Got Multiple Offers for Your Home? Here's How to Decide Which One to Take
by Christy Bieber | Published on Aug. 2, 2021
It's not just the offer price that matters.
In today's red-hot real estate market, many sellers find tons of buyers interested in their properties. In fact, it's currently common for home sellers to end up with multiple offers on their homes.
If you have received several offers from interested buyers, you're in a great position. But how should you decide which one to accept? Here are some factors to consider.
Price is important, but look at other terms
Most home sellers want to get the highest possible price for their houses. It's a straightforward outcome: You walk away with more cash in your pocket.
But while the amount a buyer is willing to pay is an extremely important consideration, it typically should not be the only thing you look at when you get multiple offers. There are a few other key sale terms to compare.
Take a close look at the following issues.
Is there an inspection contingency?
Most home buyers make offers contingent on a satisfactory inspection. Essentially, they are creating a condition for the sale, and it will go through only if the inspection doesn't show any serious problems.
If there is an inspection contingency, it means that if an inspector finds anything at all wrong with the property, the buyer could use that to re-open price negotiations. And home inspectors almost always find something wrong with a house.
If you have two offers that are close in price, but one buyer is offering slightly more and has an inspection contingency and the other has a slightly lower offer but isn't requiring an inspection, you may want the second buyer.
By eliminating the inspection issue, you reduce the chances of a problem that derails the sale or that the buyer uses as leverage to get you to accept less.
Is there a financing contingency?
Home buyers also frequently put a financing contingency in place. This means if they can't get approved for a mortgage loan, they don't have to go through with the sale or lose their deposit.
Unfortunately, a financing contingency means your sale is conditional -- the borrower must be credit-worthy and get the loan. This may not be a deal breaker, but if you're going to accept an offer with this contingency, ask the would-be buyer to provide proof of mortgage pre-approval.
If there are similar offers and one has this contingency but the other doesn't, you probably want to opt for the one without it.
Are there other contingencies?
Buyers may include a host of other conditions, ranging from a contingency requiring the home to appraise for what they're paying, to one conditioning a purchase on the sale of the buyer's property.
The more conditions placed on the sale, the greater the chances the deal will fall apart. So when all else is equal (or close to it), it's usually best to err on the side of accepting an offer with fewer strings attached.
What's the closing date?
If you want to move on a specific timeline, consider when the would-be buyers want to close the deal. If you hope to move quickly, you may want to prioritize buyers who are ready to go with cash, and want to close as soon as possible. On the other hand, if you don't want to commit to a fixed schedule, you may prefer an offer with a flexible closing date.
Ultimately, the key is to look at the big picture: Find an offer with a high price that's unlikely to fall apart and allows you to move when you're ready. Choose the one that checks most of your boxes in terms of price, timeline, and terms.
About the Author
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.