HOW TO FIND THE RIGHT BUYER?

Here are the factors most sellers rank from highest to lowest importance when considering which buyer they want to work with. 

1. Purchase Price: In most cases, this is the #1 thing sellers care about. As long as the person with the highest price offer has a high probability of closing, this is what the strongest buyer will present.

2. Financing Types: No matter how the person buying your home chooses to finance it, you should vet their financing type before going under contract. This involves getting a loan prequalification letter and calling the loan officer to ask them about the buyer, and/or receiving "proof of funds. A good realtor will know how to vet serious buyers and ones that are not prepared.

   • Cash- If you choose to work with a cash offer, get proof of funds. An account statement from their banking institution with personal information blocked off.

   • Conventional loans are seen as the next "strongest" - conventional buyers have to have high credit and a down payment to qualify, and have to make more income to qualify for the ratios in a conventional loan, making them less risky as a purchaser.

   • Government sponsored loans (FHA, VA, USDA) are not perceived as strong generally.  VA loans can be just as strong or stronger than conventional loans, depending on the person.

3. Down Payment Amount: Choosing a buyer with more of a down payment shows a buyer's available liquid cash. This means they have more flexibility and availability when hiccups come along in the process. They may be able to help cover some of the cost of the home out of pocket if it doesn't appraise (if the market is hot). They may not ask for as many home inspection repairs because they may have more liquid cash to do it themselves. They may not need as much in seller concessions because they can decrease their down payment if needed to help cover closing costs. Overall- the more money down, the more solid an offer is. 

4. Contingencies: Contingencies are elements of a contract that the buyer has the option to back out of a contract without financial repercussions. If buyers remove contingencies, their earnest money, up-front-deposit, or due diligence money is non-refundable. This gives a seller immense peace of mind that the buyer is serious and will not back out of the contract last minute, but is only typical to get that deposit non-refundable or before 3 weeks into a contract only if a market is hot. Common contingencies include: Due diligence (home inspection), Financing, and appraisal. If contingencies are removed, it means less renegotiation later on in a contract, so less headache for a seller.

5. No seller Concessions: A buyer can ask a seller to pay for seller paid closing costs, which helps them to cover their loan fees and other closing costs that sometimes are hard for a buyer to save up for on top of a down payment. Traditionally the way this is done is if a buyer were to offer on a 300,000 home, but needed $6,000 in closing costs, in a competitive situation they may offer $306,000 with asking for $6,000 in seller paid closing costs. This nets the seller the exact same as an offer of a flat $300,000, it is perceived as weaker, because if the home does not appraise for the higher value of 306,000 and the seller needs to drop the price, they don't want to have to renegotiate the price down AND still have to pay for closing costs. So typically an offer without closing costs is seen as stronger even if another offer is identical in every way.

6. Time to Close: A standard contract is 30 days. Any more than that- weakens an offer. Less than 30 days strengthens it unless the seller needs time to move out.

7. Up-Front Deposit: AKA earnest money or due diligence money. If the buyer puts less than 1% of the purchase price down in most areas they generally are considered not serious. The more down they put, the more serious you they. But at some point the amount has diminishing returns. You as the seller also need to be prepared that if you default on the contract for any reason, you will be required to pay the buyer that amount in damages in most states, so the up-front deposit is a doubled edged sword.