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The Highest Offer Doesn’t Necessarily Make the Best Deal
In hot real estate markets, sellers may be lucky enough to receive multiple offers. While it’s generally best to sell a property for maximum profit, the highest numbers don’t necessarily translate into the best deal for your clients. By assessing every part of an offer, you can help guide your sellers toward a deal that suits their unique needs best.
When buyers make offers, they tend to add conditions that, when not met, allow them to cancel the purchase. This could include a home appraising for a specified amount, the property passing inspection, and getting financed by a lender. For sellers, it’s better to have contracts with fewer contingencies, because there’s less chance a buyer will back out of the deal.
Consider funding options.
Because you won’t have to wait for a lender to approve a loan, cash-offers hold a lot of benefits. Usually, however, your buyer will need financing from a lender. In this case, it’s good to consider whether the buyer is pre-approved for a loan. This is usually much better than working with a buyer who has yet to make financing arrangements.
Consider the value of the property.
If an appraisal values the property at less than the offer price, a lender is apt to reduce its loan amount for the buyer. That’s a good thing- if the buyer is willing to shell out some of his or her own cash to honor the original purchase price. If the buyer has no way to make up these funds, that’s not as good.
Assess the lender.
If a buyer’s lender has a reputation for closing deals quickly, the deal should be viewed as more attractive. If the buyer is using an unfamiliar lender, do some research or ask the buyer to provide a little more information
Review closing periods.
If you are reviewing similar offers from multiple buyers, a quicker close can be practical deciding factor. Obviously, it’s better to close in weeks as opposed months. That said, if you aren’t quite ready to move, it might be worth your while to wait for a higher offer.
Review potential extras.
Certain buyers may be willing to pay a portion of your closing costs to differentiate themselves. They may also be willing to create an escalation clause, which states their intent to outbid other buyers by a certain amount. If you are mulling similar offers, these types of sweeteners could tip the balance.
Consider the deposit.
In a multiple offer situation, larger deposits can indicate how serious a seller is about purchasing a home. Large down payments can also speed up the lender approval process and increase the likelihood of successful financing.
If you live in a hot market, it’s best to let buyers know you are expecting multiple bids. This way, they can tailor their offers with the competition in mind.
Getting multiple offers on a property can be exciting; however, it’s not always easy to settle on a specific deal. By considering every part of an offer, including contingencies, price and ability to close, you can successfully assess several offers and choose the one that serves your unique interests best.
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