A) If there is a home sale contingency and the subject property of the buyers is either not on the market yet or hasn't passed its own contingencies in its sale. Other terms: a slow/fast or closing that doesn't work with the sellers' timeline, a lower net, or requests to amend any existing agreements currently in place with the property. The risk of accepting a higher offer that has a contingency with a home that isn't on the market or hasn't passed its contingencies is that there is less certainty that the home will sell. B) I recently represented sellers of their home on Maui, and we received two offers. One for full asking price of 975k, but it was a 0% down VA financed loan offer. The other was a 940k all-cash. On paper, the all-cash offer is the stronger buyer and the secure play. The sellers chose the higher offer with the VA loan due to the buyer's military service, and also because it was higher. The deal closed smoothly, and everyone was happy! Well, everyone except the lower offer buyer. C) N/A D) This is a higher net scenario where total commissions improve the buyer's position and increase the seller's home pay from the deal. Sellers with an agent seem to prefer when the buyer is also using an agent, as it results in a smoother, organized, and predictable process. 2. Risk/rewards are included with each answer above. 3. I have represented sellers who accepted lower offers. It's not always related to the nuts and bolts of the offers, but a personal preference in that they liked one set of buyers better than the other. The sellers feel better that a first-time home buyer will be calling it home over it being another investment for a larger organization. 4. Home sellers should consider the buyer's ability to perform when accepting a lower offer. 5. With multiple offers, consider various terms of the contract. 6. Home sellers shouldn't jump on the highest offer; they should carefully weigh the pros and cons of all offers and make the best decision for themselves. 7. Don't be afraid to take a lower offer if it means lower stress during the deal, higher confidence in the process, if it means you 'feel' better about the deal, or it aligns better with your goals of transitioning to another property. 8. Evan Harlow Real Estate Agent Coldwell Banker Island Properties Wailea, Maui, Hawaii www.mauieliteproperty.com evan@mauieliteproperty.com My original answer for this is much more in-depth and about 7,000 characters if you would like me to email.
The highest offer price is certainly enticing, but sellers need to consider valuable terms and conditions. I've helped several clients in the past who received attractive iBuyer offers, then had those offers slashed during a brief inspection period for unexpected service charges, repair credits, and appraisal shortfalls. These subtle reductions can result in a lower net then a competing offer with less minus contingencies or easier terms. A comprehensive analysis of all the terms in each offer with your agent is very important to determining the actual value of a potential offer.
Hi, I'm an Associate Broker in Massachusetts north of Boston & recently had a listing where the seller accepted an offer $30k below another! In short, it pretty much always comes down to the likelihood of closing. 1. Sellers will want to look at all details when reviewing offers, not just the price. There's of course the standard contingencies: mortgage & inspection where one may opt to waive those at a lower offer price which decreases the chance of an issue arising before closing so a seller may be motivated to take one of those instead at a discount. There could be a Home Sale contingency tied to the highest offer & sometimes you can see that it's a home that's been sitting on the market and is possibly overpriced. b. Having stronger financials can absolutely sway a seller into accepting a lower offer. This can be loan type so FHA versus conventional. Sometimes sellers may know that their house wont pass an FHA appraisal or they'd need to do a lot of work to make it pass. It can also be how much you're putting down especially if there's a chance of an appraisal gap. Then even if financing is similar, it could just be higher earnest money deposits showing more sincerity in the offer. c. I don't work with many co-ops, so I'll skip this one d. It's possible that an offer can be lower but the seller still nets more if there's no buyer agent fee (or a reduced fee) but in most cases, we're talking $15-30k on a $1M home so all other terms will be in play. The counter to this also comes back to the likelihood of closing, sometimes it's preferable to work with a buyer who's represented by another agent as you have another person uniquely incentivized to bring the deal to closing. e. It can also come down to timelines. If the seller of the home is say for instance buying another home, they may need to close by a certain date to keep their new home purchase alive. So if one offer can close within the desired timelines, but is lower, it would still be the better offer to keep their other deal alive. 2. I take this is "The risk of accepting the lower offer"? For each scenario (except the buyer agency fee one), it's pretty similar: The risk is less money, but the reward is the higher probability of an easier path to closing. 3. Yes, I had a seller take an offer $30k below the highest as we had a couple that just loved the home & they were the first to submit their offer waiting over a week for response. 4. Avoid any Fair Housing violations! (@ 2500 Char. max)
