Often when listing agents are asked what their sellers are looking for our response is "best and highest", meaning the highest price and best terms. Sometimes a seller may need some extra time in the house after close, or may be looking for an extra quick close, but most often the bottom line is "best and highest".
What does that mean, exactly? On occasion it's really "best or highest". When there is no single offer which shines as best and highest it's time to compare to find which offer strikes the most advantageous balance between price and terms.
Why not just accept the highest price and be done with it? Well, there are terms in every contract that make a deal more or less secure, more or less likely to close, more or less likely to risk that high price and if you don't know all of the aspects of a purchase contract, you could watch that high offer price tick away dollar by dollar until you end up with a price you're "stuck" with, instead of one you're happy with.
There are many nuanced components to an offer which must be considered and analyzed as parts of the whole. For now, let's quickly review the big three contingencies: Financing, Appraisal, and Inspection. I've already written in more detail about what each of those mean from a buyer's protection perspective here, so here I'll focus on what a seller stands to lose due to contingencies.
Financing: if a buyer has been fully pre-approved, they are saying that it's possible they will have to back out of a contract if they are unable to secure financing. Having a property fall out of contract and come back on the market tends to hurt a property's sale since the first two weeks of a property's marketing plan are the most impactful.
Appraisal: if a property does not appraise for the offer price and the buyer has an appraisal contingency you can bet the sales price will drop. It may not drop the full difference to the appraised value, sometimes a buyer will split the difference. But if an offer price is higher than the comparable sales, you need to ask your agent how to address this potential pitfall (there are ways to assess this one in more depth, feel free to ask me how).
Inspection: this one tends to be familiar with most buyers and sellers. If a buyer discovers any faults in the property that were unknown when they submitted their offer they have grounds to ask the seller to give them a credit, or reduce the price. There is an almost surefire way to work around this, even if a buyer wants to retain their right to inspect to their satisfaction. Want to know more? Just ask.
Just the other day my buyers' offer won in the midst of 14 other offers. The listing agent confided that they were in second place in price, but the rest of their offer was so strong they are now in contract to purchase their first home, a totally remodeled bungalow with a great yard in their perfect neighborhood. Price is important, but so are many other factors when writing or accepting an offer, be sure you're addressing all the moving parts when putting your best foot forward.