Why "Your First Offer is Usually the Best Offer" When Selling Your Home
There are exceptions to the rule, but there is a very good reason why estate agents encourage sellers to seriously consider the first offer.
It's not easy being an estate agent, mainly because most clients seem to believe that agents will do anything in order to make a quick buck - and this includes coercing sellers into accepting the first offer that's made on a property.
You've all probably heard the mantra that invariably comes from practically every real estate agent’s mouth – ‘the first offer is always the best offer’, but what you probably don't know is that it's not only South African estate agents who produce this line over and over again.
Yes, there may be exceptions to the rule, but there is a very good reason why estate agents around the globe encourage sellers to accept (or at least give serious consideration to) the first offer and that's because this old chestnut has proved to be true time and time again.
But why is the first offer usually the best?
According to various experts, sellers need to appreciate how buyers think in order to understand why things can go pear shaped if they reject offer after offer after offer because they are waiting for something just a little better.
Buyers generally all operate in much the same way, regardless of how much money they are able to - or want to - spend on a home. They start out by dipping their toes in the water. This testing of the water doesn't necessarily mean that they are going to approach an estate agent with their list of requirements. Instead they will generally begin by checking out prices online and visiting a couple of show houses in the area in which they are interested.
Those who are really serious about buying will then follow up by contacting an agent in order to find out as much as possible about a particular area, including how much the average property is currently selling for. Things start to hot up from here and, having narrowed down their search parameters, buyers will start to make appointments to view specific properties. By this stage they will have a good idea of property values in the area and would have begun making enquiries about bonds. Remember, the information they have acquired isn't a thumb suck, it's the result of intensive investigation, sometimes conducted over a period of months. And this type of buyer is often the one who will submit the first offer on a property.
They are in serious house hunting mode and their estate agent will know this. For this reason they will hear about listings the moment they come on to the market, particularly properties in the right price range and which their agent knows will appeal. Technology also plays a role in this as property portals can send out notifications of listings they think will appeal to buyers within minutes of them hitting the market.
Serious buyers will want to see suitable properties as soon as possible and will usually be able to gauge from the moment they step over the threshold if it's priced correctly and competitively when compared to other properties in the area. Remember, these buyers are keenly aware of what's happening in the market and although they may not make an offer immediately, when they do it will be based on sound property knowledge.
Serious buyers watch the market carefully and will take note of overpriced properties. They may not make an offer immediately, but would rather wait to see how the market responds. If the home remains on the market for a lengthy period of time, this buyer will come in with a lower offer which is more often than not market related and should in all fairness be regarded as good.
Sellers need to consider a few things before rejecting a lower offer outright. Who is the buyer? How long have they been looking for a property? Which agent are they working with and perhaps most importantly, what conditions are attached to the offer? A cash deal is always going to be the best deal, mainly because the transaction is guaranteed. However an offer which isn’t reliant on another property being sold to help finance the deal - even if it is subject to a bond - is also a good option.
The other aspect that needs to be considered is how close the offer is to the price originally put forward by the agent. Estate agents know their stuff and they certainly know what homes are selling and at what price. Forget any preconceived ideas you may have and focus instead on what they are telling you – who knows, they might actually make you more money in the long run by selling your home quicker.
Source: Private Property - Lea Jacobs