Which offer would you take?

[mitchjav]

Our home went on sale this weekend and we are fortunate enough to have
already received 3 above-list offers - the RE agent tells us at least 2 more
offers will be coming in, possibly more. Now, which to accept? Nice problem, I know. I obviously will be looking at total price, contingencies, closing dates, terms & pre-approvals - but some additional questions I'm hoping to get help with are:

+ Should I pay attention to the initial deposit amount or just the combination of the initial deposit + money down at closing?

+ How much importance should I give to the waiver the mortgage appraisal contingency?

+ The % being put down - what should I read into that # - is going with a 10% down number riskier than a 25% down offer?

+ Can/should I go back to the finalist(s) and see if anyone is willing waive the mortgage contingency? (the market is so "hot", that maybe I can do this)

+ Anything else I should be looking for?

 

[njhowie]

Don't play games. All the offers are above what you were prepared to receive. Go with the best one that will provide the smoothest closing process.

I seriously doubt any will agree to removing the mortgage contingency, likewise for the appraisal. It would be stupid in my mind, if I were the buyer...unless I was so well off at the time and could afford to pay cash for the entire purchase price.

However, what I would do, is to require all the buyers provide the pre-qualification letters from their lenders. Those who aren't pre-qualified, reject. Beyond that, again, I wouldn't push matters.

20 years ago, when we purchased our home, about 2 weeks after the seller accepted our offer at the listing price, our agent advised us that seller now wanted an additional $25k put into escrow. We thought it an odd request, considering we were pre-qualified for a mortgage double the amount we were borrowing. However, we deposited the additional amount into escrow as we had no concerns.

 

[street]

^ great advise njhowie. I would follow those words for a smooth ending.

 

[Aerides]

It's such an unusual market right now, I think that only things like "all cash offer" are king. And of course %down, reducing total mortgage, reduces the chance that your home won't appraise to cover the balance.

But for all these detailed points, really, this is what you pay your realtor for. Surely they are providing you guidance into which of the offers will lead to the most likely successful closing?

Either way, you have almost zero risk selling in this market. If the one you pick falls through you go back on the market and sell again a week later.

 

[Midpack]

I’d prioritize likely to close, then net $, then the rest...

 

[CRLLS]

Is it common in today's market to know the % down on a mortgage at the time somebody is making an offer?

Assuming that all the offers are close, then certainly go with whoever you feel will close the smoothest. I think if that is the one with the lowest offer, it would not be wrong to ask them to sweeten the pot to get closer to a lesser qualified, but higher bid.

FWIW, if the seller took the advice from their realtor, my son and family would not have won the bid on their home purchase last year. Listen, for sure, but use your best judgment to whose bid you accept. Did anyone write you a personal letter? It certainly helped my son.

 

[someguy]

In at least some states, there's a uniform offer template and it includes the % down. There are a lot of all-cash no-contingency offers going, again at least in some states.

I think using personal letters in judging among multiple offers is illogical -- that indicates desperation on the potential buyer's part more than anything to me, and certainly doesn't indicate financial strength. Obviously, if the seller is wealthy enough or otherwise unusually invested in the neighborhood then maybe. I imagine one would also need to be careful about opening up to potential discrimination issues.

I'd ignore personal letters and have my real estate agent let interested parties know there are multiple offers and to submit "best and final by [xx date]".

All things equal, a higher % down indicates stronger finances and less likelihood of not qualifying for the mortgage. If there's no mortgage qualification contingency, then it probably matters less.

Appraisal contingency can be an issue in a hot market where prices are rising fast. If yours will be setting a new area standard for $/ft2, this may be an issue. A strong and motivated buyer could simply cover any difference with cash if necessary.

Is anyone/everyone waiving inspection contingencies? That can be a major hold up and in some states, is essentially a way for a buyer to walk from an accepted offer for any reason.

Bottom line, if you trust your agent, he/she should be able to give you real-life input on offer strengths.

