In a seller’s market, you may receive offers from two or more buyers who are interested in your house. If you find yourself in that situation, don’t automatically choose the one who offers you the most money. There may be strings attached or potential problems, and another buyer may be the best candidate.
Consider a Buyer’s Ability to Pay
Someone who is interested in your house may make an offer well above your asking price, but an offer isn’t necessarily the same as the ability to pay. A buyer who doesn’t have that amount in cash will have to take out a mortgage, and a lender may or may not approve a large enough loan.
The amount a buyer can put down is important. Lenders have minimum down payment requirements, and a buyer who can put down a significant sum will give a lender confidence that a mortgage will be repaid.
A buyer’s loan application can get denied for several reasons, including a low credit score and a high debt-to-income ratio. Even if a buyer has been preapproved for a mortgage, if the buyer’s credit score has dropped or the buyer has taken on more debt since the time of the preapproval, a lender may refuse to approve a mortgage to purchase your house.
Compare the Amount Offered to Your Home’s Appraised Value
Someone may make a high bid to beat out the competition, but the buyer can have trouble getting a mortgage if your house appraises for less than the amount offered. In that case, the buyer will have to make up the difference in cash, or you will have to negotiate a lower price for the deal to move forward. If the buyer doesn’t have enough cash and you’re not willing to drop the price, the deal can fall through, and you’ll have to find another buyer.
Consider Contingencies
It’s normal for buyers to include contingencies in their offers. A home inspection contingency is considered standard. A buyer may also ask you to make repairs or close by a particular date.
A buyer may offer you more than other interested parties did, but the high figure may come with one or more contingencies that would be inconvenient or problematic for you. If you can’t afford to make repairs or you can’t move out by the buyer’s deadline, you may be better off accepting a different offer, even if it means getting less money.
Sometimes a buyer makes an offer contingent on the sale of the buyer’s current home. You have no way to know when the buyer’s house will sell, or if it will sell at all. It may be better for you to accept a lower offer from a buyer who doesn’t request this type of contingency.
Ask Your Agent for Advice
If you get multiple offers for your home, review the specifics and weigh them carefully. Your real estate agent can discuss the pros and cons of each offer and help you make a decision.
