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<\/a>1. Talk to your agent about your priorities in selling the home before any offers come in<\/h2>\n
Before you list your house, it\u2019s a good idea to make a list of your priorities upfront with your real estate agent, which will help you determine the right offer depending on the factors that are most important to you and your individual situation.<\/p>\n
For example, if you need to sell because of a divorce<\/a> or job relocation<\/a>, speed will be a top priority. As a result, an early offer could be your best offer so that you can negotiate a closing date that aligns with your timeline.<\/p>\n Another factor that impacts the weight you place on one offer over another is financial hardship. For instance, if you receive an offer from a buyer who isn\u2019t requesting repairs, you might prioritize that buyer over another because you don\u2019t have the cash flow to pay for those upfront. In that case, you may have to price the house lower to attract buyers who are willing to forgo repairs before closing.<\/p>\n Wayne Newcomb<\/a>, a top 1% agent in Albany, New York<\/a> with almost 20 years of experience, says that even though you may be hesitant at first to share some of these personal details with your agent, you needn\u2019t be.<\/p>\n \u201cI make it very clear, when I go into someone\u2019s home, that I owe them confidentiality so they know they can share any personal information with me,\u201d says Newcomb. \u201cI’m obligated not to disclose it to buyers\u2014unless it affects the desirability or price of the home. If someone’s selling because they can’t afford the home anymore, I want them to know that that’s kept confidential.\u201d<\/p>\n Newcomb admits that he usually doesn\u2019t ask sellers, at least right away, why they\u2019ve decided to sell, though 95% of the time they tend to disclose the reason on their own during the initial consultation.<\/p>\n \u201cIf someone doesn’t want you to know their financial situation, that\u2019s a tough one because sometimes you have to know that stuff. One question I do always ask is if they’re behind on payments because that’s a whole different ball game.\u201d (Newcomb is alluding to a short-sale<\/a> which comes into play when a homeowner owes more on the house that than its worth<\/a>.)<\/p>\n Whether you decide to withhold certain details or be an open book, trust that the agent \u2014 especially if you choose an experienced and reputable<\/a> one\u2014has your best interests in mind.<\/p>\n When you\u2019re deciding on the best offer for your house, take a close look at the contingencies that the buyers penciled in, meaning all the steps that have to occur before a seller can get paid. You can think of them as a buyer\u2019s conditions before they\u2019ll agree to a deal\u2014so don\u2019t overlook them, as they could potentially \u201ckill\u201d an otherwise great offer, price-wise.<\/p>\n The most common contingencies include the home inspection, buyer financing, and property appraisal<\/a>\u2014which all protect a buyer in the event that major defects with the home<\/a> come to light or the house doesn\u2019t appraise during closing<\/a>.<\/p>\n Some contingencies, however, are riskier for sellers, so look out for buyers who bring an offer forward that is contingent upon selling their existing home<\/a>. You have no way of guaranteeing when and if the buyer\u2019s home will sell, which puts you in a sticky predicament if you need to move quickly.<\/p>\n At the end of the day, contingencies aren\u2019t black-and-white. In fact, they could have strings attached that may not work for you. For example, buyers could drag out a home inspection period<\/a>, which could be riskier to you because the buyer has more time to inspect the property and discover issues that could implicate the value of your home\u2014and the chances you\u2019ll sell it in a timely manner.<\/p>\n If you receive an offer that has too many contingencies, look at it as a way to help you narrow down your pile. Because the fewer hurdles you have to tackle when it comes to an offer, the better for you, the seller\u2014even if the listed dollar amount is a good one.<\/p>\n Determining whether the first offer will be your best offer can be tricky, especially in a hot and competitive market. Should you give it some time to see what the market holds, or pounce on a good opportunity?<\/p>\n Thankfully, there are resources\u2014including experienced agents\u2014that can help you gauge the chances that your first offer will be your best.<\/p>\n U.S. News World Report, one such resource, describes 5 times when you should highly consider that first offer<\/a>:<\/p>\n It may be the case that you receive an offer (or multiple offers) on your house within days or even hours of listing it. In fact, if you price your house right from the start<\/a>, you\u2019re based in a prime location with sought-after perks like a good school district and low crime, your house is in a great showing condition, and the market is favoring sellers<\/a>, there\u2019s a strong chance that offers will roll in right away.