There you are, selling your house. You want the most money possible of course. That’s almost universally true. However, that’s only true if you are able to actually sell your house and sell it in a timeframe that meets your needs. You may be lucky enough to have several offers. It might seem intuitive to just take the highest one. When you are selling your house, a deal is great but that deal only matters if it closes. I the higher one has a lot of conditions or is from a buyer not likely to see it through, it may be worth looking at other options. Sometimes, this means that you may want to accept a lower offer might be worth it. Let’s take a look at when that might be the case.
Accepting The Lower Cash Offer
Along the lines of ”a bird in the hand is worth two in the bush” a cash offer means that you don’t have as many other things to worry about. A solid cash offer eliminates making sure that the buyer can be approved. It also means that the funding isn’t contingent on an appraisal. Unfortunately, that higher offer that requires a mortgage often has a lot of catches to it. At that point you aren’t just reliant on the buyer, you are reliant on the bank and its requirements as well.
These deals often tend to close more quickly. A cash offer usually means that the buyer has their funding all lined up. You’ll want to confirm that, but if they can close quickly, you will have lower carrying costs. It also means you can get out of your house more quickly and move on with your other goals.
It’s not unusual for an offer to have a bunch of contingencies. A contingency is basically a way of saying ”I will buy your house if….” It is a deal with conditions and is very common. These can be anything from having to get an inspection. The buyer might need to sell their own house first. The buyer may need to go get approved for a mortgage. Any number of things might be in there. While contingencies are common, an offer that doesn’t have any, such as a cash offer from an investor willing to forego an inspection, can be a great deal.
A Prequalified Buyer
The next best thing to a cash offer is a buyer who is definitely (or is very likely) funded. A buyer can get pre-approved for a loan from the bank. This gets you halfway there. If a buyer can prove their funding, it might be worth it for you to consider the offer.
It’s halfway there because the bank will still want to ensure that the house meets their requirements. So, you will almost certainly need to be concerned about the appraisal and the inspection. You know the house better than anyone, so you should be able to assess these. If you have a reasonably competent realtor you shouldn’t have listed the house for more than I can appraise for.
Your House May Not Pass an Inspection
Often paired up with our first two scenarios, if you don’t think your house can pass an inspection without putting more money into it than you have, you may want to consider selling to a buyer who is willing to buy it as-is. These are usually investors looking to buy a house and fix it up (or tear it down) and sell the property again for a profit. They often don’t care about what the house looks like today. However, they are looking to make a profit and so need a good enough deal to make money. They often do this all the time and know-how to close quickly and make a deal work.
You Need to Get Out Quickly
Maybe you’re having a tough time financially, or things didn’t line up like you hoped and you need to sell your house quickly. That’s a good time to look for an offer that has the means and the will to close quickly. This might be a time to add your own contingency to a deal that you will accept the lower offer if they can close in a certain timeframe. You could negotiate penalties if they can’t close at that time. Make sure to assess the buyer’s ability to close in that time but this could be a good time to take the money and run instead of waiting it out.
Accepting the Higher Offer Isn’t Always Better
When you sell something, you typically want to make as much money as possible. When you are selling something expensive and complicated, like a house, there is more to consider than just the sticker price. Every day that you still own the house, it costs you money in things like utilities, a mortgage, taxes, and so on. You may have already bought a new house and are having to pay for two mortgages. When you assess an offer, you want to look beyond the price and consider all the other aspects of the deal and that cost. You also want to do your best to look at the buyer’s ability to make it to closing. Sometimes that one bird in the hand that you have is worth far more than the two in the bush you never actually see.