If you’re selling your home in a city with very few homes for sale, it’s likely you’ll see a lot of interested buyers – and you may even get quite a few offers. But having a dozen offers to choose from doesn’t guarantee a smooth process. My fellow agents and I have seen a number of situations where a seller gets multiple offers, but the sale still falls through.
In Denver, where I work as a listing agent, a buyer can cancel a contract for any reason under the inspection clause. And because there aren’t many homes to choose from, buyers are under a lot of pressure to put in an offer quickly. That often means a buyer doesn’t truly commit to a purchase until after their offer is accepted.
So how do you know whether a buyer is serious about your home? Here are seven things you can do to ensure you’ve found a motivated homebuyer.
1. Trash the love letters.
Don’t be swayed by the emotional pleas of buyers. It’s fine if you want to read these letters, but don’t let them affect your perspective and judgment. Buyers may say they will do anything to buy your house, that their children have already chosen their rooms and that they can’t imagine living anywhere else. But then if the inspection comes back with an issue, they may still walk away. These letters are completely meaningless unless they are also backed by facts. If a buyer is so in love with your house, he can show you that through actions like offering earnest money, waiving contingencies or providing a detailed financial statement.
2. Dig in to the buyer’s qualifications.
A lender will tell you that a buyer can afford to buy your house, but that’s about all you’ll know. If you have multiple offers and want to be sure one of them will stick, your agent can ask a buyer’s agent to allow the lender to share additional financial information. You can find out things like length of employment, credit score, debt-to-income ratio and whether the buyer has cash reserves.
3. Vet the buyer’s lender.
Your agent can use his or her network to find out about the lender your potential buyer is using. Local is usually better, because a local lender will know all the laws and regulations in your market. Your agent can talk to other agents and find out whether the lender is proactive or waits until the last minute to take care of issues.
4. Know the buyer’s agent.
Your agent can ask around to find out how the agent handles transactions. Every agent has a reputation; find out what the negotiation style of this particular agent is, so you can go in prepared. If I’ve worked with a buyer’s agent before, or have colleagues who have, I can prepare my sellers.
5. Establish your limits.
Depending on your situation, you’ll have certain priorities. Is it crucial that your home sell quickly, or is the highest price the most important thing? How much money are you willing to pitch in to make repairs during an inspection? I prepare my sellers by talking to them about each phase of the process – appraisal, inspection, financing, etc. – and their expectations and limits for each. It may sound counterintuitive, but in some instances I may even encourage a seller to set a limit for how high of an offer he is willing to accept. The reason? If a buyer makes an offer that is significantly over list price, that buyer is more likely to try to negotiate on every item that comes up on an inspection. If a seller sets an upper limit and even negotiates down a bit, that buyer will feel better about the deal and is less likely to be nitpicky.
6. Negotiate something to concede.
A buyer will almost always try to negotiate, so be prepared to offer something the buyer wants, at the right time. This can be an anticipated issue that could come up on an inspection report, or a monetary concession if an offer is above what you know your home will appraise for. If your furnace hasn’t been serviced in a year, wait to service it until the inspection report comes back. In negotiations, that’s what I call a fluff item. We know we are going to give it away for the purpose of negotiating. You want to anticipate things you are willing to negotiate, which will make the negotiations that much simpler. And keep in mind that just because you are required to disclose something to a buyer does not mean you have to preemptively repair it. For instance, if you know there is a shingle missing on your roof, you can disclose that, but don’t fix it until after the inspection report comes back and a buyer asks you to do so.
7. Understand the contract and all the deadlines.
Here in Colorado, we have more than 30 deadlines associated with the home-buying contract. Make sure you know what you need to do and when. One of the quickest ways to scare away a potential buyer is to be difficult. Your agent has experience working with buyers in your market and will walk you through their expectations. If you’re well-prepared to provide buyers with what they need every step of the way, it will go a long way toward making them comfortable with the transaction.
Work closely with your agent to evaluate each offer and choose the one that makes the most sense for you. If you’re thinking of selling your home, find an agent to help on Redfin.com. And if you’re going to buy a home after you sell yours, check out our guide to buying and selling a home at the same time.