The Highest Offer Is Frequently Not the Best One

When multiple offers come in, sellers look at the top line and want to take the biggest number. Sometimes that is right. Frequently it is not, and the difference is worth serious money.

Here is what I read on every offer before I say anything about price.

Financing

Cash closes. Conventional with twenty five percent down and a lender I have worked with closes. FHA with three and a half percent down on a property with condition issues may not close, because the appraiser has requirements the property might not meet.

The pre-approval letter matters. There is a difference between a pre-qualification, which is essentially the buyer telling the lender what they earn, and a full underwritten pre-approval, where the lender has verified it. Ask which one you are looking at.

The appraisal contingency

If the property appraises below the contract price, what happens? Either the buyer covers the gap, the price gets renegotiated, or the deal dies. An offer with an appraisal gap guarantee is meaningfully stronger than one without, and that is invisible if you are reading the price only.

The inspection contingency

How many days, and how broad? A short inspection period with a limited scope is a seller advantage. Seventeen days with the right to cancel for any reason is not the same offer as seven days limited to material defects.

The deposit

How much, and when does it go hard? A larger deposit that becomes non-refundable early tells you the buyer is serious. It is also what you have recourse to if they walk.

The timeline

Does the close date work for you? Does the buyer need a rent-back? Is that worth something to you or does it cost you?

Who is on the other side

I look at who the buyer’s agent is. Some agents get their deals closed. Others do not. That is not a small factor and any agent who has been doing this locally for a while knows the difference.

What this looks like in practice

I have advised sellers to take an offer twenty five thousand dollars below the top one because the top offer had a low down payment, a full appraisal contingency, a seventeen day inspection period, and an agent I had watched lose two deals that year.

The lower offer closed on time. Nobody ever knows what the other one would have done, which is exactly the point. You do not get to run the experiment twice.

Call me at (310) 861-3459.