How to Handle Multiple Offers on a House: A Guide

Sometimes people put their homes on the market and are greeted with devastating silence. Other times, however, they are inundated with offers on their house and must decide which one to take. If that happens to you, it’s good to know how to choose a buyer for your house.

What Do Sellers Look for in an Offer?

Most of the time, sellers look for one thing when they get an offer: the most money. Typically, that’s the offer that sellers accept.

There can be situations, however, that change that unwritten rule:

• If a buyer includes contingencies in their offer, that can complicate matters. A contingency is part of the purchase agreement that must be met for the sale to proceed, often protecting the buyer's interests and allowing them to back out of the deal if certain circumstances are not satisfied. (For example, buyers can insist upon a financing contingency, which would allow them to back out of a home purchase if they are unable to secure a mortgage loan for the property.)
• The amount of earnest money included is also a critical variable, as a higher amount of earnest money can indicate a buyer is more serious.
• If the highest offer comes from a buyer who rushes the inspection process, the seller may prefer a slightly lower offer from a buyer who thoroughly inspects the property, minimizing the chances of future disputes or renegotiations.

How to Choose a Buyer for Your House: 6 Tips for Sellers 

1. Work With A Reliable Real Estate Agent

An experienced real estate agent can provide valuable insight and expertise when you’re selling your home and evaluating multiple offers. Also, an agent can skillfully negotiate to secure the best possible terms and price, thereby maximizing your return.

2. Determine The Best Purchase Price

When you’re selling your home, it’s important to start out with an accurate asking price.

To establish the home's purchase price, the seller and their agent typically consider factors such as recent comparable sales in the neighborhood (also known as comps) to gauge market value. They also consider the property's unique features and condition, as well as current market trends and economic conditions.

The seller's desire to sell, as well as the level of competition in the local real estate market, can influence the pricing strategy.

After a buyer and seller agree to a price on a home, an appraisal is ordered by the buyer’s lender. A licensed appraiser is then assigned by an appraisal management company (AMC) to conduct a home appraisal to determine the home’s value based on recent sales of comparable homes in the area, as well as the appraiser’s judgement after an analysis of the property.

It's important to consider the difference between the appraised value and the market value of a property. While the appraised value can be seen as what a home is actually worth, the market value can be seen as the price that the property ultimately sells for on the open market, based on supply and demand.

3. Decide Who Pays Closing Costs

While sellers will pay some closing costs on their end, home buyers may request the seller pay their closing costs, too. (Closing costs are fees paid to the lender for processing the mortgage loan, and they’re typically between roughly 3% and 6% of the cost of the home.)

This is known as seller concessions, when the seller agrees to pay a portion of the buyer's closing costs or expenses during the final transaction.

This will be something to consider when reviewing offers because it could affect the final amount of money you’ll get from a sale. Consider a buyer who submits an offer above the asking price but also requests that you pay seller concessions. This may actually not be a better offer than one that’s just at the asking price, with no concessions. If you agree to seller concessions, you can review all your costs on your closing disclosure.

4. Review The Buyer’s Financing

To prevent issues as the deal develops, it can help to review each potential buyer’s financing. You can’t ask the buyers for bank statements and W2’s, but there is some publicly available information that could provide insight into their financial situation:

• Preapproval or proof of funds: An offer that comes with a mortgage commitment letter has a higher value than an offer without one. A preapproval letter proves the buyer is serious and has already taken steps to get financing. It also shows that the buyer can afford to purchase the home and has met many of the qualifications of getting a loan (up to a certain amount). That means there’s a lower chance that the deal could fall through.
• Loan type: You’ll want to pay attention to the type of loan a potential buyer is getting, as different loans have different requirements. For example, an FHA loan has lower credit score requirements but requires the home for sale to pass specific property standards of the FHA. Conventional loans typically require a lower down payment requirement, but a higher credit score requirement. And while jumbo loans can allow a buyer to borrow more money, they are harder to qualify for, may require more documents, and necessitate a higher minimum down payment.
• Cash: There are many benefits of selling a house for cash. Because the buyer doesn’t need to get a mortgage, a cash offer would cut out a lot of time and fees associated with closing the loan. And because the buyer already has the money to sell and doesn’t have to qualify to get it, you can worry less about the deal falling through.
• Down payment: A larger down payment can be a good sign that a buyer is in good financial standing and is more prepared to purchase the home and handle any issues along the way. They may also have an easier time qualifying for a loan because lenders will see them as less of a risk.

5. Consider A Cash Offer

A cash offer can be preferable because this means that the buyer can pay for the property upfront and without a mortgage. With no complicated financing involved, selling a house for cash can greatly simplify the home buying process.

But while the process may be easier, you’re unlikely to make as much money selling for cash as you would if you sold your home traditionally. Cash offers are often reserved for run-down or damaged properties in need of repairs that are worth significantly less than updated homes.

