What to Focus On When Considering a Home Offer

By
Real Estate Agent with Coldwell Banker Realty NJ# 9483506

You listed your Westfield area home for sale and received multiple offers for it. Congratulations! Many sellers dream of being in your position. Now, the hard part. You must decide which home offer to accept. (An embarrassment of riches, right?) Sometimes, however, the highest price is not the best offer. Consider these other important factors before making a final decision.

Sometimes, the highest price is not the best choice. Here is what sellers need to focus on when considering which home offer to accept.

What to Focus On When Considering a Home Offer

Contingencies

Click here for an instant "No Strings Attached" valuation of your home.Most of the time, buyers include contingencies with their offer. These are conditions that must be satisfied before closing in order to complete the sale. Common ones include an appraisal, home inspection, loan approval, and sale of the buyer's current home. If a contingency is not met by closing, the buyer can walk away with their Earnest Money Deposit in hand. Therefore, fewer contingencies usually make for a smoother transaction.

Timeline

You have heard the phrase "time is money", right? Well, an offer fitting your time constraints is money, too. Perhaps you need a shorter escrow period because you need to move quickly. Or maybe you want a little more time than 30 days to get everything packed up and ready to move. Whatever your timeframe may be, an offer that fits in those parameters may well be worth a slightly lower offer price to you.

Earnest Money Deposit

Buyers must deposit money into an escrow account to hold as "good faith". When the sale completes, this money then goes towards the buyer's down payment. This is their Earnest Money Deposit. If they break the sales contract and walk away from the deal completely, the earnest money goes to the seller. While 1% to 2% of the sale price tends to be the norm, a higher EMD shows how serious the buyer is about the sale. The buyer is less likely to walk away when they risk losing this more money.

Financing

Finally, let's talk financing. All-cash offers sound great. They tend to take less time to close and minimize contingencies more often than buyers who must finance their purchase. Unfortunately, a buyer with an all-cash home offer also tends to hold the negotiating power. Therefore, their offer may come in below your asking price.

On the other hand, a buyer whose offer includes financing provides a higher risk. Anything could happen to make the loan fall through during escrow. In fact, according to Rocket Mortgage, approximately 5% of pending sales fall through escrow. A home offer that includes a pre-approval letter makes a stronger claim than one without a pre-approval letter. Even so, a "pre-approval" is not a "final approval". If your buyer does not receive final approval for their loan, then you are right back where you started...on the market and in search of a new buyer.

Before making a final decision about a home offer, weigh its pros and cons. Ask your REALTOR® for their advice. Their experience can help you make a more informed choice that works best for your individual situation.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Originally posted on my Luxury NJ homes real estate blog here: https://www.luxuryhomesnj.com/home-selling-tips/home-offer-tips-for-sellers/.

Comments (8)

Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Scott. The price could be a smoke screen for other negatives. Proceed cautiously and read the offer carefully. Enjoy your day.

Apr 22, 2022 04:07 AM
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing a great blog Scott!!!

If a contingency is not met by closing, the buyer can walk away with their Earnest Money Deposit in hand. Therefore, fewer contingencies usually make for a smoother transaction.

Apr 22, 2022 04:16 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Scott and thank you  for your information in this blog to share with us here in the Rain.  Make it a great weekend!

 

 

Apr 22, 2022 10:59 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Apr 23, 2022 06:08 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Very thorough checklist! Behind the scenes, I always am aware of the agent on the other side...do I know that person? Is the offer written up correctly? Did they follow offer instructions? How are they communicating with me?

Apr 23, 2022 11:35 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Scott:

There's lots of important, relevant information and advice here for sellers, especially in this very competitive market where buyers are trying anything they can think of to get their offer accepted. Price is just one issue of many.

Jeff

Apr 23, 2022 12:27 PM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Sellers need the right agent to fully understand the contract they receive and the issues that can send a transaction down the tubes. Information from a good agent is priceless

Apr 23, 2022 01:40 PM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Excellent, easy to read post!  Hopefully more buyers and sellers see your post to seek out your professional services :) 

Apr 26, 2022 10:18 AM