Jay Allen's Blog
One of the toughest choices to make when selling a home can be choosing a bidder. It seems like it would be straightforward. You might think you should accept the first offer or maybe you’re in the camp of accepting the highest bid. And while both of these choices are valid there are other factors to take into consideration. Factors that can make selling your home even easier and relatively hassle-free.
One of the biggest fears people have and one that really throws a wrench in the process is potential buyers backing out of a deal or asking for pricey repairs. And for this reason, I suggest looking closely at all of your bids to review the concessions and contingencies each contract contains as well as the type of financing each buyer will be utilizing.
For example, one thing to look for is the earnest money deposit. This is money held in an escrow account by the listing agent or attorney for the duration of the transaction. If the buyer changes their mind outside of the allowable contingencies, it is forfeited to the seller...therefore, the more money held in escrow, the more confident you can be that the buyer will honor the terms of the agreement.
The strength of a buyer's financial profile is a good consideration when reviewing offers. A buyer with a 20% down payment might be viewed as a stronger buyer than one putting down 3%. And certainly, a cash buyer is desirable because with no bank involved, there are no loan approvals to worry about.
Sometimes buyers will include a "Sale of Home Contingency" in which the offer is made subject to a buyer's current home selling. This places a great deal of risk on you. If your buyer's home sale falls through, it means yours will too! If this is something you are not comfortable with, you may want to place the offer directly in the “No” pile...even if it comes with a strong purchase price or down payment.
Are they asking you to cover any expenses? Sometimes offers are submitted with a requirement that the seller cover a portion of the buyer's loan acquisition costs...also known as a "Closing Cost Credit." This credit would be subtracted from seller's proceeds at closing...so make sure you do the math and focus on the net sale price when considering your options.
Sometimes, choosing a bid is less about the numbers and more about convenience. If you are in the middle of shopping for a new home yourself, bidders who offer flexibility on the move in/out date could find their way to the top of your “Yes” list. Sometimes buyers want to keep furniture or appliances from a home, which can lighten the load for your move.
If your head is spinning from all of these different factors to take into consideration when choosing a bid, that’s okay! This is why working with a real estate agent is so beneficial. Look to your agent for advice when weighing out the benefits of each bid and on making the final decision.