How To Tell Which Offer Is The Best One

Listing your home in a seller's market? You just may be lucky enough to receive multiple offers. This is an ideal scenario for sellers for many obvious reasons. It could put you in a position to sell for more than your asking price, and it also gives you the flexibility to be selective.

However, when selecting an offer, the highest price might not be the best offer. In fact, offers consist of many different terms, and some may be more favorable to your particular situation. When evaluating multiple offers, be sure to consider the following factors:

• Financing
  A buyer who is putting down all cash or a large down payment could present less risk than a buyer who is financing a mortgage. Regardless of what the buyer offers, they still will need to secure financing in order to close on the deal. It's not ideal when you get to the finish line and your buyer's financing falls through. Either way, you and your real estate agent should carefully review a buyer's pre-approval letter before accepting the offer.
  
  
• The Earnest Money
  Buyers put down an earnest deposit with their offer to show they're serious about purchasing the property. The earnest deposit varies, but it's usually 1% to 2% of the sale price. Earnest money protects you in the event the buyer decides to walk away from the deal for reasons not covered in the contract. Always consider the total earnest money deposit when selecting offers. Higher deposits could mean less risk.
  
  
• Inspection Contingencies 
  Inspection contingencies are usually a standard part of an offer. A home inspection is the most common contingency, but buyers may include others like radon testing, mold inspection, or sewer inspections. These contingencies give buyers the opportunity to back out or renegotiate based on the results of these inspections. If you have an offer from a buyer who is willing to waive the inspection contingency, it could lead to a quicker home sale.
  
  
• Appraisal Contingencies
  Many buyers include an appraisal contingency which allows them to back out or renegotiate if the home appraises for less than the asking price. Lenders typically won't finance more than the appraised value of the property. If the buyer is willing to waive the appraisal contingency, he or she is willing to pay the difference out of pocket.
  
  
• Home Sale Contingencies
  Sometimes buyers will make their offers contingent on the sale of their current home, which could lead to lengthy delays in the closing process. If your highest offer has a home sale contingency, you might consider how much risk you're willing to accept.

Receiving multiple offers is a great situation, but it can add some additional complexities to your sale. At the end of the day, it's up to you to choose the right offer. Your real estate agent won't pressure you into selecting a particular offer; rather, they'll educate you about the pros and cons associated with each one.

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