“Quintessential New Yorker®” and a Licensed Real Estate Agent at Brown Harris Stevens
Answered 5 months ago
1. If the highest offer includes multiple contingencies like the buyer wanting to sell their current home, get specific mortgage terms, or conduct exhaustive inspections, you are basically agreeing to a long engagement with no guaranteed wedding. Meanwhile, a slightly lower offer that's clean, quick, & confident might be your golden ticket. 2. I have seen buyers close all-cash deals on a slightly lower number with good financials over a higher one with shaky financing. In reality, you never know if the latter will even survive underwriting. A confident deal is always better than one that you don't even know you will close or not. 3. Co-ops are their own beasts. I often advise sellers to go with the buyer that is most likely to win board approval, even if it means closing on a smaller number. In NYC, a board rejection means you will have to start from the beginning again. One client agreed on a deal with a slightly lower offer from a buyer with amazing references and financials. The sale closed fast, no drama, no resubmissions. 4. Once a seller got two offers, a higher one with a 2.5% buyer's agent fee, & a slightly lower one from a buyer with a flat-fee agent. The net proceeds were almost identical, and the seller went with the latter because it felt like an open-and-shut case. Fewer back-and-forths means more peace of mind. 5. It's not always just about the numbers, sometimes legacy matters too. I have had sellers who prefer offers from those who wrote a thoughtful letter or showed an emotional connection with the property. The biggest risk associated with not choosing the highest offer is, obviously, leaving money on the table. But the reward? You might actually close the deal. Fast, clean, & confident offers reduce stress, delays, & surprises. One seller I worked with accepted a lower offer from a cash buyer after a bidding war. It was a tough call, but the deal closed under 30 days. She also told me that it was the most peaceful transaction she had ever experienced. Never forget to review the buyer's financial qualifications, contingencies, timeline, & motivation. And make sure you know what the net proceeds will be after commissions and concessions. The best offers are not always the ones that are the highest, it's the one that you are sure will close. So take a deep breath, consult your agent, & remember that selling a home is like running a marathon, not a sprint race.
In my 23+ years at Monterey Mortgage and now with California Hard Money Lender, I have seen sellers make expensive errors in the name of pursuing the highest amount. Here is what I found out the hard way When Relativities Slay in Reveries Just last month I saw a Fresno seller accept an offer of $875K with a bunch of contingencies over my client who had a clean offer of $840K in cash. The high-bidder requested inspection, appraisal, financing and sale contingencies. Three weeks in, their lender backed out as appraisal was at 820K. My money customer was finished. After two months more the seller sold at the price of $810K. The reason I always check buyer financials I have also witnessed too many pre-approval letters not worth the paper they were written on. Last year I had a seller take an offer of 950K with 3 percent down over my borrower with 25 percent down at 925K. Which do you guess shut? The employment of the highly leveraged buyer was restructured during the underwriting. Game over. Co-op Board Reality Check My Manhattan clients are aware that boards turn away one in every four applicants. I have witnessed first hand $1.3M bids by cryptocurrency traders wiped out by offers of $1.2M by government employees with consistent W-2s and 6 months in reserves. New Commission Economics Home Since the settlement of NAR, I am computing in a different way. A 2.5 percent buyer commission is taken which reduces the price to 960K to 936K. However, the flat-fee client offer of $940K brings the full price. In some cases less is more Money Saved by Cash Speed Time is money. Period. My hard money customers close in days not months.
In selling a house, the best offer is not always the most lucrative offer. Sellers have to give consideration to individual offers. A high bid that is too contingent can complicate the deal and even wreck the sale. A less expensive bid by a financially stable buyer or with fewer requirements, in other instances, may be smoother and faster to close and therefore the best option. Also, sellers are advised to focus on the way the commission is structured. A flat fee buyer can offer a lower price as compared to a higher one offered by a commission based buyer and still be more profitable. One should not only look at the sale price but consider the overall financial and logistics implication of each offer. Ultimately sellers that are more concerned with a smooth and reliable transaction than price will better ensure that they reduce risk and will achieve long-term success in the selling process. This considerate, tactical strategy results in an improved experience.
