Is the first offer actually the best offer?
Often a thought but rarely discussed at the right time is the topic of when and when not to accept an offer when selling a property.
There are many arguments to support that a first offer is usually your best offer but on the other hand, I’m a firm believer that speed kills (sales);
Is your first offer actually your best offer?
Being an active selling agent with 11 years’ experience I have spoken to thousands of home owners and even more buyers. Chances are I have heard all the standard responses to the majority of questions or situation that can present themselves during the sales process, with two being the most prolific out of them being ‘We’re not in a rush’ or ‘we don’t need to sell’.
As human beings, the greater majority of us are natural procrastinators. It’s in our DNA to not rush decisions or make off the cuff calls and for many of us this has a bearing on how the sale of our property will go.
I believe that it is up to the selling agent to ensure that the owners are ready to consider offers from the very moment that their home hits the market. I’m always skeptical of anything that real estate agents repeat without thinking – especially a statement like this (Your first offer is usually the best), which certainly seems self-serving. However, there is one consideration that actually gives this truism some credibility – especially in the current market.
When your new listing hits the market there is a pipeline of buyers that have been in the market for 3 months (for example) just waiting for something like this to come along. They’ve seen properties come and go quickly so they are conditioned to respond fast. You might get 12 showings in the first 2 weeks but after that initial burst you are only going to be picking up buyers new to the market – maybe another 1 -2 showings per week. And because the buyers coming along in the first two weeks are seasoned, they are more likely to make a solid offer than the newbies that come along later. So if you get an offer in those first two weeks it might be another couple of months before another offer comes along and who knows if it’s going to be better or not?
However, the complete story is a bit more complicated. In reality, as with most things in life it depends – on a lot of things. Like it or not, selling a home is more of an exercise in timing than most agents will like to admit. An awful lot depends upon what buyers are in the market at that point in time and what other competitive properties are for sale.
So when that first offer comes along you need to evaluate it carefully in light of all these various factors. I’ve seen it go both ways but I believe there are certain patterns. For example, if all of the following circumstances were to be in place then I would be inclined to believe that that first offer was in fact going to be the best one.
The first offer is made when you have had little to poor enquiry. That way you’ve had good exposure to the current available pipeline of buyers.
Interest has really died down since the property launched– i.e. it may be quite a while before you get another offer.
It’s not just a low-ball offer its just lower than your expectation. You need to have some confidence in your estimation of what the property can sell for in order to make this determination but that’s not always possible.
The offer is from a seasoned, serious, realistic buyer. They’ve been in the market a while and they understand the values. They’re not giving off that “I want to steal it” vibe. Really, this is just another way to get comfortable that they’re not low-balling you.
However if you have had less of these circumstances and signs that enquiry and interest is high then you may be inclined to believe that it is not the best offer. I’ve seen it first hand when an owner has not accepted a first offer and ended up selling for more. Best practice is to ensure you and your agent communicate effectively and that you are well aware of the feedback on price, comparable homes and competing properties. The better informed you are the more likely it is that you’ll make the right decision.