Less is more; that’s more or less how the saying goes. When it comes to price tags, logic will dictate that that is not the case. Logic would be wrong. Still not completely confused? Let’s see if I can help you out with that. When is the highest offer not the best offer? When it turns into a zero! No, it’s not a trick question, and yes, it does feel like this train of thought is getting a little derailed. The simple idea behind it is that your sole criterion for picking the best offer should not be the highest number. For example, maybe the highest number has nothing backing it up. After starting up the administrative machinery and rejecting other, more serious offers, you find out the other side has to back out of the deal. Here are six reasons the highest offer isn’t always the best one.
Cash is King
There’s a good reason cash offers are highly sought after. The whole process is much simpler when there is cash on the table. There are no additional worries or hurdles to clear. You can close more quickly; there is no possibility that the buyer’s lender will reject them or that there could be trouble with appraisals and such. The buyer has the money, the chances of the deal falling through are minimal, and you can rest assured that you will go through the minimal amount of hassle once you accept the deal. It might not be the highest bid, but it is the safest one. As with any transaction, there are two main aspects to it. You are constantly weighing terms against risks. Ideally, you are looking for the best terms that carry the lowest risk. You can opt for a cash offer even today if you are looking for a quick, hassle-free sale.
Look at the word; it just pours confidence into your very being. The lambent light of those syllables is enough to soothe any worries you may have about the validity of the offer and the buyer’s possibilities of actually paying the agreed-upon figure. A preapproval letter shows that the buyer has been, rather shockingly, preapproved for a loan. Who could have seen that one coming? Mortgages are fickle creatures hard to catch sometimes. The letter mentioned above, which would be the metaphorical net in this clumsy analogy, is a way to show that said creature has, in fact, been caught. It helps put the seller’s mind at ease. The buyer has the bank’s or mortgage broker’s backing, minimizing the chances of the deal being terminated before completion.
Can You Touch Your Toes?
My gym teacher always used to say that flexibility was crucial. I always thought it was about numbers – how many pushups I could do or the number written on the dumbbell I was holding. Turns out, he had not only been giving good exercising tips but had inadvertently been dishing out prudent real estate advice. Again, a buyer might be giving you the highest offer, but the terms are too rigid. Maybe as a seller, you need to close as fast as possible. Perhaps you are looking to buy another house and need to stretch out the selling process a bit until the selling of your property and the purchase of your future property align. Being able to touch your toes might be more important than doing an extra chin-up or two, after all.
Are You Down for a Good Down Payment?
Look at those digits in the offer. Yes, a 5% down payment is a bit unorthodox, but who cares, right? Well, you should! That’s not a mahogany flag gently unfurling in the wind; it’s a red flag flapping wildly in the snowstorm. See, the veritable snowstorm is the appraisal, or rather, the bank not appraising your home at the proposed purchase price. It’s now up to the buyer to bridge the gap, or the deal could fall through. This is yet another one of the reasons the highest offer isn’t the best one. A healthy 20% down payment might be better than a high number that the other side cannot pay.
Reasons the Highest Offer is not the Best One? Contingencies!
Beware of the highest offer that comes jam-packed with contingencies. It almost always carries with it time loss and hidden costs. The seller could stipulate that they can only buy once their home sells. This is fair enough, but it puts the seller in an awkward waiting game. One where uncertainty reigns supreme. Contingent upon inspection is a tricky one, it will either mean you will need to invest money into fixing certain things, or the buyers will want to renegotiate the price. You can take a few courses of action if the property inspection goes poorly, but avoiding this scenario would be even better. An appraisal contingency is another one. What if the lenders decide the house you are selling is not worth the selling price? A clean offer, devoid of these concessions, could be the way to go, even if that all-important number is a little lower.
Last, But Not Least
The last point on this list is also the least obvious one. Sometimes, some buyers will go the extra mile. Maybe there are multiple offers on the table, and they are all in the same ballpark. How do you choose which one to select? What if you received a heartfelt letter from one of the buyers telling you why they want to purchase your house? What if it is something moving, verging on the beautiful? As I have been saying, it’s not always a numbers game. How bland would life be if that was the case?
That’s All Well and Good, But How Do I Get the Offers Rolling in?
Cinematography seems to be all about prequels these days. A sort of prequel to our story, where you are trying to select the best offer, is how to attract potential buyers in the first place. If you are selling your first home, some advice could probably come in handy. You must know what you are doing, from hosting open houses to proper response times for offers received. Therefore, if this is your first time doing this, be sure to read up on some tips and tricks beforehand.
There you have it, six reasons the highest offer isn’t always the best one. Read each bid carefully, see what suits your current situation the most. It would be best to consider the timing, the possibility of obstacles encountered along the way, and a plethora of other factors before deciding. Now that you know what to factor in, there should be no reason you won’t be able to find that elusive best offer. All that’s left to do is organize the packing process as best as possible as you prepare to embark on a new journey. Maybe you are thinking about buying a new home. Something tells me you will blow away the sellers with your very first offer!