How to handle multiple offers on a house
Not enough homes are for sale to meet demand, and many sellers can expect to receive bids from more than one buyer. It's a nice problem to have, but choosing between multiple house offers can be tricky.
Here's a guide to how to choose a buyer for your house.
» MORE: How to sell your house
Start with price, but don’t end there
The offer with the highest price is going to get your attention, especially if it’s above your asking price. But the highest bidder might not be able to qualify for a mortgage in the amount needed.
So in addition to considering the amount offered, review the terms of the entire contract with your real estate agent or another advisor, such as an attorney. For instance, consider how much cash the buyer plans to put down. A bigger down payment — and a correspondingly lower home loan — will make it more likely that the buyer will qualify for a mortgage.
When buyers make an offer, they'll often include a few conditions that, if not met, allow them to cancel the deal. These contingencies may include getting approved for a mortgage, having the home pass an inspection and making sure the home appraises for a certain amount.
When you’re selling your home, contracts with fewer contingencies are better because there will be fewer chances for the buyer to back out of the deal.
Consider how the buyer will pay for it
When buyers pay in cash, you don't have to worry about whether they will qualify for a mortgage. That means the purchase is more likely to close. You may ask potential buyers to document that they have savings and assets sufficient to pay cash.
But most of the time, a buyer will need a mortgage, and if that’s the case, consider whether the buyer is preapproved for the home loan. An offer from a preapproved buyer is stronger than an offer from a buyer who hasn’t arranged financing.
You and your agent should also consider the mortgage company a buyer plans to use. If the lender is well-known in your area and has a reputation of being able to close deals quickly, it’s more promising than if the buyer chooses a lender you’ve never heard of. If you’re unfamiliar with the lender, do some research or ask the buyer for more information.
Ask if the buyer can close despite a low appraisal
The lender will order an appraisal. If the appraised market value is less than the offer price, the buyer may need to make up for the difference, using money in the bank. You may favor a borrower who can document having ample savings to cover a low appraisal.
» MORE: How a home appraisal works
Synchronize closing timetables
If you're in a hurry to move out, you might favor a buyer who is preapproved for a mortgage and can close within a few weeks. But if you need time — for example, to find your next home — you might favor a buyer who will accommodate you.
In the post-pandemic seller's market, buyers often offer to let the seller remain in the home for up to 60 days after closing. It's called a rent-back, although in the hottest markets, buyers sweeten their offers by not charging rent.
Review buyer 'extras'
Some buyers may offer to pay some of your closing costs as a way to stand out against other offers. Another may make an offer with an escalation clause, offering to outbid another bidder by a certain amount. If you’re considering several offers that have similar price and contingency terms, these kinds of sweeteners can tip the balance.
Getting multiple offers when you sell your home can be exciting. But by considering all parts of the offers, including price, contingencies and ability to close, you can successfully handle multiple offers on your house and sign the best contract.
» MORE: Time to dump buyer love letters