Navigating Real Estate Offers in a Competitive Marketplace. How to Know You’re Getting a Good Price

If you’re planning to sell your home in today’s competitive market, you’re likely to receive more than one offer. While getting the best possible price may be your primary goal, there are some other important factors you’ll also want to consider. Here is what you need to know about evaluating offers and comparing multiple ones.

1. Review Each Offer Thoroughly—Not Just the Price

First, don’t feel rushed. Take the time to evaluate each offer, focusing not just on price but on these other key factors:

Contingencies

Both buyers and sellers sometimes add contingency clauses to real estate contracts. These clauses allow them to walk away from the deal—or try to renegotiate it—if some requirement isn’t satisfied. For example, buyers might include a clause making the sale contingent on the home passing an inspection or receiving an appraisal for a sufficient amount. They might also include a clause that gives them an out of they can’t obtain financing or if they can’t sell their current home in time to close the deal.

Closing Timeline

If the buyer suggests a timeline for closing, you’ll want to make sure that it works for you, too. A closing that is too far in the future could delay your buying another home (or whatever other plans you might have for the money). Conversely, a deadline that is coming up too soon could mean having to pack in a rush and move before your next residence is ready. In general, home sales typically close within 30 to 60 days from the time the offer is accepted.

Mortgage Preapproval

If the buyer has a preapproval letter from a lender, they’re in a better position to proceed with the purchase than if they have yet to apply for a mortgage. They’ll still have to satisfy the lender’s requirements (such as having the home appraised), so the deal could conceivably fall through, but this should give you some reassurance that it won’t.

Down Payment Amount

A buyer who is able to make a substantial down payment, such as 20% or more, is more likely to be approved for a mortgage if they haven’t already been.

Cash vs. Financed Offer

A buyer who is prepared to pay all cash won’t have to deal with a lender at all and can move more quickly.  

Other Buyer Requests

The buyer might ask, for example, that you leave the major appliances or that you cover some of their closing costs. Whether you agree or not is up to you and how eager you are to accept that offer.

2. Leverage Multiple Offers (if You Get Them)

If you have multiple offers at more or less the same time, you may be able to use them to leverage a better deal. Tell all the potential buyers (or their agent, if they have one) that you have offers in addition to theirs. You can then ask them to submit their “highest and best” offers by a certain date of your choosing.

3. Use a Skilled Real Estate Agent

An experienced local real-estate agent can help you evaluate any offers. They can also advise you on how much leeway you might have to negotiate a better deal and even handle those negotiations for you. Legally they are required to act in your best interest.

Equally important, they’re in a prime position to tell you how much you can reasonably expect to get, based on what homes are currently selling for in your particular market. That can help you avoid underpricing your home and not getting full value—or overpricing it and seeing it linger on the market indefinitely. When homes fail to sell for too long a period of time, buyers may wonder if there’s something wrong with them.

Once you’ve accepted an offer, the agent can also help you navigate the various steps in the closing process. 

Bear in mind that all of this assistance comes at a price. Agents generally receive commissions of 5% to 6% of the sale price, which they may then split with the buyer’s agent, if there is one. 

4. Don’t Be Afraid to Counteroffer

If you’ve received an offer that falls short of what you consider an acceptable price, don’t hesitate to come back with a counteroffer. The buyer may have started off with a low bid, hoping to get a steal or just as a way to kick off negotiations. 

For starters, you could counter with a higher price. You might want to overshoot a bit since the buyer may come back with a counteroffer of their own.

You could also ask that they remove any contingencies or adjust the proposed closing date to suit your convenience rather than theirs.

If the buyer refuses to budge, you can either accept their latest offer or simply say no and move on.

5. Understand the Market Dynamics

No matter how appealing your home might be, your ability to negotiate will be subject to the current state of the real-estate market. In a seller’s market, you’ll have the upper hand in bargaining, and you may be in the fortunate position of having multiple prospective buyers bidding against each other. In some particularly hot seller’s markets it isn’t uncommon for homes to go for more than their listing price.

In a buyer’s market, by contrast, you’ll be at a disadvantage. While you might get your price or something close to it if you’ve priced your home appropriately, you may have to make some concessions or offer other inducements. That might mean, for example, covering a portion of the closing costs, paying for repairs or cosmetic improvements, or purchasing a home warranty for the buyer.

The Bottom Line

Selling your home is about more than money. While you’ll want to get as good a price as the market will bear, be sure to consider any contingencies or other stipulations the would-be buyers have written into their offers. It may turn out that a somewhat lower dollar figure—but with fewer added complications—will be in your best interest.