Sometimes the first offer is your BEST offer.

When dealing with buyers and sellers at the same time, like many real estate agents do, the first thing that I tell my newly listed sellers is - "The first offer is sometimes the BEST offer".  I have seen this happen more times than I would like to see. 

Let me give you a scenario - Mr. and Mrs. Seller puts their beloved house on the market.  At the time of signing the listing agreement, they make the agent very aware that they love this house so much and they want a loving family to buy the home and live there as happy as they did all the previous years.  As the listing gets entered into the MLS system and calls start coming, in the sellers may start to count their "money".  The sellers start thinking that this sale is going to pay for their new house outright and they will have some money left over.  You see, they start counting the chicks before they hatch.  In their minds they are planning and spending.  The  sellers start thinking of all the things they are going to do once the house is sold.  They might be looking online for the vacation that they never did take or perhaps they are looking to fully furnish their new home, whatever the case may be they start to realize that maybe, just maybe, they should have listed the home at a higher price.  Sounds funny doesn't it - but it happens all too often.

So after a day or so of officially putting the home up for sale, they get their first showing. BAM! First showing right out of the gate and they an offer and a good offer to boot (Good offer = great terms, close to original asking price, qualified buyer and a big down payment).  But what happens now is that offer was not what they wanted, they have a magic number in their heads so they decline the good offer.  After a some negotiating back and forth with all parties involved, the buyer gets frustrated and they leave/buy something else.  So now everyone is left with zero, zilch - Nada!

The sellers are not worried though - this was only their first offer, of course other offers will come in higher, they are bound too, Right?  WRONG!

Fast forward to a month or two later:  Not only have the offers NOT come in higher, but they are not getting as many showings as they did the first few weeks of the listing.   Why?  Well, the longer that a listing sits and sits on the market the less attracted the buyers are to that home.   Now don't get me wrong there are things that a seller can do to entice a buyer again (like lowering the asking price).

But what inevitably starts to happen is the sellers start to get desperate, (this is when the listing agent starts throwing in incentives on the MLS, or you see agents posting "Ready to hear all offers" or my personal favorite  - "Bring your checkbook - owners motivated").  Around this time of the panic setting in - the sellers might start asking questions like "What ever happened to those first people that made an offer, maybe you should call them" or "Are you advertising my house still?"

The offers that are now coming in are dramatically lower than the first offer that the sellers originally declined.  The sellers might be at the point that they need to sell in order to move forward with their plans so they wind up accepting a substantially low offer.  That's when the sellers will tell me "We should have taken the first offer, it was the best offer".   

Comments

[Condo Blog]

How about a blogroll offer? :)
Whatcha say?

Hey also...going to be at Inman next week???

[Christine]

Sounds good and I accept.
I will be at the Inman Connect..you?

[Athol Kay]

Great post Christine.