In the end, you get the luxury of skipping the typical listing process in favor of a fast and convenient sale, but you will likely end up selling your home at a sizeable discount.

6. Plan Your Ideal Time Frame

Before listing your home, you’ll want to have a general timeline of when you’d like to close on your home. This can be based on when you need to move into your new home or specific dates, like before the holidays or first day of school.

With this time frame in mind, it may help you narrow down your list of offers because a home buyer’s time frame can affect the sale of your home, or your purchase of another property. You may need extra time after closing to move, or you could get stuck in a bad situation if you have a buyer who refuses to allow extra days or weeks before moving in.

Or, if you’re trying to sell your current home and the purchase of your new home is dependent on it, a buyer who’s dragging their feet or struggling to get financing could cause your sale to fall through.

How Can Buyers Compete Against Multiple Offers On A House?

It’s a simple fact: When you’re looking to buy a house, there could be several people hoping to purchase the same property — resulting in a bidding war. Here are some ways you can elevate your chances of ending up in your dream home over other bidders.

1. Secure Mortgage Preapproval

Show the seller that you’re qualified to buy the house by getting a mortgage preapproval, which essentially proves that you have the financial resources to purchase the property. A Verified Approval includes a credit pull, as well as income and assets verification. This shows the buyer that you are serious and can close the deal without too much complication.

2. Submit A Sizeable Earnest Money Deposit

Buying a house may require an upfront deposit, meaning buyers need funds immediately after a seller accepts their offer. The deposit is called an earnest money deposit. A substantial amount of earnest money makes your offer more attractive and could be the difference between a seller accepting or declining an offer.

3. Waive Some Contingencies

As previously noted, a contingency is a stipulation in the purchase agreement that must be met for the sale to proceed.

For a buyer, waiving one or more contingencies can significantly enhance the appeal of your offer. By doing so, the buyer demonstrates a high level of commitment and confidence in the purchase, which can set their offer apart in a competitive real estate market.

Waiving contingencies can also expedite the closing process, making it more appealing to sellers who want a quick and seamless transaction.

Some of the common contingencies a buyer may consider waiving include:

1. Financing Contingency: This allows the buyer to back out of the deal if they are unable to secure a mortgage loan.
2. Inspection Contingency: By waiving this contingency, the buyer indicates their willingness to accept the property as-is, saving the seller from potential repair negotiations and delays.
3. Appraisal Contingency: If you waive this contingency, you show the seller that you are willing to pay the agreed-upon price regardless of the appraisal outcome.

4. Close On The Seller’s Timeline

Closing on the seller's timeline can increase your chances of acquiring the property because it shows your commitment and flexibility as a buyer. By accommodating the seller's preferred closing date, you demonstrate that you are serious about the purchase and willing to work with their needs, which could set you apart from other buyers. This cooperative approach will likely create a positive impression with the seller and may tilt the decision in your favor — especially if they are motivated to sell quickly.

5. Make A Cash Offer

In a competitive seller’s market, buying a home with cash can be a smart move — for starters, it can make your offer more appealing to a seller who wants to quickly finalize the deal. A cash offer can also help you avoid the extra fees and interest that come with getting a mortgage loan.

FAQs: How To Pick The Best Offer On Your Home

When do sellers often receive multiple offers on a house?

Sellers often receive multiple offers on their house in a seller’s market, which occurs when there is high demand for homes but limited available inventory. In such a market, buyers compete for a smaller number of properties, driving up demand and increasing the likelihood of multiple offers for sellers.

How do I pick the best offer on my house?

Picking the best offer for a sale requires considering various factors, including the buyer's financing ability and mortgage preapproval status. You may also want to prioritize buyers who have fewer contingencies, as this reduces the risk of the deal falling through. On a more intangible level, you might want to consider the level of buyer enthusiasm and willingness to work with their preferred timeline and terms.

Which offer would be the most appealing to a seller?

The most appealing type of offer to a home seller is often an all-cash offer, which eliminates the risk of financing falling through and makes the transaction more secure and efficient. Additionally, cash offers often come with fewer contingencies, which can provide the seller with a sense of certainty and peace of mind throughout the sale process.

How do sellers choose a home offer in a buyer’s market?

When choosing a home offer in a buyer’s market, sellers are more inclined to consider offers closer to their asking price. Additionally, sellers may prioritize offers with fewer contingencies and those backed by strong financial pre-approval to ensure a higher likelihood of a successful transaction.

The Bottom Line

When you are selling a house, there are many factors to consider when deciding which offer to accept. The top price can be the tempting one to go with, but there are other elements to weigh as well. A reliable real estate agent can be a godsend during this complicated process. Don’t know where to start, work with a Verified Partner Agent when you’re ready to buy or sell.