DAN’S PERSPECTIVE
The Highest Offer Isn’t Always the Best Offer
It seems like the obvious answer should be yes.
But in real estate, the offer with the biggest number at the top is not always the offer that puts the most money in your pocket—or gives you the best chance of actually closing.
When we review offers with a seller, we look at the entire package.
Price matters. But so do the terms, the buyer’s financial strength and the likelihood that the transaction will make it all the way to closing.
“Selling a home is not complete when you accept an offer. It is complete when escrow closes.”
Start With the Price—But Don’t Stop There
Naturally, the first thing everyone looks at is the purchase price. If one buyer offers significantly more than another, that deserves attention.
But then we need to ask:
What has to happen for that buyer to actually pay that price?
A very high offer with weak financing, a small down payment, aggressive contingencies, or significant appraisal risk may not ultimately be stronger than a slightly lower offer with cleaner terms and a well-qualified buyer.
The goal is not simply to receive the highest offer.
The goal is to choose the offer most likely to produce the best overall result.
How Strong Is the Buyer?
One of the first things we look at is the buyer’s financial position. How much are they putting down? Have they been fully pre-approved? Are their funds verified? Are they financing most of the purchase price or bringing substantial cash to the transaction?
The stronger the buyer’s financial position, the fewer opportunities there may be for financing problems to derail the sale. That does not automatically mean a cash offer is always best or that a financed buyer is weak. It means we need to understand who is making the offer and how solid that offer really is.
Contingencies Matter
Price is only one part of an offer. Inspection, financing, and appraisal contingencies can all affect the strength of a transaction. Imagine one buyer offers more money but retains lengthy contingencies, while another offers slightly less with shorter or cleaner terms. The higher offer may look better at first.
But if the second buyer provides greater certainty and fewer opportunities for the transaction to fall apart or be renegotiated, that may ultimately be the stronger offer.
Every situation is different.
That is why we encourage sellers to compare offers side by side rather than simply ranking them from highest price to lowest.
PRICE IS ONLY PART OF THE OFFER
When we review an offer, we look at four things together:
PRICE
How much is being offered?
TERMS
What contingencies and conditions are attached?
BUYER STRENGTH
How solid are the financing and verified funds?
CERTAINTY
How likely is the transaction to close as written?
The Appraisal Can Change Everything
- This is particularly important when a buyer offers substantially above recent comparable sales.
- If the buyer is obtaining financing, the lender will generally require an appraisal. If the property does not appraise at the agreed-upon price, the transaction may need to be renegotiated unless the buyer is willing and financially able to make up the difference.
- So when we see a very aggressive offer, we want to know:
What happens if the appraisal comes in low?
Sometimes the strongest offer is not the buyer who simply writes the biggest number. It is the buyer who has both the desire and the financial ability to stand behind that number.
Timing Has Value Too
There are also terms that have very little to do with price but can matter enormously to the seller. Maybe you need additional time to move.
Maybe you are purchasing another home and need the closing dates to line up. Maybe a short lease-back would make the transition much easier.
A buyer who can accommodate those needs may provide real value even if another offer is somewhat higher.
The best deal is the one that works for your entire situation—not just the sales price.
That combination will be different for every homeowner and every transaction. That is exactly why reviewing offers is about more than choosing the biggest number.
It is about choosing the best deal.
If you are considering selling a home in Beverlywood, Castle Heights, Reynier Village or the surrounding Westside neighborhoods, we are always happy to discuss how the process works and what to consider before you reach the negotiating table.
Thinking About Selling?
If you are considering selling your home in the next six to twelve months, we can review your property, recent neighborhood sales, and the current competition and discuss what makes sense—well before you need to make any decisions.
Dan May
Dan May Real Estate Team
REALTOR®, Broker Associate
Mobile: (310) 739-8647
CA DRE #01069168
Dan May Real Estate Team West Los Angeles Insight Blog
