How to Quickly Sort New Home Buyer Offers With Confidence
Your home is on the market. And as you finish up your first open house, the offers on your home start flowing in.
There’s a sense of excitement, relief, and…dread.
Some buyer offers seem too good to be true. Others seem to check out, but you’ve never heard of the lender.
And you know that once the offer is accepted and your home is under contract, you’ll be at the mercy of the buyer.
So how do you know which offer to choose? (Or, more importantly, which *not* to choose.)
This is where your real estate agent comes in.
Whether you have 2 or 22 offers, your agent should:
screen buyers
be in contact with the buyer’s agent
ensure you get all the paperwork needed for an offer
ask the buyer’s agent questions you may have about the offer
But ultimately, it will be you who decides which offer to choose.
How do you choose the best home offer for you?
Offers often include concessions which can make sorting them a bit tricky. (Snag my comprehensive list of concessions from my opt-in for an idea of what to expect!)
Concessions can range from sales (e.g., including appliances with the home purchase or a post-occupancy agreement) to financing (e.g., paying for fees or doing an interest-rate buy-down).
And while you may already have an idea of your priorities, here are the top two considerations I use to help my sellers sort their offers.
Consideration 1: How financially sound is the home offer?
By financially sound, I mean how possible is it for the deal to fall through due to financial reasons? Because if your sale falls through, it will affect your timeline and potential to find buyers.
In the end, you may even have to restart the process!
Buyers offering cash with proof of their funds is the most desirable offer because your deal can close quickly, and it’s the least risky — it can’t fall through because of a loan.
So cash offers always inherently make their way to the top of the pile.
From there, you’ll want to consider loan types in terms of risk:
The less risky type is a conventional loan. These loans are given to buyers with a stable financing situation. Buyers have a standard down-payment of 20% of the asking price and a good credit score.
The more risky type is an FHA loan. These loans are usually given to people with a high debt-to-income ratio, not-so-great credit, or who don’t have the standard 20% down payment. There’s inherently a higher risk of these loans not being approved and your deal falling through.
The weight of risk with loan types will greatly depend on your timeline, which brings us to Consideration 2.
Consideration 2: How fast do you need (or want) to relocate?
Some offers may be contingent on the sale of the buyer’s home, which means their deal could fall through. Consequently, the process of selling your home could take longer. This will be a problem if you need to relocate for a new job in one month.
When on a tight timeline, contingent offers are usually deprioritized.
Similarly, when comparing offers, you may find some buyers need longer than others to get their loan in order. So your desired timeline can affect how you prioritize offers that are similar in other aspects.
Should you set a deadline for accepting offers?
This is a common question when I work with sellers to establish their timelines. And the answer is a pretty gray area.
In a hot market, like during COVID-19, setting deadlines was a must to keep the number of offers manageable. It was common to list the home on a Friday, show it all weekend, and have 25 offers by 10 a.m. on Monday.
And I can tell you, managing and sorting 25 home offers is exhausting!
In a slower market, however, you might not receive any offers the first week your home is listed. So setting a deadline would work against you.
To answer the question, you’ll want to consider:
If the market conditions are hot enough to ensure you’ll get offers by your deadline.
If your circumstances necessitate setting a deadline.
A savvy real estate agent can help you decide if setting a deadline would work in your best interest.
Sort through your buyer offers with confidence!
Sorting offers can be a difficult step in the home-selling process. But trusting your gut and working with an agent to objectively consider the facts will help you avoid the dreaded ‘what ifs.’
Need an agent who will work with your best interests at heart? Send me an email. I’d love to answer your questions and see if we would be a good fit.
And if you’re buying or selling outside of Colorado, I have an incredible network of agents I can refer you to.