I've been in real estate for a long time — as an investor, a landlord, and someone who buys houses in as-is condition. One thing I've seen over and over is that the biggest number on paper isn't always the best deal for a seller. When the highest offer can backfire: A lot of times the top-dollar offer comes loaded with contingencies — inspections, appraisals, financing, sometimes even the buyer needing to sell their own place first. I've watched those fall apart weeks later, and the seller is left starting over. I'd much rather see a seller take a slightly lower offer from a buyer who has strong financing or cash in hand. A sure thing beats a maybe. Same with co-ops — even though I don't deal with them directly here in Illinois, the principle's the same: if one buyer is a lock to get approved and another (with a bigger offer) is questionable, it's smarter to go with the one that will actually get to the finish line. People also forget about commissions. If you're paying 2.5% or more to a buyer's agent, sometimes the "lower" offer with a flat fee ends up putting more money in your pocket at closing. From my own experience: I've taken lower cash offers on my properties plenty of times. Did I leave a little money on the table? Maybe. But those deals closed fast, without endless renegotiations, and I knew exactly what I was walking away with. The peace of mind was worth it. What sellers should keep in mind: Don't just look at the headline number. Look at the terms, the timeline, and how strong the buyer really is. The real question is: Which offer is most likely to close and leave me with the least stress? At the end of the day, selling a house isn't just about squeezing out the highest possible dollar. It's about getting the deal done and moving on with your life. Sometimes that means the "lower" offer is actually the smarter one. Don Wede Job Title: Company President Company: Heartland Funding Inc. Company Website: https://www.heartlandbuyshouses.com/ Social Media Profile: https://www.linkedin.com/in/don-wede/ Headshot: https://www.dropbox.com/s/l3ozgfhqty7g6nx/Head%20Shot2.jpg?dl=0
I have seen sellers make some of their most expensive errors when they are blinded by the highest number without taking into consideration the whole picture since I completed over 200 million in transactions since 2015. I am going to simplify when walking away top dollar makes you more money. Contingency-Heavy Offers: It's All About The Fine Print I had a seller last month receive a $1.2M offer that had seven contingencies as compared to $1.15M with only financing and inspection. The superior bid covered the sale of the property of the buyer, the prolonged period of inspection and up to 25,000$ of repair credits. The lower offer was accepted in 21 days; the higher one collapsed after 45 days because their property did not sell. The risks: Increased market time, the expenditure of carrying, and the threat of the price decline in the event of changes in the market. The reward: You do not incur the emotional and financial cost of a dead deal. Price is Preempted by Financial Strength Pre-approval letters do not list the entire story. I have seen 800+ credit score purchasers with 30 percent down lose to 750 credit purchasers with 40 percent down because debt-to-income ratios were different. Stated income is less important than bank statements Loss of fixed locking. There is always better certainty than uncertainty especially in rocky markets. Board Management Coop 10-15 percent of the applications are rejected in Manhattan co-ops. The one time offer of a freelancer with sporadic income is even worse than a low bid by a technical executive with the same financials. Boards want stability and an integration into a community. Risk: Discrimination only becomes a problem when not dealt with. Easy approval and quick close. Commission Math That Matters The actual math: 800K sale and 5 percent commission 760K. 785k sale and 1 percent flat fee 777K. That is $17K that is yours. I have formulated many of these transactions whereby a reduction in gross translates to an increase in net. Risk: May have a less large number of buyers. Much more net proceeds. Wildcard Cash Cash offers normally close 7-10 days quicker and have no financing risk. I have had sellers accept up to 50K less cash to eliminate mortgage contingencies, appraisal gaps and loan delays. In the competitive market, cash offers tend to appraise at the contract price. Risk: loss of income. The confidence to close and immediate liquidity.