<\/p>\n If that happens (and lucky you!), don\u2019t get cocky and opt to wait around for something better, simply for the sake of testing the market to see what you can get. You should weigh every offer seriously, and the ones that come in early may have very motivated buyers behind them who are ready to go.<\/p>\n Seems like common sense, right? But it\u2019s not unusual for sellers to brush off that first offer or wait too long to see if they can get a better price, thinking their house is worth more or being unwilling to launch into negotiations off the bat.<\/p>\n \u201cI find that [sellers letting a good offer get by] happens mostly when they get an offer at the beginning,\u201d says Newcomb.<\/p>\n \u201cAnd because the market hasn’t played out yet, sometimes sellers will think they can get more for their property than they can, and sometimes the first offer is the best offer\u2014and they have higher expectations because of it.\u201d<\/p><\/blockquote>\n That\u2019s not to say you have to accept the first offer that comes along, especially if it\u2019s a lowball offer and the buyer won\u2019t negotiate. But review it carefully, and make sure you aren\u2019t passing up a good thing.<\/p>\n Also keep in mind that \u201cthe longer a house sits on the market<\/a>, it actually gives the advantage to the buyer because they feel they can negotiate with the seller more,\u201d explains Newcomb.<\/p>\n \u201cThe first offer is not always the best offer,\u201d Newcomb adds. \u201cBut a good listing will usually draw a strong offer right out of the gate if it’s in a good location.\u201d<\/p>\n When it comes to any business transaction, like accepting, rejecting, or negotiating an offer for your home, it\u2019s critical that you do your best as a seller to keep your emotions out of the process; otherwise, the consequences could be costly to you.<\/p>\n Whatever your reason for selling\u2014divorce, death, affordability, downsizing<\/a>, upsizing, empty nests, or other personal reasons\u2014bringing your feelings about the house or situation into the equation will not do your sanity (or pocketbook) any favors.<\/p>\n According to a 2015 article in Harvard Business Review<\/i>, \u201cEmotion and the Art of Negotiation,\u201d anxiety is the most likely emotion to occur before the process of negotiations begins or in the early stages because \u201cwe\u2019re prone to experience anger or excitement in the heat of the discussions. . . and we\u2019re most likely to feel disappointment, sadness, or regret in the aftermath.\u201d<\/p>\n In fact, Harvard researchers<\/a> found that people who experienced anxiety:<\/p>\n Newcomb reports that in his experience, emotions tend to surface when dealing with estates or trusts<\/a>.<\/p>\n If a family member has passed away and the seller grew up in the home, instead of looking at the home, market, neighborhood inventory, and offers with clear eyes, \u201cthey\u2019ll let their emotions get the best of them…and because there\u2019s so much emotional attachment to the home, they let [a great offer] go.\u201d<\/p>\n Besides taking that first offer seriously, how can you gauge the quality of other offers you might get?<\/p>\n According to Ramsey Solutions, a trusted financial resource since 1992 and created by national best selling author and radio host Dave Ramsey, here are the top 3 ingredients that can decide the quality of an offer<\/a>: financial strength, concessions, and flexibility:<\/p>\n Newcomb emphasizes that financial strength is a factor you should be keen on. Whenever he\u2019s the listing agent on a property, he makes sure there\u2019s a letter of qualification from the financial institution and mortgage lender; if he thinks the letter is shaky, he\u2019ll ask permission to call the financial institution directly to make sure it is a dependable offer.<\/p>\n \u201cI had [a transaction] recently where they gave a bogus letter without running the buyer\u2019s credit,\u201d says Newcomb. \u201cI\u2019ve had one where they gave somebody else’s letter of qualification. So, if it’s not strong, I’m checking it out to make sure that my seller isn’t getting involved in a situation where they’re a month-and-a-half into the process, their house is off the market, and now the buyer can’t get financing.\u201d<\/p>\n \u201cI love a buyer that waives inspections,\u201d says Newcomb. \u201cIf there’s an older home with multiple offers on it and one party wants an inspection and the other does not\u2014and the prices are both fair for what they’re getting from the offer\u2014we\u2019re taking the one that’s not doing the home inspection.<\/p>\n \u201cThat way, I know it’s guaranteed that nobody is going to come back and maybe find mold, or termites, or something like that. I don’t have to worry about that extra expense for my seller.