In the Heat of Moment
With multiple offers, a buyer can get so emotionally drawn into the desire to win that they may take a damn the torpedoes approach. A seller too can get caught up in the moment and get fixated on price without comparing the terms as well as attempt to determine the strengths and weakness of each offer.
A Seller Should Consider Mitigating the Risks of a Cash Offer
A buyer may make an unconditional cash offer to “seal the deal”, making the agreement firm and binding once the seller signs. A cash offer may be genuine, yet most purchases do require financing of some kind. So it’s prudent for the seller to inquire as to whether the buyer actually has the cash to buy and where the money is coming from.
- A cooperative buyer will be more than willing to disclose specific information on the source of funding. For example, the buyer may have sold his current home and has the equity or has obtained approval for bridge financing. This creates credibility and gives the seller a level of comfort.
- A buyer’s vague response or unwillingness to disclose information can be a red flag and should be considered before the seller decides whether to accept the offer over another.
- What if the money is coming from a foreign country or from an insurance claim that has not been settled? This can potentially cause delays, requests for one or more extensions of the completion date and can even result in no closing at all. Some confirmation that the money will be there on closing is a reasonable seller request.
- A buyer may fail to recognize that the mortgage approval is subject to an appraisal, yet no condition addresses this.
As part of his due diligence, the seller and his agent’s job is to minimize risk, in an effort to improve the likelihood that the sale will close successfully and on time. After all, the seller may need the equity out of the home to purchase another.
Acting Hastily Can Lead to Regret
It’s not uncommon for an offer to come in and the property has one or two more showings within the next day. Understandably, the seller wants to see whether more offers are forthcoming before dealing with the offer in hand. This can cause a buyer to rush into a competing offer.
Acting hastily can result in buyer’s remorse after the offer is accepted. One approach might be to increase the deposit amount, testing the buyer’s sincerity and resolve to buy. It also slows the process down somewhat, giving the buyer time for a little sober reflection. Rushed decisions can carry the seed of regret.