Situations in which a seller shouldn't always accept the highest offer A high offer may contain an inspection, appraisal, or home-sale contingency, among other contingencies. They are all potential trapdoors. When the buyer is unable to secure financing or their own home doesn't sell, the seller runs the risk of having to wait weeks for the deal to fall through. b. Stronger finances in a lower offer: A buyer who has all cash, a large down payment, or a conventional loan will nearly always have a safer route to closing than a buyer who is paying more and is straining with FHA or little money. Sellers lose time and incur higher holding costs when deals fall through the financing stage. c. Risk of co-op approval: Co-ops are infamously picky. The chances of approval are significantly higher for a lower-priced buyer who satisfies the board's requirements, which include low debt-to-income, high liquidity, and stable income. If the application is rejected, it makes no difference if the high bidder fails the board. d. Commission math: A flat-fee agent can change the economics of expensive transactions where the buyer pays the buyer's agent. The seller can make more money with a slightly lower gross price and a lower commission than with a higher offer that requires 2.5-3% out of pocket. e. Other situations: Time is frequently underestimated. Sellers can save thousands of dollars on storage, insurance, and mortgage overlap by accepting a lower offer with a flexible or speedy close. Because they value certainty over making every dollar, sellers will sometimes even select buyers who agree to fewer post-inspection demands. Rewards and risks Contingencies: reward—larger payout if obstacles are overcome; risk—deal collapse and lost time. Financial strength: reward—certainty of funding and speed of closure; risk—slightly lower upfront. Co-op: Benefit: Preventing rejection and relisting delays; risk: reduced sale price. Commission calculation: reward—increased net proceeds for the seller; risk—possible agent friction. Timing: Benefits include a smoother transition, fewer hidden expenses, and less stress; risk includes a lower sale price.
Situations in which a home seller shouldn't always accept the highest offer A high offer with an excessive number of conditions: A buyer may jeopardize the deal if they include inspection, appraisal, financing, or home-sale conditions in their contract. It is frequently more likely that an offer will close smoothly if it is cleaner, slightly lower, and has fewer conditions. b. Lower offer with better financials: A buyer who is cash or has a bigger down payment can provide security that a buyer who is more expensive and overleveraged cannot. Unlike long-term financing, which is uncertain, cash deals, in particular, can close in a matter of days. c. Co-op board approvals: Passing the board interview is crucial for co-ops. Compared to a higher-priced buyer who is straining their budget, a lower-priced buyer with solid financial reserves and steady income may have a much higher chance of being approved. d. Differences in commission: In high-priced properties where the seller pays the buyer's agent commission, a slightly lower offer with a flat-fee agent may result in a higher net proceeds for the seller than a higher gross offer with a 2.5-3% commission. e. Other situations: Time is of the essence. A seller may want a lower offer with a quick close guarantee if they are moving for work or don't want to carry two mortgages. Additionally, emotional fit may be a factor; in some cases, particularly when selling long-held family properties, sellers select a buyer who will respect the home's history or condition. Seller risks and benefits Contingencies: reward—possibly higher price if cleared; risk—deal collapse after weeks of waiting. Financial strength: reward—certainty of closing and fewer surprises; risk—accepting less on paper. Co-op approvals: Risk: giving up a larger number; reward: saving time if a board rejects it. Commission calculation: reward—increased net proceeds for the seller; risk—possible agent friction. Timing/personal fit: Reward: less stress, lower carrying costs, and personal fulfillment; risk: less total money.
Situations in which a seller shouldn't always accept the highest offer a. Too many conditions: There is a great deal of uncertainty when a higher offer has several conditions, such as financing, appraisal, inspection, or the sale of another property. In reality, these unforeseen circumstances can cause a deal to fall through completely or drag it out for weeks or months. b. Stronger financials in a lower offer: A slightly higher financed offer is frequently less appealing than one that is cash or has a larger down payment. The likelihood of a seamless and timely closing increases with the strength of the buyer's finances. c. Co-op approvals: In cooperatives, approval is crucial. The seller's time will ultimately be wasted by a costly buyer who is unable to pass the board's scrutiny. The safer option is frequently a less expensive but more secure buyer who can pass the interview process. d. Calculating commissions on expensive properties: Sellers who pay a buyer's agent commission of 2.5-3% may receive less money from a higher offer than from a slightly lower offer that is represented by a flat-fee agent. In addition to gross price, sellers also need to compute net proceeds. e. Other situations: Time can make all the difference. A seller may be able to avoid paying two mortgages, storage costs, or delays in moving by making a slightly lower offer with a speedy close. Another factor is emotional fit; sellers may give preference to a buyer who will maintain the home's character or who satisfies specific occupancy requirements. Rewards and risks Contingencies: reward—larger payout if the deal survives; risk—deal fails. Financial strength: Lower gross sales are a risk; quicker closing and fund certainty are rewards. Co-op approvals are risky because they leave money on the table, but they are also rewarding because they prevent relisting and wasted months. Commission scenarios: Risk: Agent pushback; reward: increased net profit. Timing/personal priorities: reward—avoid stress and hidden carrying costs; risk—accept less.