\u201d<\/p>\n Securing a buyer who is willing to be flexible on a closing date can be important particularly for sellers who haven\u2019t yet secured a new home.<\/p>\n \u201cI have some sellers that are selling their home and buying new construction<\/a>, but their home is not going to be ready for 7 or 8 months. That’s always a tricky one\u2014when to actually put the house on the market. But when you’re putting it up prematurely like that, you want to try to capture the buyer that’s going to give you the time that you need to make the transition.\u201d<\/p>\n On the flip-side, if you’re on a time crunch and need to\u00a0sell your house fast<\/a>, look for a buyer who is willing to shorten the inspection window and move up the closing date. But also consider the possibility that you\u2019re probably going to get less cash as a result.<\/p>\n Among the offers you receive on your house, you could find that some buyers don\u2019t require financing and are able to pay entirely in cash. Should you accept one of these cash offers, you won\u2019t have to worry about a buyer\u2019s approval for a mortgage loan falling through, and that gives you a higher level of certainty that the transaction will close. However, you should verify proof of funds before proceeding with any cash offers.<\/p>\n \u201cYes, cash is king in a real estate deal<\/a> if you\u2019re on the receiving end,\u201d describes Bankrate, an expert-driven independent financial resource guide since 1996. \u201cYou\u2019ll probably get a little less money out of the house that way, but you can avoid costly repairs and other complications while enjoying speed, convenience and less paperwork (and worry) in the process. As long as you\u2019re not needlessly sacrificing thousands of dollars extra beyond the standard as-is price adjustment, it\u2019s a good deal for you.\u201d<\/p>\n While Newcomb says he does love a cash buyer because it makes the transaction much easier, sellers should not casually accept it without examining the whole offer in the context of their needs, their neighborhood, and the market.<\/p>\n \u201cIf a cash offer is $20K less than a financing offer that’s good conventional financing with maybe 20% down, I\u2019m recommending the seller goes with the higher price,\u201d Newcomb explains.<\/p>\n If a no-fuss, certain transaction is what you need (without the hassles of stagings and showings) you could also consider fielding offers from various cash investors<\/a>\u2014of which there may be hundreds or thousands in your market alone.<\/p>\n Between fix-and-flippers, buy-and-hold rental investors, and the new-age iBuyers that target homes of a certain price point, the direct-buy market is more competitive than ever and you should theoretically be able to fetch more for your house if you take the opportunity to compare offers.<\/p>\n If you\u2019ve narrowed down your stack by now and all offers remaining are fairly equal in price, concessions, flexibility, and scope\u2014another factor you can use to determine the best offer is the earnest money deposit<\/a>.<\/p>\n \u201cA good-sized, good faith deposit also matters,\u201d explains Newcomb. \u201cIf everything else is equal and one party’s got a $2K deposit and the other one’s got a $10K deposit, to me [the latter] is a lot better because it\u2019s harder for a buyer to walk away from the deal.\u201d<\/p>\n Not only can this strategy be a winning move to snag a house from other prospective buyers, a higher deposit also benefits a buyer\u2019s financial health<\/a> (i.e. a higher deposit equals smaller monthly payments and a lower mortgage interest rate).<\/p>\n As a result, sellers feel more comfortable prioritizing a buyer who has monetarily demonstrated their true intention to buy the house.<\/p>\n According to Nolo, a publisher of legal guides since 1971, \u201cfailure to obtain bank or loan financing is a common reason for deals to fall through \u2026 the seller\u2019s eyes will light up if you can show that you\u2019ve got the cash<\/a> to sew up a good part of the deal.\u201d<\/p>\n<\/a>2. Review the contingencies in each offer and their chances of being deal-killers<\/h2>\n
3. Don\u2019t rule out the first offer that comes along simply to \u2018test\u2019 the market<\/h2>\n
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<\/a>4. Keep emotions at bay and treat each offer like a business deal<\/h2>\n
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5. Know a strong offer when you see one<\/h2>\n
1. A buyer\u2019s financial strength (i.e. mortgage pre-approval; bigger down payment; all-cash offer)<\/h4>\n
2. A buyer\u2019s concessions (i.e. buyer requests, financial or otherwise)<\/h4>\n
3. A buyer\u2019s flexibility (i.e. move-out, move-in date)<\/h4>\n
<\/a>6. Recognize the value of a cash offer but verify funds first<\/h2>\n
7. Seriously consider offers with sizable deposits<\/h2>\n
<\/a>8. Leverage a bidding war to get the price and terms you want<\/h2>\n