Is it common in today's market to know the % down on a mortgage at the time somebody is making an offer?

Assuming that all the offers are close, then certainly go with whoever you feel will close the smoothest. I think if that is the one with the lowest offer, it would not be wrong to ask them to sweeten the pot to get closer to a lesser qualified, but higher bid.

FWIW, if the seller took the advice from their realtor, my son and family would not have won the bid on their home purchase last year. Listen, for sure, but use your best judgment to whose bid you accept. Did anyone write you a personal letter? It certainly helped my son.

 

[Jerry1]

I’d prioritize likely to close, then net $, then the rest...

Agree. I don’t even know why you would care about the other financing things like money down. As Aerides says, cash is king. Of course you’re going to get cash either way, but in this market, cash is king in terms of ability to close (priority #1). If someone is getting a mortgage and the appraisal comes in low, the buyer has to put more down. That could derail the purchase and you have to start over.

Good luck.

 

[mitchjav]

Don't play games. All the offers are above what you were prepared to receive. Go with the best one that will provide the smoothest closing process.

I seriously doubt any will agree to removing the mortgage contingency, likewise for the appraisal. It would be stupid in my mind, if I were the buyer...unless I was so well off at the time and could afford to pay cash for the entire purchase price.

However, what I would do, is to require all the buyers provide the pre-qualification letters from their lenders. Those who aren't pre-qualified, reject. Beyond that, again, I wouldn't push matters.

20 years ago, when we purchased our home, about 2 weeks after the seller accepted our offer at the listing price, our agent advised us that seller now wanted an additional $25k put into escrow. We thought it an odd request, considering we were pre-qualified for a mortgage double the amount we were borrowing. However, we deposited the additional amount into escrow as we had no concerns.

Thanks - i tend to agree - just for the record - two of the offers that came in with the appraisal contingency waived. Definitely looking a pre-approvals.

 

[mitchjav]

It's such an unusual market right now, I think that only things like "all cash offer" are king. And of course %down, reducing total mortgage, reduces the chance that your home won't appraise to cover the balance.

But for all these detailed points, really, this is what you pay your realtor for. Surely they are providing you guidance into which of the offers will lead to the most likely successful closing?

Either way, you have almost zero risk selling in this market. If the one you pick falls through you go back on the market and sell again a week later.

Thanks - yes, we are getting good guidance from the realtor - just thought I'd get some additional advice/comfort from others here who have the experience. Realtor echoes your comment about "zero risk selling in this market"

 

[mitchjav]

I think using personal letters in judging among multiple offers is illogical -- that indicates desperation on the potential buyer's part more than anything to me, and certainly doesn't indicate financial strength. Obviously, if the seller is wealthy enough or otherwise unusually invested in the neighborhood then maybe. I imagine one would also need to be careful about opening up to potential discrimination issues.

I'd ignore personal letters and have my real estate agent let interested parties know there are multiple offers and to submit "best and final by [xx date]".

All things equal, a higher % down indicates stronger finances and less likelihood of not qualifying for the mortgage. If there's no mortgage qualification contingency, then it probably matters less.

Appraisal contingency can be an issue in a hot market where prices are rising fast. If yours will be setting a new area standard for $/ft2, this may be an issue. A strong and motivated buyer could simply cover any difference with cash if necessary.

Is anyone/everyone waiving inspection contingencies? That can be a major hold up and in some states, is essentially a way for a buyer to walk from an accepted offer for any reason.
.

We asked for no personal letters - don't know whether this was smart or not, but didn't want to cloud the issue with emotion - just the strength of the offer, please. RE agent saying that waiving appraisal contingency is pretty common in this market and we already have 2 offers where this was done. Waiving inspection contingency is less common (but still happens). One offer said they would cover the first $2K of inspection related issues.

