Many sellers may be tempted to select the highest offer they receive, but there are several other factors to consider. Here are five areas important to evaluate.
- Down payment. The size of the down payment should be heavily considered when comparing offers. It is often tied to the size of the loan the buyer is taking out and a larger one indicates higher financial stability.
- Earnest money deposit. The EMD is the sum of cash the buyer is willing to put up when the sales agreement is signed to show their high level of interest in purchasing the home. If they back out of the transaction without a good reason, the seller typical keeps it, and if the sale goes through, it typically goes towards their down payment.
- Contingencies. Contingencies are standard for most offers and outline the evaluations and appraisals that need to be completed before the sale is final, such as financing, appraisal, sale of current home, title, and home inspection. The fewer contingences, the higher the chance of reaching the closing table.
- All-cash offer. Not only does putting down an all-cash offer boost the likelihood of loan approval, but the buyer will not need an appraisal or financing contingency, reducing the chance of the sale falling through.
- Closing date. Consideration of the closing date differs for each seller. For example, if you have already purchased a new home, you may want to close quickly. But, if you are waiting on the money from the sale to start house hunting, you may be okay with a slower settlement.