Real estate agents around the world generally go by the same mantra when discussing the first offer that a seller receives on their home: “The first offer is always your best offer.”
Of course, this isn’t true in every situation, but there are reasons why agents believe this, and why they often suggest that sellers either accept the first offer or at least give it serious consideration.
Get in the buyer’s head…
To understand why the first offer is usually the one you should accept, consider the buyer and the journey he or she’s on.
Buyers in the real estate market usually start by dipping their feet into the water. This may be before they even engage a real estate agent. They generally go to a few open houses, check out prices online, and start to do their homework. They may even make first contact with an agent to assess what the agent thinks about the state of the local market.
From there, buyers begin to get more serious. They may start going on private, second or third showings with their agent. They really start to get engaged in the process. They become “the real dealer” — a buyer who is completely in the game, approved for a mortgage, and actively engaged with their mortgage lender or broker. Maybe they’ve even written an offer or two. They’ve narrowed down their search parameters, spent months learning the market, pricing and checking the comparables. (To learn more about the three types of homebuyers, read “Seller’s Guide to Understanding Today’s Buyer.”)
Real dealers are often the ones who write the first offer a seller receives on a property. And that’s why their offers should be taken seriously.
Real dealers will likely get an email notification about your listing within hours of it going online. Or, since they are so engaged with their agent at this point, the agent may spot it first and send them a text or email.
This buyer will want to get in and see the property ASAP. Since they’re so familiar with the market, they’ll be able to tell once they step foot inside if it will work for them, if it’s priced right, if it shows well, and if it’s in line with present or past comparable sales. If the property meets their criteria, the real dealer, armed with all their knowledge and motivation, will make an offer.
The real dealer…
Their offer may not come in within days of a property going on the market. But it will come from an informed buyer who is knowledgeable of the market. If a home is priced too high and a month or two goes by without an offer, it will be the real deal buyer who has been watching the listing and waiting to see how the market responds. If they note that there aren’t any offers on it and there is no activity after some time, the real dealer will come in with a low offer, which actually may be a good offer, on the seller’s home.
While you may see it as an insulting “low ball” offer coming out of left field, you should still look closely at this offer. Who is the buyer? How long have they been looking? Have they written other offers nearby? Are they working with a good local agent? Does the offer come with a pre-approval letter? Is this offer actually a number that is close to the number your real estate agent initially suggested?
As hard as it may seem to contemplate an offer much lower than your asking price, serious sellers should look at all the signs leading up to it and consider if this is the offer to accept. Trust your agent. And even better, trust the phrase, “The first offer is always your best offer.”