The San Antonio real estate market is hot right now. With too few homes on the market for the many buyers that are looking, many home sellers are being forced to choose between multiple offers once they put their home on the market! If your home is priced right, in excellent condition, and located in an ideal location, you may have more than one offer, resulting in a bidding war. Although it seems that it would be easy to simply accept the most money, it is important to sit down with your REALTOR ® and go through the offers carefully to decide which offer works the best for you and your needs. Before accepting an offer, consider the following:
A contingency is a provision in a real estate contract that specifies the contract ceases to exist upon the occurrence of a certain event. Some examples of a contingency are a home inspection, mortgage approval, or appraisal.
- Home Inspection: Some areas of the country require a home inspection and certain criteria must be met in order for the home to be sold. If your home does not pass the inspection, you either need to make repairs or sell the home “as is.”
- Mortgage Approval: If the sale of your home is contingent upon approval of financing, there is always the possibility the lender will not approve the amount required to purchase the home.
- Appraisal: With an appraisal contingency, a professional appraiser determines the fair market value of the home. If the appraised value is less than what to seller is asking, the buyer can back out of the sale.
While these contingencies are recommended for all buyers, some may choose to waive them. If one or more of the buyers making an offer do so without contingencies, the selling process will be quicker with those offers.
If you are moving and need to be in a new location or purchase another home by a particular date, the closing date could be important to you. One situation where the closing date is important is if you have children and are trying to complete the moving process during the summer months to ensure they will be settled when the new school year begins. Additionally, if you are moving for a new job and have a set starting date or have another house you wish to purchase, the closing date may be something you must take into consideration. Buyers who can close by your preferred closing date may be more desirable to you.
If a buyer offers all cash, it means you do not have to wait for financing to be approved through a lender. This makes the closing date far more flexible. It could also potentially shave tons of time off the closing date- sometimes weeks. Additionally, sometimes a loan approval requires an appraisal, another step that will delay the sale. An all-cash offer should be considered when time is a factor in your decision.
Buyer’s Ability and Intentions
Your real estate agent can help you with this one. There are a number of things to look for that will tell you about the buyers’ ability and intentions.
- Earnest Money
- Earnest Money is a deposit made to a seller showing the buyer's good faith in a transaction. The earnest money is held in a trust or escrow account. Generally speaking, the amount is 1-2% of the total purchase price. The earnest money shows that a buyer is serious about purchasing the property. The amount of earnest money buyers put up gives a good indication of how serious they are about buying your home.
- You and your agent also need to consider who is providing the mortgage. If the lender is known for delaying closings, you may wish to think twice about accepting that buyer’s offer.
- Additional Financial Incentives
- One or more of your buyers may offer to pay all closing costs, which reduces the expenses associated with selling your home. Additionally, buyers may add an escalation clause to their offer that increases their bid by a certain amount above all the other offers.
- Plans for Your Home
- If you love your home – maybe it has been in the family for years – there may be some emotional factors that come into consideration when you begin to look at your buyers’ offers. You may decide you prefer a family to buy your home rather than that investment company whose motives and intent for your home is unclear. Remember that you want to walk away from selling your home not only with money, but with a feeling that you have made the best decision possible for you and your family.
The factors listed above are not listed in order of importance. You will need to decide which is the most important for you and your family.
More than one offer may provide what you need. In that case, you can respond to more than one offer. However, if you do so, you must be honest and upfront and set a time frame, asking for the buyer’s “best and highest” offer. Set a deadline of one or two days and then review the offers and, with your agent’s assistance, accept the one that best meets your needs. The reason for allowing one or two days before the deadline is to allow your buyers to take whatever steps they need to in order to strengthen their offers.
The offer you accept may not be the one offering the most money. For example, if there are no contingencies, the financing is with a reputable institution, and the closing date is not a factor, you may wish to accept an offer even if it is $5,000 to $7,000 less than another one with risky financing, contingencies, but offering more for your home.
Remember, you do not want to get involved in an extended bidding war. Not only is escalating the bidding war intentionally frowned upon as being somewhat unethical, but there is always the possibility your best offers will decide to pull out.
You and your agent must look at a variety of factors when entertaining multiple offers. Your real estate agent will be able to help you decide which offer is the best and why. The key is to figure out which offer meets the needs of your family. Then you can proceed with confidence, ending up with a sale that satisfies all of the parties involved.