Why The Highest Offer Doesn’t Always Win In A Seller’s Market
Is the highest offer always the best offer?
An offer is so much more than just the purchase price. A solid offer is the sum of all its parts. It’s totality of the entire offer that makes a seller pick one offer over another.
In this post, we’ll take a deeper look at why the highest offer doesn’t always win in a seller’s market. And, more importantly, we’ll look at the other factors that make an offer stand out without raising the purchase price.
First: Why Price Does Matter
Price will always be the most important aspect of an offer. But it’s not always the most important.
When a seller is evaluating offers, there’s a pretty good chance that all the offers are fairly close in price. After all, offers can only go so high or the home won’t appraise.
In addition, there may be certain things that are more important to a seller than just the overall price. A seller may choose a slightly lower cash offer since a cash closing can be easier and potentially close quicker.
Needless to say, that price is a big factor of offer acceptance, but there are also other factors that are important to offer acceptance.
What Other Factors Help With Negotiations?
There are a handful of factors that can help tilt the odds in your favor when you’re facing a multiple offer situation. Here we’ll cover a few different scenarios that can help make your offer stand out.
Don’t Ask For Concessions
Seller concessions can add up quickly, especially when a buyer is asking for a seller to pay a portion or all of their closing costs.
Depending on your situation as a buyer, you either may or may not be able to afford paying for your portion of closings costs. If you can’t afford to pay your closing costs, it can help your case to increase the purchase price when asking for a seller to pay your closing costs. This can help neutralize the amount that you’re asking a seller to pay for.
Still, there are other things that a buyer may ask a seller to pay. Things like a home warranty or repairs are all things that can quickly add up for a seller. If you can afford to pay for these on your own or if they’re a non-emergent issues, consider handling paying them for yourself.
Asking for everything under the sun can sometimes rub a seller the wrong way and hurt your chances of offer acceptance.
Rock Solid Financing
What’s the easiest way to stand out from the competition? Show that you’re a solid home buyer. While not everyone has the luxury of being able to pay cash for a home, it can be important to show that you can secure financing.
The easiest way of doing that is proving that you’ve been pre-approved with a local mortgage company.
A pre-approval is good for a few reasons:
- It shows that you’ve taken the time to get pre-approved.
- It shows that you’re taking the process seriously enough to get pre-approved before you start looking for homes.
- It shows that you’re a qualified buyer who is more likely to make it to closing.
A seller wants to know that they’ll make it to the closing table on time. A pre-approval can help give them some comfort in knowing that you’re income and credit score have already been approved. While things can happen to delay closing or make closing not happen, this is one small reassurance that can go a long way.
This may seem simple, but flexibility goes a long way in negotiations with a seller.
You may be surprised to find that some sellers do put a price on those buyers who are willing to work with them. Sometimes, a little goodwill can go a long way.
A seller may need time to find a new home so they may want a close date that is 45 or 60 days out. Or, they may have moved out of the home and want to close in 30 days so they don’t have to make another mortgage payment. A seller doesn’t want to feel pressure to be out of their home. A buyer who is unwilling to compromise on these items may be tough to work with when other issues and make a seller hesitant.
Instead of upping your offer price, showing that you can be a little flexible with a seller can go a long way. See if your agent can find out when a seller wants to close before you make an offer, this can often be an easy way to make your offer more appealing.
In the end, sellers just want to make it to closing with as little drama as possible.
Bottom Line – It’s A Two Way Street
It can be easy to forget that a transaction is a two way street. While your needs as a buyer are important, it can be important to consider what a seller may be wanting, too. By getting into a seller’s head a bit, you can set your offer apart from the competition.
Buying your first Knoxville home is an exciting and overwhelming experience. If you’re like most first time buyers, you may not be sure where to start. If there is anything we can do to help you in your home search, please do not hesitate to contact us. We’ve helped countless homeowners buy their first home and we’d love to do the same for you. Rick can be reached at 865-696-9002 or via email at Rick@KnoxvilleHomeTeam.Com. Kati can be reached at 865-696-1888 or via email at Kati@KnoxvilleHomeTeam.Com.
Are you ready to start your home search? Visit our home search page to get started today. Or, be sure to keep up with our Knoxville First Time Home Buyer’s Blog to keep up with the latest information about buying your first home.