5 Reasons the Highest Offer Doesn’t Always Win?
Why doesn’t the highest offer always win when buying a house? Here are 5 reasons The highest price offer might not win and how you can save time and frustration when trying to buy a house in a competitive market.
The home buying process is a fun but also agonizing experience that is as gut wrenching as a stanley cup playoff run by the Blues in 2019. When you find the home you fall in love with, you don’t want to miss out on it and go back to the drawing board to find another home that you hope is just as good.
You might think that the highest priced offer always win. But, that’s not always true. Here’s 5 reasons the highest offer doesn’t always win, and how you can make sure you’re the one getting your dream house instead of someone else.
So here’s the first reason why the highest offer might not get accepted.
#1 Inflexible Closing Date
It’s often forgotten that the seller is also human and have a life. Maybe they need to close quickly so they can move to a new city, or have a delayed closing because they don’t have another place to live. Either way, sometimes the ability to be flexible on a closing date can be more attractive to a seller than more money.
#2 Ask For Repairs
The second reason the highest bid might not win is because they ask for repairs. In a standard sales contract, the buyer has the right to ask the seller to repair defects with the house. Sometimes the last thing a seller wants to do is coordinate contracts to fix a house they aren’t going to be living in. And, accepting an offer that removes the option for the buyer to ask for repairs is a bigger deal than the sale price.
#3 Appraisal Contingency
The third reason the highest offer might not win is because it keeps their appraisal contingency. Typically, the buyer gets a loan from a bank to finance the purchase of the house. This is contingent upon the bank appraising the value of the home, and they’ll lend money to the buyer to appraised value, minus the down payment. If the appraisal comes in low, the buyer and seller negotiates a new or same purchase price.
Usually, the seller values knowing that when they agree to an offer, that’s the sale price and won’t change. But, with this contingency, it could change.
Things buyers have been doing to make their offer more attractive to the seller are offering to pay the difference if the appraisal comes lower than the purchase price, or even waiving the appraisal contingency all together.
There’s many factors that go into this. So, make sure your agent talks to you about the risks associated with paying over the appraised value of the home.
It’s still something that makes sellers consider an offer that’s not the highest purchase price.
#4 Bad Communication
The fourth reason the highest offer might not win is because thre’s bad communication between the buyers agent and listing agent. As with the theme of this whole video, the sellers don’t just care about the highest price, but also care about a smooth and easy transaction. This happened to my buyers this year. The sellers had a really frustrating and difficult time buying their new home. And, all they wanted was to sell their home quickly and painlessly. My clients offer was similar to another offer but the seller asked the listing agent which agent and buyer would be easier to work with and would be less stress on their life. The agent recommended taking our offer because she knew I’d be easy to work with.
#5 Too Many Contingencies
The last reason the highest offer might not get accepted is because it has too many contingencies. Most sellers care about purchase price, but not if they have to jump through a bunch of hoops to get the highest price. Moving is a stressful event, and many sellers are willing to not take the highest offer if it means they can have a little more security and time to focus on them instead of catering the buyers requests.
Cash is still king. But, the highest offer doesn’t always make it the best offer. At the Krista Hartmann Home Team we make sure to explain how to make your offer as strong as possible while working with your situation. If you’re looking to buy a home now or in the future, make sure to reach out to us so when the time comes, your offer stands out above the rest.