“Tips for Evaluating Multiple Offers on Your Home”

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How to Choose Between Multiple Offers on Your Home

If you’re selling your home, having several interested buyers is a good problem to have. An in-demand property can give you leverage during negotiations, which could lead to a better deal. However, offer prices aren’t the only thing to consider when vetting potential buyers. You also want a buyer who’s financially secure and ready to close the sale without any snags. Here are four tips to help you decide between multiple offers on your home.

1. Closely Compare Offers

An enthusiastic buyer might make an offer, but that doesn’t mean they’re financially ready to buy your home—or that their offer lives up to your expectations. Below are three key details to consider:

• Their offer price: Begin by comparing all bids. In January 2024, over 23% of homes sold for more than the listing price, according to Redfin. The right buyer may be willing to give you more than you’re asking for.
• Whether they’re preapproved: Buyers who have been preapproved for a mortgage are better positioned to receive funding from their lender. The preapproval process typically involves a deep dive into the buyer’s finances—including their income, debt, and credit health. Buyers who get the green light from a mortgage lender typically receive a preapproval letter that’s valid for several months.
• If they could cover a potential appraisal gap: Most mortgage lenders will require a home appraisal. If they determine that the property’s value is lower than the buyer’s offer, they won’t approve the full loan amount. Would the buyer be able to supply extra cash to cover the appraisal difference? If not, the deal could fall through.

2. Review Contingencies

Buyers can make their offers contingent upon certain requirements—and they can walk away from the deal if those requirements aren’t met. Below are some common contingencies in real estate transactions:

• Inspection contingency: This allows buyers to abandon the deal if they aren’t satisfied with the results of a home inspection.
• Appraisal contingency: The buyer has an out if the home is appraised for less than the sale price.
• Financing contingency: The sale is contingent upon the buyer being able to secure a home loan. If they aren’t approved for a mortgage, they can withdraw their offer.
• Home sale contingency: This is for buyers who have to sell their existing home before they can buy a new property. That could cause a delay in your home sale.

When weighing multiple offers on your home, pay attention to buyers who are willing to waive certain contingencies. It could set the stage for a faster and smoother closing.

3. Pay Attention to Cash Offers

If your home is at the center of a bidding war, some buyers may be willing to pay cash to stand out from the competition. It can certainly be appealing—cash buyers don’t need to rely on a mortgage lender to finance the transaction. That can help shorten the closing process by up to 60 days.

Also, pay attention to buyers who can make a larger down payment. This is the amount a homebuyer pays upfront. The rest of the sale price is then financed through a mortgage. Buyers who require less financing may be more likely to get approved for a home loan.

4. Think About Your Needs

When deciding between multiple offers on your house, clarify what a successful home sale would look like. For example, you may be on a tight timeline and need to move relatively quickly. In that case, going with a cash buyer or someone who’s willing to waive contingencies can help you close faster. If your timing is more flexible, you might simply choose the highest offer from a buyer who’s already been preapproved for a mortgage.

You can also consider buyers on a more personal level. Let’s say your home is located in a great school district and you get a competitive offer from a young family. They might stand out to you more than someone who’s looking to buy an investment property.

The Bottom Line

Comparing multiple offers on your home can be stressful. Ideally, you’ll find a financially prepared buyer who’s able to close with no major hiccups. An experienced real estate agent can help you evaluate offers and negotiate on your behalf.

If you’re going to buy a new home, you’ll want your credit health to be as strong as it can be. That can make it easier to get approved for a mortgage—and secure a competitive interest rate. Get started by checking your credit report for free with Experian.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate the home buying process with ease and confidence.

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