How to Evaluate Multiple Offers on a House
A seller’s dream is to receive multiple offers. But when you get them, it’s not necessarily easy to know which one to accept or how to move forward. Here’s how to evaluate multiple offers on a house.
Identify the best buyer and make a deal
The best buyer isn’t necessarily the one with the highest offer. If a buyer made a high offer just to “win” the bidding war, they might second-guess their decision later and walk away after inspections.
Your best buyer will have seen the home multiple times and has made themselves known to you and your agent. This buyer is likely working with a local real estate agent, is pre-approved with a local mortgage professional, and has been in the market for a while. Often, your best buyer is the first, or one of the first, to see the home and may have lost out on other properties already.
You want a buyer committed to the home and who will close, barring any unforeseen circumstances. Your real estate agent should be able to spot your best buyer.
Use the terms of a lower-priced offer
Multiple offers can run the gamut from over-asking to lowballing. Don’t be insulted by any offer, because the more offers you receive, the more you have to work with to get counter-offers.
If your agent can go back to the buyers’ agents and say “We’ve received four offers,” it will make the top two buyers want it even more. If your low-priced offer has a quick closing or offers to remove all contingencies within two weeks, you can leverage those terms with your higher-priced buyers.
Get a backup offer whenever possible
You don’t want to have to go back on the market. When that happens, you lose momentum and may not get it back. Buyers who see a home going back on the market tend to get spooked or think there’s something wrong with the property.
If you receive multiple offers, try to get the second-best buyer to agree to a backup position. If they won’t agree to it in writing, be sure your agent stays in touch with them or their agent until the first buyer has removed all contingencies. If you can simply slip in buyer no. 2 later in the game, do it.
If you study and know your market, you can plan for multiple offers. Think in advance what terms and conditions are most important. When you have more than one interested party, you’re more likely to create the perfect, most favorable terms and conditions for a successful, hassle-free sale.