In today’s market where there are more homebuyers than homes available for sale, it is likely that home sellers may face a multiple offer situation when listing their house. Accepting the highest offer seems like a no-brainer, but it might not always be the best choice. Below, I’ve outlined other important factors for home sellers to consider when accepting an offer.

Pre-Qualified And Pre-Approved Homebuyers

Most offers will include a letter from a mortgage lender indicating that a homebuyer is either pre-qualified or pre-approved for a mortgage loan. Don’t be fooled by the fact that people often use these terms interchangeably. There is a considerable difference between these two terms.

A homebuyer can receive a pre-qualification letter by discussing their financial situation with a mortgage lender, who will then provide an estimate of what the buyer can afford. At this point, the mortgage lender has not checked the accuracy of the information provided by the potential homebuyer. A mortgage lender might be able to produce a correct estimate for a homebuyer who is very knowledgeable about their financial profile. However, home sellers should be aware that a lender has not yet verified income, assets, debt, or available funds for a down payment. In other words, a pre-qualified buyer offers little assurance to the seller that the buyer has the ability to close the purchase.

To obtain a pre-approval letter, a mortgage lender must complete a credit check and verify the items mentioned above after a homebuyer completes a full loan application. Pre-approval letters require a much more thorough process and are far more desirable than pre-qualification letters.

Pre-approved buyers are far more desirable, but it is essential that the letter states the remaining conditions for funding. For example, all pre-approvals will be conditional on the home appraising. Home sellers should demand to know the other conditions to the approval as well.

Home sellers should be aware that neither letter guarantees a homebuyer will receive a loan due to other variables and issues that may exist, but a pre-approval is far more desirable than a mere pre-qualification.

Consider The Contingencies

Nearly all contracts for sale and purchase contain clauses that provide reasons for buyers to cancel a contract. For example, almost all offers include contingencies regarding appraisals and inspections. If the buyer’s financing falls through or the home inspection findings are not satisfactory, the buyer has the right to terminate the contract.

However, some homebuyers may need to sell their current home to purchase a new one. This stipulation could be another contingency added to the contract. When faced with multiple offers, home sellers should look to accept one with fewer contingencies to increase the likelihood of closing.

How To Get Multiple Offers

Perhaps you are a home seller with your home on the market right now wishing you had to choose from multiple offers. Luckily, this can happen with any home. All you need is proper pricing and an aggressive marketing plan to ensure the entire pool of prospective buyers see your home. Having both in place will increase your chances for generating multiple offers on your house which is the best way for you to get top dollar for your home.

If you are thinking about selling your home, or are currently in the process of trying to do so, be sure to select an experienced and active real estate agent who can bring multiple buyers to the table and then help you negotiate the offer that will work best for you.

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