 

[Samething]

I just sold my house 10 days ago. Received 18 offers in 3 days in this very hot market. There are many parts to consider to an offer. I accepted a cash over asking offer. 25k earnest deposit and waved inspections (on a 60 year old house). I had a higher $$ financed offer but I knew if I accepted the cash offer it was a done deal. No contingencies.

 

[OldShooter]

I’d prioritize likely to close, then net $, then the rest...

This. An exceptional deal that bubbles is no deal at all.

I'd also consider asking the Realtor for a discount since the property sold with little or no effort on his/her part.

"Discount" elicits horror in Realtors' minds, though. Another approach would be to ask them to pick up closing costs or other items you're on the hook for. In Olden Times in our market at least, the closing was simply part of the real estate company's included services, not an extra gouge.

 

[njhowie]

I'd also consider asking the Realtor for a discount since the property sold with little or no effort on his/her part.

And if I were the realtor, I'd laugh at you and ask without hesitation, "If there was little or no effort on my part, then why didn't you just go sell it on your own and not have to pay me anything"?

Realtor has absolutely no reason to take less and shouldn't. Seller entered into a contract with the realtor, and should be responsible enough to make good on the contract terms.

Seller is getting above asking price. Realtor did his/her job (regardless of the amount of effort) and deserves compensation agreed to. End of story.

 

[Sniggle]

And if I were the realtor, I'd laugh at you and ask without hesitation, "If there was little or no effort on my part, then why didn't you just go sell it on your own and not have to pay me anything"?

Realtor has absolutely no reason to take less and shouldn't. Seller entered into a contract with the realtor, and should be responsible enough to make good on the contract terms.

Seller is getting above asking price. Realtor did his/her job (regardless of the amount of effort) and deserves compensation agreed to. End of story.

I can not argue with the fact that if the seller signed a contract, the seller is obligated to live up to the terms of that agreement.

However, I do think that in this market there is room to negotiate with the realtor up front, or to to self-list and then negotiate with the buyers agent to manage the closing.

6% to a realtor in this market is stupid.

 

[OldShooter]

I can not argue with the fact that if the seller signed a contract, the seller is obligated to live up to the terms of that agreement. ... 6% to a realtor in this market is stupid.

Both true. It is all but certain, though, that the contract doesn't prohibit the seller from asking for a discount or some other consideration. You don't get what you don't ask for.

 

[Dtail]

Both true. It is all but certain, though, that the contract doesn't prohibit the seller from asking for a discount or some other consideration. You don't get what you don't ask for.

True, but maybe the time to ask was upfront before any offers were made, knowing it is a hot market.

 

[RAE]

+ Can/should I go back to the finalist(s) and see if anyone is willing waive the mortgage contingency? (the market is so "hot", that maybe I can do this)

When we got multiple offers on a house we were selling last year, we went back to the Top 3 and basically told them that there were multiple offers on the house, and so we needed to now see their "best and final offer", before making a decision. One of the 3 increased his offer considerably (the others increased their offers only slightly), so we sold to the guy with the best offer. Seems like a good way to handle multiple offers, from the sellers perspective.

 

[Aerides]

6% to a realtor in this market is stupid.

I agree, but the time to negotiate on the fee is before you agree to list with the agent. And while the house will sell quickly, without need for a lot of advertising, showings, etc., there is more work on the back end negotiating deals with the buyer agents, and fielding those offers, so, work is still being done.

Thing is, the country is at a record low inventory of homes for sale, so as much as buyers are crawling over each other to get your home, realtors are probably doing the same to get your listing.

 

[Walt34]

When we sold our previous house near D.C. in 2002 we had three offers in as many days. One potential buyer also included a very emotional letter writing about how much he and his family would love living in that house. I told the RE agent "Gee, that's very nice, but irrelevant". We picked the single guy who offered the highest price with the 30% down payment and an income that would have qualified him for a mortgage nearly twice the size he was applying for. Predictably, there were no issues impeding settlement.

 

[Samething]

I can not argue with the fact that if the seller signed a contract, the seller is obligated to live up to the terms of that agreement.



