How to choose the right offer when selling your home

Many markets are experiencing a Seller’s market where homeowners are receiving multiple offers on their home they have listed for sale. I know that to be the case here in South Florida and Sellers are asking which offer should they accept?

How many of you will immediately jump to say that you should choose the highest price offer? Of course, selling your home for top dollar is always desired but, it’s not the only thing that Sellers should be looking at in terms of selling a home. There are other considerations that Sellers need to review to go along with that high priced offer. Today’s focus of consideration is that of the Buyer’s financing.

In a Seller’s market, you can likely run across Buyers who have submitted a few offers on homes already and have lost the home to another Buyer. They may now be at a point of desperation and may decide to stretch their home purchase price that they’ll be financing or  perhaps you have a new Buyer just starting with their home search.  Either Buyer could have painted a rosier picture of their finances either intentionally or unintentionally or simply didn’t know what details needed to be provided to their Mortgage Broker to gain a pre-approval. This uncertainly presented to a Mortgage Broker nor questioned by the Mortgage Broker, who may then issue a flimsy pre-approval for a home loan, is not the offer that you want to select, even if it were to be the highest price offer. What good is the highest price offer if it will not come to fruition?

What do you want to look for in a Buyer who will be financing the purchase of your home? Your Real Estate Agent will want to:

• Make sure that the Buyer’s credit report has been thoroughly reviewed.

• What is on that credit report that could bring up a red flag to the underwriter? Any potential red flags must be reviewed prior to the pre-approval. You don’t want any red flags revealed a week before a scheduled closing because the Buyer’s credit was never reviewed.

• Make sure that the Buyers income has been reviewed, indicating their ability to afford the mortgage payments.

  • This is particularly important in a multiple offer when one Buyer is trying to perhaps out bid another Buyer and stretch their financing purchase limits.

• The assets of the Buyer need to be reviewed, as the Buyer will need money for their down payment and closing costs. The hopes of future income coming isn’t current assets. Assets much be accessible in time for closing to purchase your home.

• Some type of automated review system, as in a desktop underwriting (DU) system is recommended, as this will reveal important housing and expense ratios for the Buyer.

If these points are covered and they result in a favorable outcome, you most certainly are on the path to gaining a loan commitment for this Buyer from the Buyer’s Lender meaning your chances for closing are greater.The point being, what good is the highest price offer if a Buyer will never get approved for a loan to buy your home.  Find this out at the beginning so you’ll have greater peace of mind.  Of course, this doesn’t not guarantee loan approval yet it certainly increases the likelihood. Happy Selling.

This article was written by by Lynn Pineda, your Coral Springs Realtor and South Florida REALTOR® with Keller Williams Partners Realty.