HOW TO CHOOSE BETWEEN MULTIPLE OFFERS
With interest rates at an all-time low and buyer interest increasing, you might find yourself in the fortunate position of receiving multiple offers on your home. It’s important to remember that while the highest value offer is your ultimate goal, other elements will have an impact on the transaction and should be considered before you make your final decision. Below are three aspects to consider when trying to choose between multiple offers:
1. The suspensive conditions of the offer
The majority of offers that you’ll receive will be subject to certain conditions transpiring first, such as the sale of the buyer’s previous home. While it’s not very common to find an offer that is entirely void of conditions, you should keep in mind that your home will be off the market while the terms and conditions of the offer are waiting to be met. The offer with fewer conditions presents less risk of the sale falling through and is likely to reduce the time your home is off the market without the sale having been finalised.
2. The financing of the deal
When it comes to financing the home, unless it’s a cash offer, you should ask whether the buyers have a deposit saved and whether they are prequalified for home finance. A deposit is an excellent indication that the buyer is serious about their offer and is in a financial position to purchase your home. A deposit also greatly increases a buyer’s chances of bond approval. Beyond this, you should check if the buyer has pre-approval for a home loan, as it’s the most reliable way to prove that the buyer will be able to access the funds when it comes time to purchase your home.
A cash buyer will not rely on the bank for bond approval which makes the transaction far less complicated. Banks are also far more willing to grant finance to a buyer that requires less than 80% of the purchase price of the property. When checking the financial credentials of the offer, ask whether the buyer needs a third party to sign surety on their behalf. Although it’s normally not an issue, it does increase the chances of problems arising. You should also look at whether the buyer can provide proof from the bank that the funds are available to back up the offer.
3. The date of occupation
You should also consider the date of occupation on each of the offers. If the best offer on the table doesn’t quite meet your timeline, you can counter the occupation date. Ideally, the occupation date should coincide with the transfer date if possible, as this will avoid situations where the buyer takes occupation of the property before the transfer goes through. If the offer contains any suspensive conditions, do not allow occupation of the home until these conditions are met, and all documentation is signed by both you and the buyer at the conveyance attorney. Otherwise, you might have to go through a costly and time-consuming process of evicting the buyer if the sale falls through.
Reach out to a property professional
Once you’ve considered all these factors and you’re ready to move forward, you can then consider the value of the offer. In some cases, a lower offer might be the right one depending on the conditions presented. Real estate agents can be a great sounding board for advice and can help you make informed choices when making the various decisions involved in selling your home, which is why working with a trusted real estate advisor is so helpful.