In the current sellers market it would seem that sellers have the luxury of choosing from many qualified buyers and that it should be easy to pick the best offer. It is more of struggle that you think to find that truly qualified buyer! Not only someone who can reliably provide the money to close, but who is emotionally vested and has the motivation to see it through, even when things get rough along the way. There are two processes of qualification in the escrow period to consider, the buyer has to qualify to get the money and the property must qualify as sufficient collateral. Let’s just focus on the buyer for now.
When sellers receive any offers they must rely solely what is written in an offer and any additional supporting evidence such as a pre-qualification letter and information from the buyer’s broker. Since most pre-qualification letters are hastily written without any verification, the seller really has no concrete proof that the buyer can even secure a loan at time of acceptance. The listing broker must be savvy enough to read between the lines and help detect clues that help to provide clarity in that struggle.
Does the buyer have sufficient funds to close? The purchase agreement should have rules of engagement that require the buyer to provide proof of funds (bank account amounts, IRA’s, loan from grandma, etc) so that the seller can have some assurance of buyer’s true financial status early in the deal.
Did the buyer view the property? Many buyers in this frenzied market, wearied by the competition and worried they will lose out, sometimes submit offers prior to viewing the property, thus increasing the risk to the seller that they will not perform.
Is the buyer emotionally vested or are they flakey? One clue might be that they have filled the offer with escape clauses, just in case they might want out. One common escape clause is the Home Inspection Contingency. Though a necessary evil, it is a free look and a free walk for the purchaser if they are not totally satisfied with the inspection. This cuts two ways for the seller! While it certainly offers some insulation from liability if the deal actually closes, there is a big chance that the buyer will use that leverage to escape the deal if they get nervous.