Whether your home has inspired a heated bidding war, or you are entertaining your first offer in a competitive buyer’s market, there could be no better time to have a crystal ball. Unfortunately, when it comes to considering the offer(s) on the table, with no magic up your sleeve, you’ll have to rely on reasoning and your realtor’s experience and advice to evaluate whether/which offer to accept. You’ll want to consider several variables when deciding what to do next – keep, toss, or negotiate.
The most obvious variable is the price. Offers are not personal, so it is wise not to be offended if a buyer’s first offer seems very low to you, especially with first-time buyers. A home is an expensive purchase, and new buyers often “come in low” because they are fearful of the expense; other times, buyers fall in love with a home that is beyond their reach, but they try an offer just in case. Rather than dismiss their offer out of hand, review all the elements of the offer, and if there are no other red flags, counter in a way that lets them and their agent know you’re willing to negotiate if they come to the table with a more sensible offer. Your agent will likely want to contact his/her counterpart to learn more about the prospective buyer and their circumstances in order to better understand the offer and the likelihood of finding common ground.
While a full- or above-asking-price offer may seem like a dream come true, be sure to review the entire contract before jumping to accept – especially if you have more than one offer on the table. You want to make good decisions as you navigate this process; if the path forward is unclear, rely on your agent’s experience and expertise to help you through the evaluation process. There are several questions you will want answered.
While you may be able to negotiate timeline, repairs, concessions, etc, beware if there are any concerns about your buyer being able to qualify for a loan; funding is the one element you are not likely to be able to control or negotiate, and while you wait for your “iffy” buyer to get it figured out, other qualified buyers are moving on.
How committed is the buyer? This is sometimes difficult to assess, but there are clues, starting with the earnest money. If a buyer is willing to put down a substantial amount of earnest money, they are less likely to forfeit the funds and walk away for another home they like more, or because they are not willing to negotiate through issues uncovered in inspection. Your agent may also be able to gather some insight about their level of interest from the buyer’s agent.
In order to make the right decision and to keep the right deal moving towards closing, you need to know what you must have, and in priority order: net proceeds, timeline – even which furniture, appliances and other amenities you are willing to leave behind in order to close the deal. Once you sign a contract to accept an offer, you are essentially reserving your home for that buyer; if it falls through, precious time is lost and viable buyers that might have been are already on the way to their own closings. If you begin by understanding your own priorities, carefully assess your offers, and turn to your agent for support when you need it, you’ll be better able to make choices that result in a win for everyone.