If you want to buy a house during its first few days on the market, expect to pay all the money – and even that might not be enough.
The banks started it with their insistence on not entertaining offers for the first 4-7 days. But just because a bank does it, doesn’t mean it’s a smart idea.
Logically, it would seem counter-productive to deliberately wait until the initial urgency dies down before entertaining offers.
But sellers and their agents are so cocky (or ignorant) that they think buyers will endure anything to buy a house. Buyers might wait, but the price they are willing to pay declines as the urgency drains out of the equation.
Buyers are notified automatically as new listings hit the MLS. Homes listed with quality photos and attractive pricing usually receive inquiries within the first few hours.
This instant feedback guides the agents who are paying attention. To gauge how hot the listing is, measure the number and quality of inquiries that arrive the first day.
Are listing agents paying close enough attention that they are reading the response to this house correctly? They should, because the frenzy is uneven.
These days most agents are just happy to be busy. They typically need a few days just to figure out what to do, and end up in agent-coma mode. If they receive an offer the first day, they assume that they will receive more the next day. They exclaim, “Let’s wait a week or so to see what happens!”…and they wait until the action dies down before doing anything productive.
It is easy to recognize these agents – they are the ones who are giddy about how many showings they are getting. They ignore offers on the table so they can go show the house a few more times, because that’s easier for them to handle.
They insist on waiting 4-7 days before entertaining offers, and in the meantime, the hottest buyers are wilting.
Have you heard the phrase, “the first offer is the best”?
The first may not be the best 100% of the time, but it’s close. The buyers who offer early are the ones that are highly motivated, and recognize that this is a great fit for their needs.
Those are the people that pay top dollar, yet it is now an industry standard to put them on ice, and keep looking for two in the bush.
True, it’s a fine line – there might be more offers coming.
But whenever you hear that there are a bunch of offers, at least half of them are not contenders. They are from those who aren’t as motivated to buy this property, and to compensate, they offer less.
If sellers are lucky, they might have 2-3 or maybe a handful of strong, motivated buyers.
Why? Because you’ve already fluffed your list price an extra 5% to 10% higher, and only a few are willing to pay retail, or retail-plus. Those are the buyers that surface immediately.
The rest are going to make offers in line with the comps, or have low down payments or other problems that don’t appeal to the agents already paralyzed by the frenzy.
These listing agents delay or blow off the most-motivated buyers who offer early, and tell their sellers that it will get better, later; all while the evidence is right in front of their eyes. They should let the number of inquiries and offers they get in the first day be their guide, and make a deal accordingly.
If you have low activity and 1-2 offers in the first 24-48 hours, you should make a deal quick. If you have handfuls of offers, you might get away with an extra day or two.
There is a shelf life to frenzy benefits. By the fourth day, the most-motivated buyers who offered early will either pay less or move on.
Get good help!