If you’ve ever sold a home before, you know how exactly nerve-wracking it can be! From cleaning to staging to the inspection and the final close, there are many hurdles to finally moving out. It’s so complicated, we dedicated an entire blog to the home seller’s timeline! And as complex as each stage can feel, one of the most important is when the offers start coming in.
From afar, this seems like it would be pretty simple. You list your home for a certain amount, and then you ideally sell it to someone who’s willing to pay that full amount or a little extra.
But this is a complex moment, and it’s even more complicated in today’s market, where Pittsburgh homes are regularly seeing double-digit offers! While that’s a net positive for sellers, it can also create confusion for everyone involved.
One buyer might be willing to go over your asking price, but they could list a few contingencies in return. Another buyer might only offer exactly the asking price, but they could be willing to waive the inspection and work around your schedule to close.
How can you determine which is the best option for you and your family?
Every offer has its own pros and cons, and you and your real estate agent will have to weigh these offers carefully to ensure you pick the one that best benefits you!
How to Weigh Offers On Your Home
If you’ve received multiple offers on your home, congratulations! You have something numerous people want, and that’s a great spot to be in!
The trouble comes when you’re trying to find the best offer for you, as an offer is often about much more than money.
Here are some questions to ask to help you consider your options when weighing offers on your home:
1. Which buyers are pre-approved?
When comparing offers on your home, the first thing to remember is this: It doesn’t really matter what people offer. It matters what they can actually afford.
Sure, $300,000 for your 3-bedroom home in Greenfield seems like a generous offer, but it doesn’t mean anything if the buyer can’t come up with the cash.
That’s why we always recommend working with buyers who are pre-approved, which means a mortgage lender has already reviewed their finances and is comfortable loaning them money up to a certain dollar amount. In fact, some real estate agents advise their clients to only talk to individuals who are pre-approved and understand their mortgage options.
The reason is simple: If someone hasn’t been pre-approved, there’s a chance they may struggle to generate the money necessary, and the entire deal could fall through the cracks.
The Difference Between ‘Pre-Approved’ and ‘Pre-Qualified’
There’s a big difference between buyers who are pre-approved and buyers who are pre-qualified.
If a buyer is “pre-qualified,” it means a lender has reviewed their income, assets, and debts, and thinks they’ll likely be approved for a loan of a certain amount. But that doesn’t mean they’ll ultimately be approved, as there’s much that can go wrong.
If a buyer is “pre-approved,” that means a lender has looked deep into their finances and has actually approved them up to a certain amount. In other words, they can secure the funds on their offer, making it much more attractive to sellers.
2. Are any of the buyers also selling their home?
This is an important question to review with your real estate agent. If a buyer’s offer is contingent on them selling their own home, the success of your sale then relies on the success of their sale—and possibly even the money they can get from selling that home! And if they find they have to settle for less than they asked for their home, they may want to lower their initial offer with you before going under contract.
If someone is selling their own home while making an offer on yours, check out their house to determine:
Its condition
Its asking price
How long it has been on the market
If the home is in poor condition for its asking price, is priced way above market value, or has been on the market for a few months, you may want to consider turning the offer down. In this situation, there’s a chance they may struggle to sell their home in a timeframe that works for you.
3. How big is the downpayment?
Another consideration: How much cash are they willing to throw down upfront? While the downpayment amount isn’t exactly as important as the total offer, a sizeable downpayment suggests they have significant cash reserves and are serious about their offer.
4. Do you have to make any changes or put in any additional sweat equity?
Your buyer may make an offer that hinges on some extra expenses or sweat equity from you. It could be something as simple as repainting the kids’ bedroom to remove the lime green walls they insisted on when you first moved in, or it could be as expensive as replacing the roof nearing the end of its lifespan.
While you may be willing to make concessions to win a larger offer on the home, run a quick cost analysis to see if it’ll be worth it. Repainting the kids’ bedroom might only take a few hours if you do it yourself, but replacing an entire roof could easily cost $5,000—something you may not want to be on the hook for.
5. How soon do you need to close?
If you’re moving across the country for a new job that starts in a few weeks, you may be eager to close quickly. And if a buyer is willing to make a strong offer and seems equally eager to move in, that could make their offer a winner—even if it’s slightly less than another offer from someone who seems to feel less urgency in closing quickly.
6. Consider the emotional side of selling—and try to push it aside.
If you’ve lived in your home for a few years or more, you’ve likely made it your own. You’ve painted, picked out the carpeting and drapes, restored those old kitchen cabinets, and maybe even added on an extra room. Even more importantly, you’ve built memories with the people you love. You may have even preserved a few of those most precious memories with photographs in the living room or aligned them on the wall up the stairs.
In other words, you may have grown attached to your home, and that’s OK! We get it. But you should avoid allowing that emotional connection to interfere with such a serious financial decision.
Some common emotional obstacles you may encounter when weighing offers on your home:
Offer letters - Offer letters have grown more and more popular as the market has become ultra-competitive in recent years. While an offer letter can be valuable in demonstrating a buyer’s motivation and commitment to a transaction, offer letters may make it difficult to weigh your offers objectively. If this is a concern for you, talk with your agent ahead of time about excluding offer letters from negotiations.
Family & Friends - One of the joys of working in real estate is that everyone has an opinion about what we do! Family and friends may encourage you to set a certain price for your home—which could ultimately work against you. Or they could have opinions about what kind of buyer you should sell to, which could introduce legal and ethical complications. Remember: Your real estate agent is the best judge of what your home is worth, and they’ll have the best opinion on how much you can actually get from your buyers.
While there are many factors that could impact your decision, remember that selling your home is a major financial decision. Talk to your real estate agent and do your best to keep emotion out of your decision.
How to Weigh An Offer On Your Home: Example
Here’s an example of a situation you could encounter in Pittsburgh: Let’s say you’re selling a beautiful three-bedroom home in Greenfield. You’d love to move within a month because you’re starting a new job in the North Hills and would like an easier commute by moving to Ross Township.
You receive two offers that look great. Although you asked for $175,000, one offer is for $200,000, and the other is for $210,000.
Looking a little deeper, here’s how the two offers break down:
The person making the $200,000 offer is eager to close quickly, and they’re ready with a $20,000 downpayment. They’re also pre-approved for the full offer amount.
The person making the $210,000 offer is willing to pay more than the first couple, but they also want you to replace the water heater, fix the loose railing on the front steps, and pay to have the appliances removed because they’d like to bring in their own. They’re also pre-approved for an amount higher than $210,000.
This is a tough situation! In this scenario, your real estate agent may recommend making a counter-offer to the person willing to pay $210,000, as meeting their contingencies will suck up valuable time and financial resources while you rush to move into the North Hills. If they’re unwilling to budge, that first offer is still excellent, and it may very well be the better option.
Find A Real Estate Agent You Can Trust
If you’d like a second opinion on the offers you’ve received, or if you’re feeling overwhelmed by selling your home in general, contact us at theblocks@blocksintheburgh.com. We’d love to help you explore your options!
Cheers,
Julie & Ted