Selling your home? The highest offer may not be the best
It is natural to be drawn to the highest offer when selling a property. But are there other factors you should be considering beyond the money?
Is selling property all about getting the highest price?
The short answer is, "it depends".
People sell property for a range of reasons, with different timescales in mind, and under many different circumstances.
If you have the luxury of time, you can afford to turn down low-ball offers and wait for a bigger offer.
For many sellers, however, time is very much a factor. This is often because the seller is in a chain and needs to find a buyer urgently.
Buyers face similar pressures. Some are more ready to move than others, some are more serious about seeing the process through, and some may be embroiled in a complicated chain that may delay the completion of your sale should you accept their offer.
When you have multiple offers, you must consider both your own circumstances and requirements, and also your buyer's.
Ask yourself, "What is more important?"
Do you want a quick sale, or the best-possible sale price? Are you prepared to risk the sale falling through by accepting a buyer in a chain, because they have made the higher offer?
Be aware that these various positions are not mutually exclusive. It is possible (if very unlikely) that you find a perfect buyer; a chain-free, cash buyer who also happens to have made the highest offer. It is also possible that there is little to choose between two or three offers you receive from buyers all in similar, chain-bound circumstances.
Choose the offer, and buyer, that best satisfies what requirements are important to you.
When selecting a buyer. be mindful that conveyancing solicitors can take 2-3 months to complete the sale. Both your circumstances, and those of your buyer, can change in that time.
The highest offer may not mean a guaranteed sale
If someone comes along who is willing to pay the asking price (or more), make sure your estate agent gets a sense of the buyer's circumstances before you eagerly accept the offer.
A buyer in a chain may try to lure you in with the highest bid, so you are more willing to wait while they find a buyer themselves.
Try to understand the following about the buyer's position:
- Does the buyer have a mortgage agreed in principle?
- If the buyer is selling, do they have a buyer?
- If the buyer is part of a chain, how many 'links' are there?
- Are they a first-time buyer?
- Are they a cash buyer (with no need to arrange a mortgage)?
Offering you the asking price is all very well, but be cautious of an buyer's offer that feels 'too good to be true', or seems otherwise unreliable.
Your estate agent may also be able to give you a steer as to how reliable a buyer's offer could be.
Do you need to sell quickly?
If you need to relocate swiftly, your finances are under strain, or you’ve made an offer on a property you don’t want to lose, finding a buyer who can move quickly will likely be your highest property.
Find out when your potential buyers plan to move in, and see whether this fits with your timescale.
If one buyer offers you more money, but is part of a complex chain that could see significant delays, and another party is offering less but is a cash buyer, you have a simple choice to make: more money, or a faster sale?
In addition, a cash buyer is not reliant on a bank or mortgage lender to fund their purchase. Cash buyers are therefore less likely to have to pull out for unforeseen reasons.
A buyer with a mortgage could lose that mortgage offer if, for example, their they lose their job in the months between making you an offer, and completing the conveyancing process.
Has the highest offer been made by a developer?
If you have had a high offer from a property developer, ask yourself why the developer wants to buy your property:
- Are they simply planning to renovate or extend the property? Would that add considerable value in your area?
- Could other developers be interested in the property?
- What developments are due to take place in your immediate area that might make your house or the land it’s on more valuable?
If you have time and don't need to urgently move, ask your estate agent for any clues. It may be prudent to wait before leaping at the first high offer, particularly if an early, asking-price offer is an indication that improvements to the local area are imminent,
If some new development or new road is in the offing nearby, your property could become increasingly desirable.
Are you prepared to gamble and wait?
Refusing a high offer is always a gamble. Assuming you do not need to move urgently, you may find that a high offer is a positive sign, and that you may receive even higher offers in due course.
That said, the local market could collapse, an anticipated road or rail scheme could be delayed, or your high offer may have been made by a uniquely-positioned buyer in desperate need of a home. A delay on your part could see the high offer withdrawn.
Conclusion - Be prepared
The best position to be in is one where you have considered your requirements ahead of time.
If you know what your minimum acceptable offer is, whether you need a quick sale, or a (relatively) more-reliable buyer, you will be able to judge each offer you receive against those criteria.
According to HM Land Registry, one-in-three conveyancing transactions fall through. Ultimately, if you do need to sell, you may be better off ignoring the size of the offers you receive, and focus instead on choosing the buyer with the best prospects for a successful sale.