How I Read Offers From Both Sides of the Table
The Short Answer
The highest offer isn't always the strongest offer. Financing, contingencies, earnest money, appraisal terms, lender strength and the buyer's overall ability to perform can matter just as much as the number on the page. Having worked as a mortgage broker while also owning a mortgage company, alongside over two decades as a REALTOR®, I look at an offer from both the lending side and the real estate side.
That doesn't mean I have access to a buyer's private financial or underwriting information. It means I know what questions to ask, what to look for in the documentation we're provided, and where potential financing risk may be hiding.
Why This Matters More Than People Think
Most sellers assume comparing offers is relatively simple: look at the price, compare the closing dates, and choose the best number.
In practice, two offers at exactly the same price can carry very different levels of risk.
A great price doesn't help a seller very much if the buyer can't close.
When a transaction falls apart and a home returns to the market, it can create additional challenges. Buyers may wonder why the previous sale failed, which is one reason I believe evaluating the strength of an offer is about much more than the purchase price.
What I Actually Look At in an Offer
The strength of the preapproval
A prequalification and a fully reviewed preapproval aren't necessarily the same thing.
When appropriate and permitted, I want to understand how thoroughly the lender has reviewed the buyer and whether there are significant outstanding conditions.
My mortgage background helps me know which questions are worth asking the buyer's lender rather than simply accepting the letter at face value.
Loan type and financing structure
Conventional, FHA, VA and other financing programs have different requirements and considerations.
The loan type itself doesn't make an offer good or bad. What matters is understanding how the financing interacts with the property, appraisal, closing timeline and terms of the purchase agreement.
The lender behind the letter
The lender matters.
Communication, responsiveness and the work completed before the offer can all affect the likelihood of a smooth closing.
When appropriate, I may speak with the buyer's lender to better understand the strength and status of the approval while respecting the buyer's privacy and applicable lending rules.
Appraisal protection and gap coverage
Price matters, but so does what happens if the appraisal doesn't support that price.
In competitive situations, some buyers offer appraisal gap coverage or other terms addressing a potential appraisal shortfall.
The amount, wording and buyer's demonstrated ability to perform under those terms can materially change the strength of an offer.
Earnest money
Earnest money can provide another indication of a buyer's commitment to the transaction.
But I never evaluate it in isolation. It is one part of the overall offer and needs to be considered alongside contingencies, financing and the rest of the purchase agreement.
Contingencies and how they're written
Inspection, financing, appraisal and sale-of-property contingencies can create very different levels of risk depending upon their specific terms.
The important question isn't simply whether an offer contains contingencies.
It's what those contingencies actually allow the buyer to do, how long they remain in effect, and what they could mean for the seller.
Why My Mortgage Background Still Matters
Before becoming a REALTOR® in 2004, I worked in mortgage lending and owned a mortgage company.
That experience changed the way I look at real estate transactions.
When I'm representing a seller, I'm not underwriting the buyer's loan and I don't have access to their private financial file.
What I do have is an understanding of how lenders think, how loan approvals progress, what questions are worth asking, and what can cause a seemingly strong transaction to run into trouble later.
That allows me to help my sellers evaluate more than price.
Jason's Take
There are times when the highest offer is absolutely the best offer.
There are also situations where another offer may provide a seller with greater certainty, better terms, or a cleaner path to closing.
My job isn't to make that decision for the seller.
My job is to help them understand what they're actually comparing.
After more than 450 closings and experience on both the real estate and mortgage sides of the transaction, I've learned that the details behind an offer can be every bit as important as the number at the top.
Thinking about selling?
Pricing, timing, disclosures, closing costs, preparing your home and other common seller questions are covered in my East Metro Home Selling FAQ.
East Metro Home Selling FAQ →Frequently Asked Questions
Is the highest offer always the best offer?
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No. Price is important, but financing, contingencies, appraisal terms, earnest money, closing timing and the buyer's ability to perform can all affect the strength of an offer.
What's the difference between a prequalification and a preapproval?
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The terms can vary by lender, but generally a prequalification may involve a more preliminary assessment, while a preapproval typically involves a more detailed review of a buyer's financial qualifications. Sellers should consider the strength of the financing documentation along with the rest of the offer.
Why does the buyer's lender matter to a home seller?
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The lender can affect communication, financing timelines and the overall path to closing. An experienced listing agent can ask appropriate questions about the status of the buyer's approval without requesting or accessing private financial information.
What is appraisal gap coverage?
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Appraisal gap coverage generally refers to a buyer agreeing to contribute additional funds if an appraisal comes in below the purchase price, subject to the specific language of the purchase agreement. The amount and terms can be important when comparing competing offers.
How does Jason Lange's mortgage background help sellers?
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Jason's previous experience as a mortgage broker and mortgage company owner gives him an understanding of the lending process in addition to more than two decades of real estate experience. That background helps him ask informed questions and evaluate financing-related considerations when helping sellers compare offers.
About the Author
Written by Jason Lange
Jason Lange is a REALTOR® with RE/MAX Results serving home sellers and buyers throughout the Twin Cities, East Metro and Western Wisconsin. A REALTOR® since 2004, Jason previously worked as a mortgage broker and owned a mortgage company. He has been involved in more than 450 real estate closings.
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