Highest Offer Is Not Always the Best Offer
There is a big misconception about the highest offer being the best offer when it comes to selling real estate. There are several factors that sellers will look at when accepting an offer, the biggest factor of course is price. What many people fail to realize is that the type of sale, financing, and down payment are just as important if not more important than price in many cases.
Highest Offer is not the Best Offer on Short Sales
If a very high offer comes in on a short sale, it is unwise of the seller to accept the highest offer if it is above or very close to the homes retail market value. What happens in many cases is that the buyer will walk because the short sale process takes a long time and the buyer recognizes that they are not getting a good price on the home because they are buying it as-is. The unfortunate part is that the seller is stuck with the home with a very high “short sale approved price”. Once the bank is presented with an offer for a very high amount, the bank will not want to come down on their sales price or the seller will have to wait until the Banks evaluation expires (this is several months in many instances and the home can go into foreclosure). It is always wise to accept a lower offer on short sales so that the buyer gets a good deal and closes (if the buyer walks, the agent will have a low approved short sale which will sell very easily). Most agents do not understand this concept and that is why many short sales go into foreclosure.
Financing
When someone is selling a house and one potential buyer is obtaining financing and one potential buyer is purchasing the house cash, the cash offer is always preferred. Many times sellers will even take a lower cash offer over a financed offer because it is considered a stronger offer and not contingent on an appraisal (needed for all financed offers).
Earnest Money Deposit
If a buyer puts a very large amount of money down for the earnest deposit, it is considered a very strong offer. This means that the buyer is serious and that the buyer is not worried about losing their deposit so they won’t back out last minute. If someone puts a 100% earnest money deposit of the sales price, it is an extremely attractive offer. This shows the seller that if they take the offer, the money is already there and all they have to do is close. For example, if someone made an offer on a house for $100,000 with a $100,000 earnest money deposit, it is extremely attractive to the seller (as long as pricing is in line with what they want). Using a huge earnest money deposit like the example helps people win houses when bidding wars occur even if they aren’t the highest offer.
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