds, also research the financial value of your property. You would know the fair market value of your home if you did a great deal of studying and researching how your home should be priced.
If you know how much your home should fetch in the current market, you’d know right away if the cash offers for your home are fair and good. You would also know if they are lowballing you. Pricing is important because a lot of the other things involved in the negotiation and transaction pivot around how much the final sale price is going to be.
- Check Contingencies Attached To Offers
When you receive multiple offers from several different buyers interested in your home, you should check what kinds of contingencies these buyers placed on the sale. Contingencies refer to the conditions that have to take place or be met before the buyer becomes obligated to pay the price to the seller. These are conditions or qualifications that the buyer imposed before the deal can push through at the accepted offer price.
You shouldn’t ignore these contingencies because they’re like obstacles that have to be overcome or satisfied before the buyer’s obligation to make good on the contract and pay the final price kicks in. Here are some of the most common contingencies imposed by buyers:
• Most buyers require to do a home inspection before the sale goes forward.
• Some buyers prefer to have the property inspected by a consulting engineer before they pay the final price, especially if the home is quite aged.
• Some buyers require their sellers to wait until their financing is approved.
• Some buyers say they’d prefer to see the real estate appraisal.
The thrust of these contingencies is to protect the buyer from any untoward effect or consequence should it be found out later on that there were hidden defects, issues, or problems in the property. Most of these are reasonable contingencies and are, in fact, quite expected from any potential buyer as an accepted practice in real estate industry transactions.
But some buyers would include contingencies that could tie you up to an ongoing transaction. For instance, a buyer might say that they’re very interested in your property but that they’d only be able to push through with the purchase if they’re able to sell their own house where they currently reside in the meantime.
2. Watch How Contingencies Play Out During Negotiations
You should also watch out for the way that some of these contingencies might be applied by buyers, because the effect might be to your disadvantage. For example, some buyers might say that they’d like to make a series of home inspections. This might sound perfectly alright, even if they insist it should be a contingency. But they might take advantage of this contingency to protract the home inspections to span several days or even weeks.
They might use this contingency to justify why they haven’t decided yet. This could keep you from accepting the other offers that you received in the meantime if this buyer has already paid some deposit or earnest money but keeps you hung about what they really plan to do.
You could also use these contingencies to filter who you’re going to seriously consider among the multiple offers that you received from interested buyers. You can immediately exclude those offers which are tied to numerous contingencies or cumbersome conditions that would needlessly delay the negotiation process. You can come up with a shortlist of those offers which don’t have too many contingencies and also look good on other details.
3. Don’t Ignore The First Offer Just Because It Came First
Don’t ignore the first cash home offer that you receive just because it was the first offer. It doesn’t necessarily mean that it’s not the best offer simply because it came first, or that it won’t be the best offer even if other offers might come along. It’s understandable if you want to find out and explore further what other offers you might get.
But what’s really important is that you should consider an offer that matches your expectations. If the first offer already meets the price that you hoped your property would be able to fetch, then it might be worth giving serious consideration to close on the first offer. If there aren’t any complicated contingencies, you really don’t have to wait for other offers.
There are some sellers who decide to close on the first offer because of some circumstances that bear upon the transaction:
• Sellers who have plans of moving out of state would prefer to close as soon as they can especially if they’ve already sorted out everything at their new place
• When the buyer makes an enticing cash offer, some sellers would take it especially if it removes a lot of the other requirements that go with a mortgage purchase and sale
• Sellers who are in a bit of a hurry to raise some cash would tend to close on a first offer
• Sellers who have already closed on their new home sometimes prefer to close on the first offer to avoid having to pay two mortgages in a month until such time that their old home is sold
4. Give Good Offers Some Serious Consideration
In some instances, you might receive more than one or two offers almost immediately after you listed your house. This can happen if you did everything right before you had your home listed. If your home is in a sought-after neighborhood, and you posted really nice pictures online, and you also priced it just right, your phone could be ringing with interested buyers within hours or days after you listed.
This shouldn’t make you too overconfident if that happens. You should carefully weigh each offer including the first offer and the subsequent ones after that. Keep in mind that most of these buyers are seriously looking for a good deal. They could also be investors looking for a great addition to their rental portfolio.
Not all of them would make good on their offer if you make them wait too long. Consider each offer seriously, even the first ones. But neither does this mean that you should just go along with the first offer because there haven’t been any subsequent offers yet. If the first offer is a low ball, then maybe you should think twice about going forward with it right away even if it’s been days since you listed and there have been no new offers yet.
5. Evaluate The Offer’s Strength And Quality
Aside from the cash offer on your home, you should also take into account other things that indicate the quality of the offer being made. Here are some of those indicators that you should weigh:
• Buyer’s Financial Capacity – You should verify the financial capacity and financial documents of your buyer if you feel there’s something off about it. Some people could easily get bank documents that might not be reflective of their current credit standing.
• Buyer’s Concessions – You should also watch out for signs of the buyer’s attitude about concessions. For instance, if your buyer isn’t too stingy about inspections and other contingencies, and they gave a good offer for your property, then the sale might have better chances of closing if you dealt with such a buyer rather than with one who demands a lot.
• Flexibility – You should also take note of whether you have a flexible buyer who would be considerate enough of your own considerations. For example, it would be nice to have a buyer who’d be willing to give you time to look for a home before they press on closing the deal right away.
6. Give Them Chance To Make Their Best Offers In A Bidding War
If you think most of the multiple offers that you received from buyers interested in your house are serious enough, and that most of them have the financial capacity to back up their interest in your property, then it might be appropriate to let all of them make their best offers in a bidding competition.
Of course, this would be to your advantage since it would remove their restraint, while hoping for a lesser price, and bring out the maximum limits of each buyer. It would also bring out their flexibility in the other terms such as waiver of contingencies, shortening the inspection periods, and contingencies on the closing date and transition period.
A bidding competition isn’t just good for the seller, but it could also be beneficial to the buyers in general. It would give each prospective buyer an equal chance to make their best offer.
It might seem to some that allowing a bidding war would be predatory but it actually does a little bit of good for everybody else. After all, serious buyers won’t offer to pay what they can’t afford. The other option is for the seller to just pick from among the multiple offers without giving the other interested buyers a chance to at least submit their counteroffers.
It would be a seller’s great advantage to receive multiple offers from several different buyers who are interested in purchasing the seller’s home. This gives the seller a lot of advantage over the buyers, especially if most of the buyers are also keen on closing the sale. But a seller should keep in mind some of the things discussed in this article on how to handle multiple offers on their home for sale.