There are times when a lower price is better. As a businessman and lawyer, I've seen buyers feel uneasy about pursuing the highest price without first understanding the underlying value. Having too many ties can waste time and money. A high price that depends on the home sale, inspection, or financing may not go through. It's often easier and faster to close on a lower cash deal with no conditions. Price is not as important as financial power. A buyer who is fully pre-approved and willing to pay cash has a better chance of closing than a buyer who is offering more but isn't exceptionally qualified. Board approval is more important than price in co-op deals. The buyer with the lowest offer who also has strong financials and a good pitch may get the deal, while the buyer with the highest bid fails the interview. Commission maths can change the result. If the buyer's agent charges a flat fee, a smaller offer might get you more than a higher offer with a 2.5% agent fee. Price can be beaten by timing. You might take less if a buyer can close quickly, especially if you need to finalize the deal soon, such as after losing your job or buying something else. One's own use of words can affect a choice. Some sellers prefer selling to someone who will live in the property rather than to an investor. Others like deals with open-ended closing dates. Who crosses the finish line is more important than the price.
1- My recommendation is that the most excellent offer is not necessarily the largest: enormous contingencies or insurance-waiver terms can cause a high offer to blow up; a slightly less offer with complete preapproval or a cashier's check eliminates finance risk; in coop sales the highest-to-clear-board-inspection offer is more valuable than a greater, more perilous offer; and a nominally less sale price with a flat-fee buyer could put more cash in your pocket after fees and commissions are deducted. 2-The risks are collapse, appraisal gaps, longer time on market, and renegotiations; the compensation is a sure close, quick escrow, minimal repairs/credits, and more of the net proceeds when commissions are a factor. You exchange headline price for a guarantee and speed. 3-Yes: We once had a mid-level Tampa house under contract where a better offer was an offer of a sale-of-home contingency and below-average loan, and we opted to take a slightly lower fully underwritten buyer and closed right on time and never had a 45-day fall-through; the lesson was that certainty is worth it. 4-Confirm lender preapproval conditions, earnest money amounts, inspection limits, appraisal plans, and a request for a co-op packet before accepting a low offer; do not rely upon verbal assurances. 5-Include close date, escrow duration, seller concessions, payment of appraisal shortfall, inspection limitations, and buyer's tolerance. Sometimes, a neater, faster close is well worth thousands of dollars. 6-In a nutshell, the greatest nominal bid may overlook the risk of execution; mature sellers value certainty, timing, and net proceeds to a darn fine top line. 7- No 8-I am Alexei Morgado, realtor for more than 5 years in Miami, Florida, and CEO and founder of Lexawise Real Estate Exam Preparation. My best email is alexei.morgado@lexawise.com
I have seen so many transactions of properties where the property that got the highest offer was not the wisest decision made. I have learned in my experience in covering later-life finance and equity release how property decisions can impact across the financial futures of individuals. 1. The situations, in which sellers are advised to take lower offers, are as follows: a. Excessive contingencies in high tend to set up roadblocks that kill a deal. I have even seen offers with inspection periods extending up to 21 days, financing contingency where the buyer can walk on minor credit hitches and sale of home clauses where the sale of your home is dependent on the sale of another home. Such contingencies are usually an indication of buyers who are not really interested and who are not ready. b. Price of offers is never a match to financial power A cash buyer at a price of 10,000 pound less than the full price will win out over a leveraged buyer with weak employment history even though he is willing to pay the full price. Letters of pre-approval are not a guarantee. The deals have fallen through even when the closing was weeks away and the buyers could not find final financing. Money is not enough to get co-op board approval. Lending Boards will review debt to income ratios, employment stability and even personality match. A lower bid on a physician with good recommendation is better than a higher bid on a physician with complicated income sources or attitude problems in the interview process. d. Commission structures are capable of reversing the equations altogether. Assuming that you are paying buyer agent commission, a £200,000 offer by a flat-fee represented buyer would leave you with more money than a £208,000 offer where you pay 2.5% buyer agent commission. The figures cannot be falsified e. Other situations involve timing requirements (fast closings as opposed to long-term timelines), acceptance of property conditions (as-is sales as opposed to repair requirements), and the strength of the backup offers.
