How to Choose Between Multiple Offers When Selling Your Home
When you’re selling your home, it can be a big relief to have multiple prospective buyers make an offer. Nearly half of homes listed for sale in the United States receive multiple offers, according to Redfin. When there’s more than one offer on the table, how do you know which is the right one for you? Is the highest offer always the best offer?
There are a variety of factors sellers should consider when choosing between multiple offers. While it may seem as straightforward as choosing the highest offer, the decision facing sellers in a multiple bid scenario is rarely that simple.
From having committed financing to being able to close quickly, there are a range of considerations that can help you choose the best offer for you. Below we’ve outlined some of the important characteristics to look for in an offer when selling your home.
- Does the buyer have committed financing?
- What lender is the buyer using?
- How much earnest money is being put down?
- When can the buyer close?
- Any contingencies?
- What if I receive a personal letter from a buyer?
- So You’ve Received Multiple Offers…What Next?
- Buyers Close Quickly and Confidently with Purchase Pass
- Why sellers and listing agents love Purchase Pass:
- Additional Resources
Does the buyer have committed financing?
One of the first things to consider when weighing an offer on your home is whether the buyer has already been preapproved for a mortgage. An offer from a preapproved buyer is significantly stronger than one from a buyer who has yet to arrange financing. Even better – if the buyer can provide an underwritten commitment letter from their lender in addition to showing they have been preapproved you can feel confident that their loan is as good as funded.
What lender is the buyer using?
The reputation of the mortgage company or bank a buyer is using can be another important indicator of the quality of an offer. According to a recent survey by Cinch Home Services, more than half of homebuyers surveyed in 2022 said they had to back out of a deal – most often because their financing fell through, and according to the New York Times, this summer saw the highest share of canceled purchase agreements since the start of the pandemic as a result of rising rates. If a lender is known for successfully being able to close on homes, it can significantly strengthen an offer. Sellers should always take the time to research the lender a buyer is using, as this can give you an idea of what to expect from them during the closing process.
How much earnest money is being put down?
An earnest money deposit is a sign of good faith from the buyer that they have money needed to purchase your home. Investopedia reports that an earnest money deposit usually ranges from 1-10% of a home’s purchase price depending on market interest – in a more competitive market, you can expect to see higher earnest money deposits from serious buyers. If the buyer backs out of the deal or fails to close on time, they risk losing their earnest money deposit.
When can the buyer close?
Finding a buyer who can not only close on schedule but also be flexible with your needs is crucial when you’re selling your home. If you’re in a hurry to move out, you may want to go with a buyer who you know can close within a few weeks. It’s important to choose a buyer who can accommodate your timeline.
When buyers submit an offer, there will often be various contingencies attached. These can range from their getting approved for a mortgage to having the seller cover repairs or upgrades to even making the entire offer contingent on the buyer selling their current home. While usually not the sole deciding factor for sellers, considering contingencies attached to offers in a multiple bid scenario can help you narrow down your options.
What if I receive a personal letter from a buyer?
In a competitive market where you receive multiple offers on your home, you may receive a “Dear Seller” letter from a prospective buyer providing you background on why they are interested in purchasing your home. This letter may include information on why the want to become a homeowner, background about their family, or what they like about the community your home is in. Ultimately, they are likely to use this letter to try to make an emotional connection with you that could help bolster their offer in your eyes. It’s important to talk to your real estate agent to determine whether you want to take a “Dear Seller” letter into consideration when reviewing multiple offers.
So You’ve Received Multiple Offers…What Next?
When you have multiple offers for your home on the table, your real estate agent will be invaluable resource for helping you weigh the various factors outlined above to select the right offer for you. You may also want to compile the offers you receive into a spreadsheet where you can track the down payment amount, financing details, concessions requested or waived by the buyers, and other important details.
Next it will be important to weigh these factors, in consultation with your real estate agent, against your own priorities – will the highest bidder be able to close quickly if you’re on a tight timetable? You may conclude that an offer with less money down is actually the best option for you because the buyer can commit to closing on your schedule. Similarly, you may want to accept a lower offer because there are fewer contingencies attached. You may even be moved enough by a personal appeal made in a “Dear Seller” letter to allow that to factor into which offer you accept.
Buyers Close Quickly and Confidently with Purchase Pass
With a variety of factors to consider across multiple offers, choosing the right buyer for you can feel like an overwhelming decision when you’re selling your home.
Buyers who use Leader Bank’s Purchase Pass program come to the table with their strongest offer and are ready to close confidently and quickly – in as few as 10 business days when needed! And as the #1 Home Purchase Lender among banks in Massachusetts you can be confident in a buyer working with Leader Bank.
Purchase Pass strengthens a buyer’s offer with two key tools:
- Upfront Commitment: A fully underwritten commitment letter subject only to the review of a future property so sellers know that a buyer’s loan is as good as funded.
- 10-Day Closing Guarantee: Enjoy a stress-free closing in as few as 10 business days of receipt of a signed Purchase and Sale Agreement; backed by a $500 credit towards the buyer’s closing costs.*
Why sellers and listing agents love Purchase Pass:
- Buyer comes to the table with committed financing up front
- Smoother, stress-free closing process
- As good as a cash offer
- Leader Bank’s proven track record of getting buyers into homes
*Subject to borrower’s satisfactory completion of the Purchase Pass program and receipt of an approved Purchase Pass Commitment Letter. Credit approval required. Rate Lock agreement will be required to determine final interest rates and monthly payment. Commitment to close within 10 business days requires (a) Leader Bank’s review and acceptance of a valuation of the chosen property; (b) the ability of the Bank to obtain a clear title commitment and title insurance for a mortgage secured by the property, (c) borrower’s purchase of satisfactory insurance relating to the property as may be required and (d) satisfaction of all other conditions in the final Commitment Letter issued. 10-day closing offer available only for properties in Massachusetts, Connecticut, and Rhode Island. Eligible borrowers will only receive $500 credit towards closing costs if both (a) the closing date in the purchase and sale agreement is set within 10 business days of Leader Bank’s receipt of the signed agreement and (b) neither borrower nor seller request and receives an extension to the closing date beyond this 10 business day deadline.