What to do if multiple homebuyers make offers

Price isn’t the only thing when evaluating numbers

Live in a hot real estate market? If you’re selling your house, you might be lucky enough to receive more than one offer. If so, it’s a good idea to let potential buyers know. That way, they can tailor their offer with the competition in mind.

You’ll then need to evaluate each offer fairly and consider advice from your real estate agent to choose the best one. Here are strategies to reach a decision:

Price just a starting point: The offer with the highest price is going to get your attention, especially if it’s close to or above your asking price. But that doesn’t mean you should automatically hand over the keys to the highest bidder. Those offering the most money might be stretching their finances and run into trouble at the closing table. For example, they may not get approved for a big enough mortgage to buy the house at the agreed price.

So in addition to considering the dollar amount, you should review the terms of the entire contract with your real estate agent. For instance, consider how much cash the buyer is planning to include in the offer. More cash — and a correspondingly lower home loan — can ease a closing.

Compare contingencies: When buyers make an offer, they’ll often include a few conditions that, if not met, allow them to cancel the deal. These contingencies may include getting approved for a mortgage, having the home pass an inspection, and making sure the home appraises for a certain amount.

When you’re selling your home, contracts with fewer contingencies are better, because there will be fewer chances for the buyer to back out of the contract.

Consider buyer funding: If the buyer plans to pay in cash, you won’t have to wait for a lender to approve the home loan.

But most of the time, a buyer will need a mortgage, and if that’s the case, consider whether the buyer is preapproved for the home loan. An offer from a preapproved buyer usually is stronger than an offer from a buyer who hasn’t made any financing arrangements.

Consider your home’s value: Say you accept an offer from a buyer who then orders an appraisal of the property. If the appraised market value is less