The CFO with real estate transaction experience has observed numerous cases where sellers made better decisions than choosing the highest offer. The most common situation occurs when an offer contains various conditions. The buyer wants to make the purchase conditional on selling their current home or obtaining specific financing terms or performing multiple home inspections. The conditions create obstacles that prevent the process from moving forward so a slightly lower offer with better terms becomes more attractive. The second situation occurs when a buyer presents a lower offer but possesses better financial standing. The risk level becomes lower when an all-cash buyer makes a fast purchase compared to a higher offer that requires mortgage approval. Sellers choose to give up some price value in exchange for obtaining quick results and complete assurance about the sale process. The boards in co-op sales have the power to reject the highest bidders when their financial situation or personal background fails to meet their approval criteria. The process of resolving approval denials for candidates who receive slightly lower offers takes multiple months so it becomes safer to accept them. Commission structures also matter. The seller receives more net proceeds from a flat-fee broker's lower offer than from a higher offer that includes a 2.5% commission in high-value deals. Sellers need to determine the net value instead of focusing solely on the gross amount. I have advised clients to accept lower offers when the buyers offer cash as payment. The client chose the lower cash offer which led to a fast 30-day closing process because it eliminated the need for renegotiation. The lesson shows that headline numbers do not always match the worth of clear and certain information. Sellers need to evaluate buyer stability and financing terms and board approval chances and contingency conditions when making their decision. The strong human impulse to select the most attractive offer exists yet real estate agents understand that the most advantageous offer results in both quick and successful property deals. Full Name: Brian Chasin Title: Chief Financial Officer, Soba New Jersey Location: New Jersey Email: Brian.chasin@sobanewjersey.com
My experience leading finance teams at startups and Fortune 500 companies has shown me that the seller should not automatically choose the highest bidder because it does not always result in the best transaction. Too often, the offer with the biggest number comes with conditions that create uncertainty.The risk of delay or collapse becomes high when a buyer needs to sell their own property first or when they ask for major inspection concessions or when they link multiple financing conditions. A lower price from a cleaner service provider would provide stability and decrease anxiety levels. The financial situation of a person affects the entire situation. A cash buyer who makes a slightly lower offer is more dependable than a buyer who offers a higher price with mortgage approval conditions. The seller gains peace of mind and speed, and avoids the possibility of re-listing if financing falls through. The principle holds special significance for co-ops because of its importance. The board of directors chooses to deny candidates who show excellent qualifications but do not fulfill their predetermined requirements. A proposal with a lower value that has better chances of acceptance will prevent months of unproductive negotiations. A business outcome stability guarantee provides more value than the incremental revenue that shows up in the top-line number. Commission structures are another overlooked factor.Sellers paying a buyer's agent commission may actually net more from a lower offer tied to a flat-fee broker than a higher one that comes with a 2.5% commission.The determination of net proceeds needs to be done before the headline price is considered. The market provided its best offer to clients who decided to exit the market because the financing conditions were unfavorable. The seller chose a cash offer at a price lower than market value and the sale finished within 30 days without needing any price modifications. The team discovered that delivering quick and dependable service produced more value than pursuing the highest possible price. Sellers need to evaluate multiple offers by considering both the conditions of sale and the stability of buyers and their proposed closing dates and the overall amount of money they will receive. Full Name: Jonathan Orze Title: Chief Financial Officer, InGenius Prep Location: Phoenix, Arizona Email: https://www.linkedin.com/in/jonathan-orze-b637592?original_referer=
