Showings & Offers: Turning Buyer Interest Into the Right Decision

Home Selling Series — Part 6 of 7

Getting an offer on your home is exciting. Getting multiple offers can be even more exciting.

But this is also the point where sellers need to slow down and look beyond the number at the top of the Agreement of Sale.

The highest offer isn't always the strongest offer, and the strongest offer isn't necessarily the same for every seller.

My goal is to help my sellers understand exactly what they're agreeing to—and choose the offer that gives them the best opportunity to get from accepted offer to settlement.

Those First Showings Matter

The first few weeks after a home is listed are especially important. Your home is new to the buyers who have been watching and waiting, and that's often when some of the strongest interest and offers appear.

That's one reason I've put so much emphasis throughout this series on preparing your home, pricing it correctly, using professional photography, marketing it from day one, and providing buyers with the information they need.

You don't get a second chance to be the new listing.

When buyers come through the door, I also encourage my sellers not to be home.

Buyers need the freedom to walk through the house, talk openly, and imagine themselves living there. Sellers also don't need to hear every comment a buyer makes. Something that sounds negative during a showing doesn't necessarily mean the buyer isn't interested.

And sometimes meeting a buyer can create an emotional connection that influences a seller's decision later.

When Emotion Gets Involved

I once represented sellers who stayed home during their showings. We eventually received multiple offers.

The sellers chose the buyers who had a dog.

That was really the reason. They liked the buyers because they had a dog.

It wasn't the highest offer, and it wasn't the strongest offer financially. Unfortunately, we later discovered that the buyers didn't have sufficient funds, and settlement had to be delayed while they worked through the problem.

That experience reinforced something I've seen many times over the years: choosing an offer is both a financial and an emotional decision, but emotion shouldn't replace the facts.

That's why, when I receive multiple offers, I prepare a worksheet for my sellers comparing the important terms and conditions side by side.

If several offers are very similar, I may go back to the buyer agents and let them know we're considering other comparable offers and give their buyers an opportunity to present their best terms.

If they're still close, then we look at what matters most to my seller.

Maybe it's price. Maybe it's the settlement date. Maybe it's financing, the deposit, seller assist, inspections or another contingency.

There isn't one answer that's right for every seller.

Every Transaction Deserves a Fresh Start

Over the years, I've had agents tell me they wanted their buyers' offer to work because they had heard from other agents in their office that when they work with me, I'll work hard to get the transaction to the settlement table.

I appreciate hearing that, but when I'm representing a seller, my responsibility is to look at what's best for my seller.

The same is true when I've had a difficult experience with an agent in the past.

Once that transaction is over, I put the experience behind me. Good or bad, the next transaction is a new one.

I don't want a past experience with another agent to influence how I advise my seller today.

My job isn't to choose the buyer or agent I would prefer to work with. My job is to help my seller understand the differences between the offers so they can make an informed decision based on what matters most to them.

My Goal Is Settlement

Once my sellers accept an offer and sign the Agreement of Sale, my goal is to get that transaction all the way to the settlement table.

My sellers may be depending on those proceeds to purchase their next home, downsize, retire, or simply move on to the next phase of their lives.

That's why I don't look at the offer price alone.

If the buyer is obtaining a mortgage, I want to speak with the lender and have as much confidence as I reasonably can that the buyer is qualified for the amount they need to borrow.

If it's a cash offer, I want to see proof that the funds are available.

A Higher Offer Isn't Always a Better Offer

In a market where multiple offers and offers above asking price are common, another question becomes important:

Will the home appraise for the amount the buyer needs to finance?

An offer can look wonderful on paper because the price is high. But if I believe the appraisal could come in considerably lower, my sellers need to understand what could happen next.

They may be asked to reduce the price, or the buyer may need sufficient funds to make up some or all of the difference.

Depending on the situation, we may ask a buyer to waive or modify the appraisal contingency. But before my seller relies on that protection, I want to know that the buyer has the financial ability to cover the difference.

Sometimes an offer that's a little lower—with strong financing, a substantial deposit and fewer contingencies—may provide the seller with greater certainty.

The number on the offer matters.

But so does the buyer's ability and commitment to actually complete the purchase.

Looking Closely at Contingencies

Contingencies aren't necessarily bad. They protect buyers for legitimate reasons. But from a seller's perspective, each contingency creates another step in the transaction that has to be successfully completed.

A buyer who waives a home inspection, for example, may present a stronger offer from the seller's perspective because they're agreeing to accept the property's condition without using an inspection contingency to later request repairs or credits.

A home-sale or home-settlement contingency requires an even closer look.

I don't automatically tell a seller to reject one.

The circumstances matter.

If we've been on the market for 30 days or more, don't have another offer, and the terms otherwise make sense, it may be worth considering.

But first, I want to know as much as possible about the property the buyer needs to sell.

Where is it? What condition is it in? How long has it been on the market? Is it priced fairly for the current market?

I may also recommend terms that allow my seller to continue marketing the property or establish a deadline for the buyer's contingency.

If the buyer's home is already under contract and we're dealing with a home-settlement contingency, I dig even deeper.

Has their home inspection been completed? Has their buyer applied for a mortgage? Are there concerns that could interfere with that settlement?

And then there's another important question:

Does their buyer also have a house to sell?

Think of It Like Building Blocks

Imagine four blocks stacked on top of one another.

At the top is the new home my sellers are buying.

Underneath is the home my sellers are selling.

Below that is the buyer purchasing my sellers' home.

And underneath that buyer may be another transaction they're depending upon in order to purchase.

If that bottom block moves out of place, everything above it can be affected.

That's why, when I have multiple offers, an offer from a well-qualified buyer who doesn't need to sell another property first may deserve very serious consideration—even when another offer has a higher price.

I'm not trying to predict every problem that could possibly happen.

I'm trying to identify the risks we can see before my sellers make their decision.

Marsha's Tips

When you're reviewing an offer on your home, don't look at price alone.

Look at the entire offer.

How is the buyer financing the purchase? How much are they putting down? What's the deposit? Are there inspections? Is there an appraisal contingency? Do they have another home to sell? What settlement date are they requesting? And, most importantly, how do all of those terms fit with your plans?

The best offer isn't necessarily the one with the biggest number.

It's the offer that makes the most sense for your circumstances, your priorities, and what you need to accomplish next.

Because accepting an offer isn't the goal.

Getting successfully to settlement is.

Putting You 1st Is 2nd Nature!

Coming Next — Part 7

From Accepted Offer to Settlement: The Seller's Side of the Story

An accepted offer isn't the finish line. In the final part of my Home Selling Series, we'll follow the seller's journey from the signed Agreement of Sale through inspections, appraisal, title and mortgage requirements, final walk-through, moving out, and finally—the settlement table.