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June 25, 2013

4

The First Offer Is The Best Offer

by mark mclean

staring at the sun picThere are a few inextricable truths in life. It’s a bad idea to have a “stare into the sun” contest. It’s a bad idea to date your best friend and it’s a really bad idea to get into a car with a stranger to help find a lost puppy….even if the driver offers you candy. Likewise, it’s a bad idea, if you are a home seller, to turn down your first offer.
If you’ve been in real estate for any length of time than you have probably heard the term “the first offer is the best offer”. There is a reason why it’s a familiar phrase….BECAUSE IT’s TRUE!! If I were taking a cross-country poll, I would say, the first offer is the best offer, 9.9 times out of 10, with a margin of error of +/- .1%. But still…you can take that to the bank. Every agent who has been in the business long enough has either lived it personally or has heard a story of a seller refusing a really good offer and then eventually having to sell for a lot less some time later. This is the inextricable truth of real estate.
Case in point. Agent Bob lists a fairly decent house in a good area. There is one problem with the house. It has settled unevenly over time and is a little crooked. Okay, it’s a lot crooked. It’s not going to fall down or anything but you need to rest a brick against every door to keep them from slamming shut. Given its slight tilt, the Agent Bob priced it accordingly and within the first week received a pretty decent offer. Not over asking, but pretty close. Let’s say within 1% of ask. The Seller flatly refused the offer and in fact cancelled the listing and relisted for more than the first asking price. This is, after all, the Toronto market where it is our inalienable right to expect multiple offers over asking on every property we list. Well, that was 40 days ago and the house was just reduced to the original price. I guarantee it will be around for a more weeks before it eventually sells for much less than the first offer. There are only three possible reasons why the seller refused the first offer. Either they are just plain greedy, they thought they knew more than the listing agent or they actually knew that one person who turned down the first offer only to get a higher offer later. Dear Mr. seller, how are you feeling now?
I asked the question to a Realtor Facebook group and sat back to take in the plethora of stories. Everyone had an anecdote including one agent who said her parent Realtors used this talking point back in the 60’s. Ok so it’s not just me….IT’S EVERY REALTOR ON THE PLANET. So why don’t Sellers listen? Often it is as simple as the first offer happening too quickly. Hey, that means that you have done your job by pricing the house just right. The stars are aligned and a Buyer is ready to go.
Knowing what to say to a Seller starts well before the first offer arrives. You need to give every offer its full consideration and attention. This is not the time to be cocky. Afterall, you only need ONE qualified buyer and you can’t sell it more than once.

mark mclean

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4 Comments Post a comment
  1. Aug 11 2013

    Great blog and so true. Sometimes procuring a quick offer makes the seller feel they underpriced the home. But usually it just means that the buyer had been looking for awhile and this new listing fit their needs.

    Reply
  2. Michelle Finnamore
    Sep 1 2013

    I know this to be true personally and through my work as a stager in a brokerage with over 200 agents. Great article, should be required reading for sellers.

    Reply
  3. Jan 4 2014

    Just awaiting the results now! Our bid is above the last sale ( 60 days ago) for a unit vertically lower in the building. … Waiting for the response….

    Toronto west Condos

    Reply

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