“Your first offer is always your best offer”.....

This is on old mantra that has been bandied around in real estate circles for many years…but is it always true?

This is a very interesting question!

I believe that one of the biggest mistakes a seller can make is to underestimate your first offer although I must admit, I don’t believe that your first is always your best offer.

It can be a huge dilemma for a seller…the property has first hit the market and one buyer has acted very quickly and made a particularly good offer.

So, what should the sellers do?

It follows logic to think that if you receive a cracking offer from a buyer when the property is first listed for sale, there’s every chance that the offers will be even higher when many more have inspected the property.

But does this regularly occur?

To analyse this question, it pays to understand the psychology of the buyer that often makes the best offer.

The truth is that some buyers are very motivated to buy – perhaps they’ve just sold and need to secure something quickly, they could be relocating and running out of time to find a suitable home, perhaps their lease is up and they don’t want to sign another long lease…or maybe they’ve been looking for a long time, have missed a few properties after multiple offers were submitted and know that the property they want to secure is quite hard to find.

If indeed the buyers have missed a few through a multiple offer situation, there is every chance that they are a very hot buyer and will usually make a very competitive first offer.

It’s this sort of buyer that is scouring the internet 5-6 times per day (yes…that’s what our statistics tell us when they’re motivated) and when they see a brand new property come up for sale that perfectly suits their requirements, they act very fast!

They’ll often try to view the property before the first open home (or before anyone else has a chance to inspect).

Now compare this to the buyer that has seen the property online after a day or so and made a note in their diary to view at the first open home. Is this buyer as motivated as the first buyer…and more importantly, are they willing to pay a price that’s as high?

In many cases, they don’t.

From some recent statistics of our own figures, we found that the very first buyer to enquire on a property (let alone inspect it) paid the highest price on 24% of the sales we’ve made over the previous twelve months….and of these sales, the vast majority made their initial contact to us within 4 hours of the property being listed online.

What’s even more interesting is that 79% of the first offers we received in 2017 ended up being the highest offer for that particular property…but only 71% of the first offers were accepted by the sellers.

This means that 8% of the properties we listed for sale had received an initial offer that ended up being the highest offer but was rejected by the sellers…only for them to eventually accept an offer that was lower at some stage down the track.

Upon analysing these offers (the 8% that weren’t accepted), what I found was that 82% of them were made either at or above the original list price.

Without trying to confuse you, this means that of all the sales we made 2017, around 6% of them had an initial offer at or above asking price and were rejected by the sellers, only for them to accept an offer that was lower at some point moving forwards.

We try to do our very best to prepare our sellers for what may happen when a property is first listed for sale so these numbers aren’t high but, in my experience, the number of times this happens across the industry is surprisingly frequent.

It must be said that whilst 79% of the first offers we received were the highest, this means that 21% of the sales we made resulted in the first offer not being the highest so this dispels the myth that your first offer is always your highest.

As you can see, I love my numbers and if you’re not a numbers’ sort of person, the last part of this blog more have bored the living daylights out of you – if so, I apologise unreservedly!

Can you believe that Easter is just around the corner and there’s only just over a week or school left before the holidays?

If you haven’t entered our competition to win a huge jar of Easter eggs, go to ‘The Michael Spillane Team’ Facebook page and guess how many eggs are in the jar. Good luck!

 

Until next week, Happy Listing & Happy Selling!

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“Your first offer is always your best offer”.....