Which Offer Won?

Man pushing happy woman in moving box

A real example of price vs. terms

By Andy Randles, Flyhomes Client Advisor in Seattle

“How much do we need to offer on this home?” is one of the most common questions I get from buyers.

Well, that’s a pretty layered question and ignores the other very important part of every offer—the terms.

Terms include items such as contingencies, earnest money, closing date, and more.

If the terms on an offer are weak, you’ll have to offer more money, but if the terms are stronger, you’ll likely be able to offer less.

Let’s take a look at a recent offer scenario. Two offers came through for a single-family home listed at $874,950, but which was selected?

Because of expected competition, both offers included escalation clauses, meaning that the offer could be automatically increased up to the max escalation amount.

Offer #1

  • Offer at $874,950 (list price)
  • Escalation to $960,000 with $6,200 increments
  • Financing contingency included
  • $30,000 in earnest money to be held in escrow until closing
  • No rent-back

Offer #2

  • Offer at $874,950 (list price)
  • Escalation to $907,000 with $4,000 increments
  • No contingencies
  • Flyhomes Guaranteed Offer
  • $45,350 in earnest money with immediate release to sellers
  • 1 month of free rent-back

Despite coming in at a significantly lower purchase price of $907,000, Offer #2 (the Flyhomes offer!) won in this scenario. (Offer #1 would have ended up at $913,200 with a $6,200 escalation over the max $907,000 escalation on Offer #2.)

Sellers crave certainty in their offers and that shone through in this situation. Our winning offer had no contingencies and our buyer was willing to release their earnest money immediately to the sellers, in addition to one month of free rent-back (this allows the sellers to get their lives squared away and potentially buy a new house before they’re out of their old home).

So, all this is to say … offering is a negotiation and sellers want to feel like they’re getting something in return for taking a lower-priced offer. Considering all options, pricing and terms, is the best path to success.

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