Coach Darryl Davis writes that strong terms are a competitive advantage and that buyer agents who package and verify terms are doing the real work for their clients.
When a seller asks, “What’s the best offer?” most people think the answer is the highest number. It feels obvious. The highest price wins.
But after 40 years of coaching agents in this industry, I can tell you that the highest offer and the best offer are not necessarily the same. Real estate professionals who understand this difference can protect sellers and actually close the deal.
Here’s how I teach agents: Think of the offer like a job seeker. The salary they are looking for is price. However, we never hire people based on salary alone. You want to know if they’ll show up, if their references check out, and if they can do the job without falling apart in the first week.
The terms of the contract are a resume and letters of recommendation. They will tell you if this buyer can actually achieve the numbers you have noted down.
And the truth is, the numbers don’t mean anything unless the transaction is completed. According to the National Association of Realtors’ latest Realtor Confidence Index, about 5 percent of contracts closed within the last three months, and about 14 percent had late closings.
NAR consistently finds that the issues that sink or stall sales stem from a few of the same places: home inspections, buyer financing, and appraisals. These are all condition issues, not price issues.
So let’s take a look at what you should actually read in your offer and how to explain it to the seller.
Does the buyer have a home to sell?
The first question is whether this buyer needs to sell their current home to buy your home. A home sale contingency ties the closing to a second transaction that you don’t control. This is not an automatic deal-breaker, but it changes the risk and is worth sellers understanding. Here’s how to put this together.
“This buyer has made a strong offer, but there’s one thing you need to understand: Their offer is contingent on them selling their home first. So we’re not just betting on this buyer. We’re betting on a buyer we’ve never met, a home we’ve never seen. Let’s discuss whether it’s worth the risk or whether we should ask them to lock in terms.”
How strong is your financial strength?
The price is only as good as the loan behind it. Are buyers pre-approved or just pre-qualified? They are not the same thing. What is their credit status and how much money are they putting down? Equally important, who is their loan officer?
An experienced local lender that everyone in the market knows and trusts is really worth the money to sellers. Because the financier can ultimately complete the transaction. A name that no one knows on an online portal is a question mark. You are allowed to ask questions.
“Before we celebrate this number, let me make a few calls. I want to know who is writing this loan and whether they have an actual pre-approval or just a pre-qualification. Even if the loan falls through in the third week, the price on paper doesn’t matter.”
What kind of emergency are they looking for?
Every contingency for a buyer is a door they can walk through. Inspections, appraisals, financing, attorney reviews, and home sales. Some are perfectly reasonable. However, you and your seller need to know exactly which doors are open and what it will take to close them.
Interestingly, NAR’s latest data shows that buyers are waiving contingencies less frequently than a year ago, with about 17% waiving inspection contingencies, making clean offers more prominent than ever before.
Is the deadline correct?
This is always overlooked. If a buyer wants to close within three weeks, but the seller takes 90 days to find another home, a great price for a great deal could be the wrong offer. Or vice versa.
Timing is a term, and it’s something that sellers feel in their daily lives, not just on the settlement statement. Always ask what date the buyer wants and if it matches the date the seller actually needs.
What kind of tests will I receive?
Here are some quiet issues that can slow down your trade and blow it up. There’s a real difference between a buyer who inspects the roof, foundation, and systems for major defects, and a buyer who fixes every cracked outlet cover with gold coins and asks for credit on it all.
Although not always known in advance, a buyer’s agent or lender will often have a good idea of who they are dealing with. Appropriate examination posture is a term worth considering.
This cuts both ways
If you’re a listing agent, your job is to research the entire offer, not just the top line. Who is on this buyer team? What bank do they use? What inspector? You have to answer the phone, learn those answers, and translate them into plain language for the seller.
If you are a buyer’s agent, this is your opportunity. When you submit an offer, you don’t just hand over numbers and preferences. Insist on buyer terms. Let the listing agent know that you are fully underwritten, that your lender will close on time, that you are flexible with dates, and that you won’t be chasing after every minor repair.
Strong terms are a competitive advantage, and buyers’ agents who package and verify terms are doing real work for their clients.
High prices attract sellers’ attention. Get to the closing table on solid terms.
Daryl Davis, CSP, is a nationally recognized real estate speaker, bestselling author, and coach with over 40 years of experience in the industry. For more information, visit darrylspeaks.com.
