The current San Diego real estate market is extremely competitive. With more buyers than homes for sale, listing your home in this market could result in multiple offers for your house. While this is a great position to be in as a seller, make sure you look beyond price when weighing the offers you receive. Here a few other things you should consider:
Length of the Escrow
A 30-day escrow is pretty standard in San Diego, but can go longer or shorter if all parties (including the lender) are willing and able.
If you need a quick close, a cash buyer is going to be your best option. Since there’s no loan involved, all the buyer needs to do is verify and inspect their purchase. A 10-14 day close is not outside the realm of possibility for a cash buyer.
But if you need a quick close, cash buyers aren’t your only option. Buyers need to specify the length of the escrow on their offer so make sure you look at what each buyer has offered you.
If you’re not in a hurry to close or are asking for a rent back anyway, a strong offer at the price you want with a 45 day or more escrow could be just as attractive as a cash buyer.
How much is the buyer putting down and how much of that are they offering as their Earnest Money Deposit (EMD)? These numbers not only paint a picture of the buyer’s financial stability, it also indicates how serious they are about buying your home. The larger the EMD, the more “skin” the buyer is putting in the game.
If an effort to stand out in a competitive marketplace, a buyer might offer to waive the normal contingencies – like the appraisal contingency. This is a bold move for a buyer to make and shows how serious they are about buying your home. As a seller, you want to work with a committed buyer who is unlikely to back out during escrow – leaving you with a house you still have to sell.
You should also consider the allocation of closing costs. What is the buyer offering to pay for? Are they covering all of the items that are typically covered by the buyer or are they asking you to pay for any of those items? Maybe they’re offering to pay for some of the items that are typically covered by the seller – which would save you some money.
Sometimes you will get offers that are contingent on the sale of the buyer’s current home. If you have multiple offers on the table, it could be tempting to immediately disqualify the contingent offers. But before you do, make sure you have considered the rest of the offer and how well it aligns (or doesn’t align) with your own goals. If you’re not in a hurry and the offer otherwise looks strong and offers the price you want, you might want to seriously consider that contingent offer.
Your agent should be able to tell you how long they think it might take the buyer to sell their home based on the market conditions. Though your agent can’t tell the future, they should be knowledgeable and experienced enough to give a rough estimate of how quickly that home might get into escrow. Your agent is also responsible for communicating with the buyer’s agent to see if there has been any activity on the home or if they might be close to accepting an offer. These are all important things to know when considering a contingent offer.
If you do decide to go with the contingent offer, your agent will talk to you about countering back with a specific timeframe for the buyer to get their current home into escrow. If you give the buyer two weeks to sell their home and it doesn’t happen, you’ll be free to move on to another offer.
You also might find that the contingent buyer’s home is already in escrow – which means less risk to you if you go with their offer. They’ll be motivated to see the deal through since they’ll need somewhere to live when their current home closes.
Finally, it’s important to consider the buyer behind the offer. You should look at both their financial situation and who they are personally.
On the financial side of things, you should make sure the buyer has been pre-approved for a loan. You should also look at what amount they were pre-approved for. If your home is at the top end of the budget, they probably won’t have any more room to go up in price or cover any additional costs that might come up during the escrow. If your home is comfortably within their budget, they might have more capital to play with to close the deal.
On the personal side, who is the buyer? Are they a family? A young couple? An investor? While it might not make financial sense on paper to let your personal opinion of who should buy your home guide you when deciding between offers, at the end of the day, it’s your home and you can choose any of the offers on the table. If you’d rather go with a family who is offering you a little less than a cash investor offering full price, you can do that.
Your agent is there to help you evaluate and decide between the offers you receive. This is where working with an experienced, knowledgeable agent can really benefit you. I have successfully helped many San Diego sellers sell their homes – with and without multiple offers. If you’ve been thinking of listing your home for sale and would like a free consultation, give me a call!