Evaluating Multiple Offers

Three offers arrived. The first is $2.31 million, all cash, twenty-one day close. The second is $2.38 million, financed, thirty-day close, with inspection, appraisal, and financing contingencies. The third is $2.35 million, financed, with the inspection contingency waived.

The instinct is to rank them by price and call the second offer the winner. That instinct is understandable, but often leads to choosing an inferior total package. What actually determines outcome is a combination of three things: whether the financing is real, what the contingency structure means for the seller's exposure, and what each offer produces after the transaction costs that come with it.

Our last post explained how to price for competition. This one explains what to do with the competition once it arrives.

Cash vs. Financed

A cash offer is not simply a higher-quality offer. It is a structurally different offer. The elimination of a lender from the transaction removes one of the most common sources of deal-killing complications: the appraisal, the underwriting process, and the possibility that the buyer's financial circumstances change between application and funding.

On a Monterey Peninsula property, appraisal risk deserves particular attention. These are often unique homes with limited comparable sales. An appraiser working from a narrow comp set may arrive at a number below the negotiated price, particularly in a market that has moved quickly. A buyer with an appraisal contingency has the right to exit the transaction or renegotiate if the property does not appraise. A cash buyer does not have that right unless they specifically included it.

A seller who receives a cash offer and a financed offer at the same price has two different risk profiles on the table, even if the numbers look identical. The cash offer closes faster, carries less exposure, and requires fewer things to go right. That difference has real value. How much value depends on the specific seller's priorities, timeline, and tolerance for process risk.

This does not mean a financed offer from a well-qualified buyer is categorically inferior. It means it requires more evaluation before accepting it as equal to a cash offer at the same price.

Contingency Structure

Each contingency in a purchase offer gives the buyer a defined right to exit the transaction under specific conditions. Sellers often focus on which contingencies are present rather than what the structure of those contingencies actually signals about the buyer.

Inspection contingency: The length of the inspection window matters as much as whether the contingency is present. A buyer who proposes a standard twenty-one day inspection period is leaving himself maximum time and optionality. A buyer who shortens that window to seven or ten days with meaningful earnest money at stake is signaling genuine commitment to completing the transaction rather than using the contingency period as a second look at the decision. The Ruiz Group pushes for short inspection windows. It is one of the clearest signals of a serious buyer.

Appraisal contingency: A buyer who waives the appraisal contingency on a financed offer is taking on real financial risk. If the property does not appraise and they have waived this contingency, they must make up the difference in cash or lose their earnest money. That waiver means something different from a cash-rich Bay Area buyer who has explicitly modeled the downside than it does from a buyer who may not fully understand what they have agreed to. The Ruiz Group asks about the buyer's financial depth when evaluating appraisal contingency waivers on financed offers.

Financing contingency: The presence or absence of a financing contingency tells the seller how committed the buyer is to completing the transaction regardless of what happens with their lender. A buyer who removes the financing contingency is accepting that if their loan falls through, they lose their earnest money. That is a meaningful signal of confidence. A buyer who retains a long financing contingency window with a small earnest money deposit is providing themselves maximum optionality at the seller's expense.

The best offer is not always the highest one. It is the one most likely to close on terms the seller can live with.

Buyer Qualification: Will This Financed Offer Actually Close?

A pre-approval letter is not a guarantee of funding. It is a lender's preliminary assessment of a buyer's creditworthiness based on information the buyer provided at the time of application. Between pre-approval and funding, things change: employment situations shift, additional debt is taken on, appraisals come in low, underwriting conditions surface.

The Ruiz Group's standard in a multiple-offer situation involving financed buyers: speak to the buyer's lender directly to understand the loan type and down payment source, and to assess whether the lender knows this market and this property type.

A buyer who has gone through full underwriting before making an offer, meaning the lender has reviewed income documentation, assets, and credit in detail and issued a conditional approval, is a fundamentally different risk from a buyer who filled out an online application last week and received an automated pre-approval. That distinction almost never appears in the offer itself. It requires a direct conversation with the lender to surface.

Local and regional lenders who know the Monterey Peninsula market tend to move faster, communicate more clearly, and encounter fewer surprises than national lenders who have not underwritten properties here before. Loan type matters too. A jumbo loan carries different underwriting standards than a conforming loan, and understanding which is in play helps the seller evaluate the execution risk of a financed offer.

Run the Net Sheet for Each Offer

Different offers produce different net proceeds to the seller after accounting for concessions, close-of-escrow cost contributions, and carrying costs associated with a longer or shorter timeline. An offer that includes a seller credit for closing costs, or that proposes a sixty-day close on a property that is vacant and accumulating carrying costs, produces a different net outcome than the headline price suggests.

The Ruiz Group runs a net sheet for each offer in a multiple-offer situation before presenting the comparison to the seller. The goal is to give the seller a clear picture of what each offer actually produces, not what it nominally proposes. Two offers that look $30,000 apart on paper may be $5,000 apart in net proceeds, or the lower-priced offer may actually net more once the structure is accounted for.

The Decision

The Ruiz Group's role in a multiple-offer situation is to present all the variables clearly so the seller can make a genuinely informed decision rather than reacting to the highest number under time pressure. That means running the net sheets, making the lender calls, reading the contingency structures as information rather than boilerplate, and presenting the complete picture before the response deadline.

The best offer is the one most likely to close on terms the seller can live with. Finding it requires looking at all of what is on the table. If you are approaching a listing and want to understand how The Ruiz Group thinks through a multiple-offer situation before you are in one, that conversation is worth having in advance.

Related reading: What Your Net Sheet Actually Tells You  ·  Why You Should Price Your Home for Competition, Not Negotiation  ·  Offers Getting Rejected? Get Underwritten.