What to compare
- Price
- Financing type and the strength of the pre-approval
- Down payment size
- Earnest money deposit
- Contingencies, such as inspection, appraisal, financing or home sale
- Closing date and any rent-back request
- Concessions the buyer is asking you to pay
Look at certainty, not just price
An offer is only worth something if it closes. A buyer with a full pre-approval, a solid down payment and few contingencies is more likely to get to the closing table.
A larger down payment can also give the buyer more room if the appraisal comes in low. Appraisal gap coverage, where the buyer agrees to cover some or all of a shortfall, lowers that risk further.
Contingencies and timing
Each contingency is a way for the buyer to cancel. An inspection contingency lets them back out or renegotiate after the inspection. A home sale contingency means their deal depends on selling their own home first, which can add weeks of uncertainty.
Timing matters too. A closing date that lines up with your next move, or a short rent-back that lets you stay a few extra days, can be worth more to you than a small bump in price.
Use net proceeds
Net proceeds are what you'd keep after concessions, commissions, payoff and other selling costs. Two offers with different prices can net you almost the same amount, or the lower one can come out ahead.
Two offers compared
Here are two offers on the same home:
- Offer A: $430,000, FHA financing, $8,000 in seller concessions, inspection contingency
- Offer B: $424,000, conventional with 20% down, no concessions, appraisal gap coverage
What the example shows
After concessions, Offer A nets about $422,000 before other costs. Offer B nets $424,000, with less risk if the appraisal comes in low. Even though Offer A has the higher price, Offer B leaves you with more money and fewer ways for the deal to fall apart.
Hypothetical example; figures are for illustration only.
Handling multiple offers
With several offers, you can counter one or more, or ask everyone for their highest and best. Some buyers use an escalation clause that raises their price above competing bids, up to a cap. Your agent can help you respond fairly and within your local rules. Where CapCenter offers realty services, our agents can prepare a side-by-side net sheet for you.