1. Scenarios when sellers shouldn't accept the highest offer a. Too many contingencies - A big number doesn't mean much if it's tied to long inspections, financing, or sale-of-home contingencies. Cash buyers offering less but closing in two weeks with no inspection often prove smarter. b. Lower offer with stronger financials - A buyer maxed out at $300K with little down and no reserves is fragile. If the appraisal comes in low, they may back out. A $285K buyer with 20% down, reserves, and a solid local lender is far more reliable. In today's lending climate, stability often beats a risky "stretch" offer. c. Co-ops - Even a high-priced offer can collapse if the buyer fails the board interview. Months get wasted and you may have to relist. A lower-priced buyer with stronger financials and references can sail through approval, protecting your timeline and net. d. Commissions - Net matters more than price. A $385K offer with a flat-fee agent can net you more than a $400K offer with a 3% commission. 2. Risks and rewards Contingency-heavy offer: Reward = higher price if it closes; Risk = delays, renegotiations, or cancellation. Stronger financials: Reward = smoother closing; Risk = potentially leaving money on the table. Co-op: Reward = higher chance of closing; Risk = settling for less upfront. Commissions: Reward = more net proceeds; Risk = possibly fewer showings. 3. Example A seller in Cleveland Heights had offers at $275K and $260K. The higher one came with long contingencies and financing red flags. The $260K was cash, no inspection, 14-day close. We took the lower offer and closed without issues. 4. What sellers should consider Look at the whole offer—contingencies, financials, timeline, and net proceeds and not just price. Falling out of escrow with the "highest" buyer means wasted time, extra carrying costs, and a stale listing. 5. Other considerations Who's the buyer's agent and lender? An unresponsive agent or inexperienced lender can derail deals. Also, check the earnest money. The bigger deposits usually mean more commitment. 6. Why not always take the highest offer The highest offer isn't always the best. Certainty and strength matter more than price on paper. A slightly lower but solid offer often puts more real money in your pocket. Nick Kuang Co-Founder, Home Sweet Home Offers Cleveland, OH kuangnick@gmail.com
Good Day, The best offer isn't always the smart one. We see that a buyer with too many contingencies for instance that they are waiting for financing through or to sell their current home first adds to risk. Also a lower price may in fact be the better play if the offer is supported by cash or is for a larger down payment. In co-ops the lower priced bid may in fact go in front with the board which is a factor that plays into it more than price. Also in large ticket items we see that commission structures play a role -- in some cases we net more from a lower price, flat fee buyer Rejecting the best offer may leave you at a financial loss, but it also gives you the chance to avoid mid process deal failures. A strong financial backer or one which doesn't attach too many conditions will give the seller piece of mind, and a large chance of a timely close. I had a case where a seller chose a lower all cash offer over a larger which was to be financed. The cash in hand buyer closed the deal in three weeks with no issues at all, whereas the larger offer may have not gone through or drag out for a very long time. My client saw that in the end it is better to have a sure thing rather than to chase after the very last dollar. The seller should not rush to lower offers but rather weigh other factors before settling on a price. Also, check how secure a buyer's finances are; how much money he or she is putting down; and if he or she has any proof of funds. What matters most, however, is the net proceeds after commissions and costs; often they tell a different story than the headline number. With very many offers out there, the first thing to consider is the terms that would make the deal easy. Earnest money, inspection demands, flexibility on closing dates, etc. Sometimes, a buyer who is very easy to work with is worth much more than one who simply gives the highest number. Such an offer-the highest dollar-offer-can actually backfire when it collapses. A lesser offer that goes through results in a better-if worse-off payoff. Selling a house is all about price, certainty, and timing. The superior offer in funds is one that closes with the least risk and not necessarily the biggest number. If you decide to use this quote, I'd love to stay connected! Feel free to reach me at marketing@docva.com and nathanbarz@docva.com
Multiple scenarios exist where sellers should reject the highest offer because price alone does not determine the best deal for your situation. At Liberty House Buying Group, I work with sellers who learn that the most money on paper often becomes less money in their pocket after the deal complications get resolved. The contingency heavy offers create the biggest problems because buyers who include inspection contingencies, appraisal contingencies and financing contingencies can renegotiate or walk away at multiple points. I think that the buyer financial strength matters more than their offer amount because the weak buyers often cannot close even if they get approved initially. A buyer with 800 credit score and 20 percent down will close reliably while someone stretching financially at 620 credit might face the last minute loan problems. The co op board approval adds an extra layer of complexity where the lower offers from the stable applicants beat the higher offers from questionable candidates who might get rejected after months of board review process.
I've seen sellers get swayed by flashy high offers that were stacked with contingencies, only to watch deals fall through after weeks of waiting. When I work with distressed homeowners, a cash buyer offering a little less often saves the day because they can close in a week and don't nitpick repairs. My advice: sometimes the sure thing, especially when time or stability matter, actually puts more money and peace of mind back in your pocket.