However, I do think that in this market there is room to negotiate with the realtor up front, or to to self-list and then negotiate with the buyers agent to manage the closing.



6% to a realtor in this market is stupid.

When I looked at the comps the commission was listed. Not many people in this area are paying 6%. I didn’t. I hear what you’re saying. Paying 5% of the sale price of your house is a lot of money in this market. To me it was worth it.
The buyers agent brought the out of state buyer. She got half of the commission. My agent recommended a higher listing price than I had in mind. Higher than the comps would indicate. She helped stage my house. She even supplied some patio furniture and some knick knacks to dress it up. She used her agencies photographer who did an outstanding job. I didn’t have to worry about escrow or a title company. All things I could have hired out I know. But after spending several months driving close to 7 hours round trip to look at houses in my target market sometimes several times a week easy was welcomed.

 

[RetireeRobert]

+ Should I pay attention to the initial deposit amount or just the combination of the initial deposit + money down at closing?

+ How much importance should I give to the waiver the mortgage appraisal contingency?

+ The % being put down - what should I read into that # - is going with a 10% down number riskier than a 25% down offer?

+ Can/should I go back to the finalist(s) and see if anyone is willing waive the mortgage contingency? (the market is so "hot", that maybe I can do this)

Initial deposit--(earnest money)--yes pay attention. If buyer backs out for a non-contingency item, you keep the earnest money.

Appraisal contingency waiver--yes, place some fair amount of importance to it. In this market, it is probably more apt to happen that a house does not appraise than in weaker sellers' markets or in buyers markets.

Percent down payment---higher percent down indicates stronger buyer, more likely to close.

Go back to finalists? Yes, with very high percent of houses for sale nationwide getting quick multiple offers, I would go back for a "highest and best offers please". Seems worst that could happen with this tactic is no one gives better than their original offer!!

 

[mitchjav]

Just thought I'd close the loop here. After the full 2 weekend days of showing(s) + an additional 2 showings Monday and one on Tuesday morning - we had, by mid-day Tuesday, 14 offers.

The highest offer had a home sale contingency, so we passed on that - but the
good news was that this high offer effectively activated escalation clauses on two other offers - one of which we selected. So, fingers-crossed that all goes smoothly - but we accepted an offer at $40K over list - no appraisal contingency - inspection limited to structural & safety issues and termites. We got the closing date we wanted and the rent-back option we were looking for.

Thanks for all the input - we definitely looked for the best overall offer prioritizing not only the price but the perceived ability for a smooth close.

 

[RetireeRobert]

Just thought I'd close the loop here. After the full 2 weekend days of showing(s) + an additional 2 showings Monday and one on Tuesday morning - we had, by mid-day Tuesday, 14 offers.

The highest offer had a home sale contingency, so we passed on that - but the
good news was that this high offer effectively activated escalation clauses on two other offers - one of which we selected. So, fingers-crossed that all goes smoothly - but we accepted an offer at $40K over list - no appraisal contingency - inspection limited to structural & safety issues and termites. We got the closing date we wanted and the rent-back option we were looking for.

Thanks for all the input - we definitely looked for the best overall offer prioritizing not only the price but the perceived ability for a smooth close.

Thanks for the update and results! And congratulations! $40k over asking, and minimal contingency for inspection, and desired closing timeline---very nice!!

 

[Original Wally]

We ALMOST bought a home 30 years ago ... wsa a FSBO, an Air Force Captain bucking for Major - had to relocate. Don't remember the asking price, but Mrs. loved the home so we offered something like $500 over asking. Had 35% cash IN HAND and were able to close without selling old home. Cap'n took another offer that was $1,000 over. Some months later we got a call from his new duty station ... yup: Deal fell through >> Are you guys still interested? We DID do another look-see, but being empty for 3-4 months it didn't show the same. So we declined and ended up buying 5 acres, literally BUILT our own and were happy as could be. Fate is funny.