There is an old adage in real estate that the first offer you receive on your home is often the best offer, but is it really true? To be honest, it's hard to say, but if the offer comes quickly it very well could be your best offer.
Think of it this way, when your home first goes on the market, all the buyers that have already been hunting for a home like yours will come and see it in the first few days. After that, you have to wait for new buyers to come into the market, so the first buyers are often the most motivated.
A couple of weeks ago some clients of mine made an offer on a home that was listed a few days earlier. We were familiar with the area, and I had reviewed the the 3 things every buyer should see before we wrote the offer. We had been looking at homes in that area for a few weeks, and from our perspective this home was significantly over priced.
When they came back to us with their final position my buyers were dumbstruck. We couldn’t figure out how they came to their price. We asked their agent to show us anything that would justify their position but of course we got nothing. After a few days of negotiating we ended up being $5000 apart and we walked away. Now several weeks later that property is listed below where they ended negotiations with us - perhaps they should have taken the first offer.
In the end it worked out better for my buyers because they found a home they fell in love with and bought it.
While the first offer isn't always the best offer, if you don’t know what you're doing in this market it can cost you big time.
As a seller there things you can do to evaluate if an offer is fair:
- Look at the comparable sales. How do they honestly compare to your home?
- What is the absorption rate like in the area?
- How much competition do you currently have?
- What are the relevant facts of the offer?
- How is your traffic (are showings increasing or tailing off? how about web traffic?)
- What is happening with the market as a whole? Are sales/prices/inventory levels increasing or decreasing?
While these won’t tell you for certain if you're making the right decision it is certainly better than making an emotional decision based on what you think you know about real estate and the market.
Sheldon the fact that you negotiated would indicate that your first offer wasn't the best offer. The first buyer might be the most motivated but rarely does a buyer put their best offer forward first up (in my limited experience).
I guess we weren't really clear there, when we say the first offer we mean the first buyer that brings an offer, not literally the first offer that the first buyer makes. Once the negotiations didn't go anywhere, and we ended up $5000 apart the “first offer” was now dead and the next buyer than came along would've been the second in this scenario. The point was, they are now listed below where they ended negotiations with us, so they would've been better off had they taken the offer from our buyer.
Sheldon the fact that you negotiated would indicate that your first offer wasn't the best offer. The first buyer might be the most motivated but rarely does a buyer put their best offer forward first up (in my limited experience).
I guess we weren't really clear there, when we say the first offer we mean the first buyer that brings an offer, not literally the first offer that the first buyer makes. Once the negotiations didn't go anywhere, and we ended up $5000 apart the “first offer” was now dead and the next buyer than came along would've been the second in this scenario. The point was, they are now listed below where they ended negotiations with us, so they would've been better off had they taken the offer from our buyer.