Handling offers correctly is the key to reaching a meeting of the minds with the buyer(s) and creating a binding contract on your home. Dealing with offers in a seller’s market presents different challenges, especially if there is more than one offer to consider – and it’s reasonable to expect more than one offer these days.
Offers may be similar, or quite different, and while it is your decision as to which offer to accept, how do you make that decision?
Here are some important things to consider and think about, whether there is 1 offer or multiple ones:
- Know that price as well as terms and conditions are important – price, of course, IS important, and may be the most important issue to you. And the buyer may have a different perspective. But don’t focus ONLY on the offer price since other terms may not be reasonable.
- Consider the terms and conditions that are important to you. What about the closing time frame? Or the amount of deposit with the offer (in our area typically 1 – 3% of the offer price)? What about the costs traditionally paid for by the seller?
- Think about the bottom line price you are willing to accept. You can always modify this depending on the market and the terms offered by the buyers. This may be less of a concern in our seller’s market when offers are often near ot at asking, or above (for well-priced homes).
- Pre-approval – you should never accept an offer without a current and written pre-approval from a reputable lender. I usually call the lenders to verify information during the offer review process, especially if I have questions about the pre-approval and the buyer’s qualifications. And on-line lenders can raise some red flags.
Contingencies – what contingencies are in the offer? Home inspection? Appraisal? Sale of the buyer’s house?
- Proof of Funds – seeing written proof that the buyer has the available cash to buy (down payment plus closing costs) is important, and of course is essential with a cash offer.
- All offer pages completed and all initials and signatures where required. The standard California offer to purchase documents should be complete, and must be readable. While we can request corrections in a counter offer, a poorly done offer raises concerns from the beginning.
- Are there any special requests you will consider, depending on the offer – for example, the washer and dryer you intended on taking, or a request for the seller to pay closing costs (this is unusual in this seller’s market). How about a rent-back after closing offered to you by the buyer to give you time to move?
- Review a copy of the standard offer paperwork before you receive offers and discuss any questions. I like to review these documents with sellers and make sure they know what to expect beforehand.
- Establish a game plan – we are required to present all offers, and as soon as possible. But there should be a plan for doing this and how. I like to present multiple offers in a spreadsheet to summarize the key details for easier comparison (offer price, closing date, down payment, loan amount, deposit, etc.). There are different approaches for responding to multiple offers depending on your preference, and what makes sense given the offers – Do you want “best and final?” Will you just pick the best offer, or will you counter all offers or just 1?