“The first offer is usually the best offer”, say many popular real estate websites and most real estate agents.
It is highly likely that you have heard this statement, especially if you have been a vendor in the property market. Is it true or a cliché?
I have been in the real estate industry since 1984. I have seen plenty of properties, which were overpriced by either the vendor or the agent, or both. But I have also seen a lot of properties that have been sold for well below what the market would have paid, if those properties had been marketed more effectively or simply priced higher! While it should not happen, there are cases where the real estate agent has convinced the vendor to list their property at a low price, resulting in a quick sale, but not necessarily the best price. Of course, if the vendor’s circumstances demand a quick sale, then the price has to be competitive enough to ensure a quick result.
Most vendors are not in a desperate situation that demands a quick sale. It is not just normal for a vendor to try for the very best price, it is common sense. The problem arises when the vendor becomes unrealistic or plain greedy – which is their prerogative!
When a vendor is realistic in the pricing of their home, they should expect a good result sooner rather than later, but how soon? Is the first day too soon? There is no rule when it comes to this question: It is about opportunity and motivation. If you are selling, and an offer is received on the first day, if the offer is acceptable, accept it! But if the first offer is lower than your expectation, then don’t accept it.
“The first offer is usually the best offer”, if it is the best offer! Consider this example of an actual case. The vendor wanted to sell a property, which they purchased about six months earlier, for $410,000. Due to a change in their plans, they decided to sell the property and sought to resell at the price they paid: The market at the time was moderate and showing signs of improvement, so it was a reasonable expectation. I listed the property for sale by tender using T-SALES Revolving Tender ®. As is common, I took a written instruction from the vendor authorising me to declined offers below a certain amount, at my discretion. In the first week, I received a call from a prospective buyer who wanted to offer $400,000. The meeting with the buyer was ninety minutes of negotiating, resulting in an offer of $420,000. I took this, the FIRST OFFER, to the vendors who were, as expected, very happy. I could have persuaded the vendor to sign off, but suggested they might get more, as I was receiving plenty of enquiries. And that’s the key; I had plenty of prospects to work with. The vendor declined the offer. Two weeks later the original buyer paid $435,000 for the property. In this case, the first offer was not the best offer.
In conclusion, if your property is receiving plenty of enquiry and you are satisfied you are the zone with price, don’t be hasty. However, if you are not getting enquiries, you should review your price and adjust to the market – no matter how much you need to lower the price!
T-SALES Revolving Tender ® is a proven way to avoid overpricing or underpricing. Call Patrick Grogan 0419 47 432 or email pgrogan@tsales.com.au to learn more.