Why the First Offer is Statistically the Best Offer
January 17, 2013
It invariably happens, a property has been on the market for a short time and an offer is received and the Seller is reluctant to take it because they think that if there is one Buyer out there that means that there may be more. If they understood what good Realtors® know! The phenomena that statistically the first offer is the best offer is a complicated market phenomena, but I will attempt to explain why it frequently works that way.
In any given market sector in any given point of time there is a pool of buyers ready willing and able to purchase, they are just waiting for the home of their dreams to come on the market. The particular buyer that writes an offer has more than likely seen everything out there in the marketplace and is up on all the comparable sales and what is under contract. So when that Buyer makes an offer they have taken into consideration the present market conditions. If that pool of Buyers doesn’t purchase the property, or in effect “rejects it” then there are usually 2 courses of action for the Seller, change the property or lower the price.
The real estate market is not a static entity; it typically doesn’t vacillate as much as the stock market, but it does react to the environment that exists at that point in time. In effect the market is the very best market study. All the analysis in the world does not replace actually being on the market and responding accordingly.
Properties priced too high attract fewer Buyers, showings and offers. Properties priced at market value generate more Buyer interest. If properties are priced too high then both Buyers and agents lose interest. In fact, what they do is say to themselves that they will wait out the Seller, once the Seller gets more realistic then they’ll come back. But what they come back at is a much lower price.
During high school my son, Drew, worked at the local McLean Hardware store. He found that if merchandise had been on the shelf for some time and not purchased, then it gets “shop-worn” and often times has to be marked down in price in order to get it sold. Well the same is true for real estate. If the original pool of buyers has “rejected” the property, then it is more than likely the price that has to change to get them to reconsider and come back.
Well-priced properties on the other hand generate immediate interest among Buyers and agents. If the price is too high, that excitement never happens. Dropping the price later usually will not generate the same enthusiasm. So how can I prove it is true, as is in many cases, experience for better or worse is the best teacher. Unfortunately for Sellers, to pass up on the first offer is a hard lesson to learn.
Karen Briscoe and Lizzy Conroy are active and experienced Realtors ® in the Northern Virginia, Washington DC market place and would be delighted to assist whether for home buying or selling. The Huckaby Briscoe Group was recognized by the Wall Street Journal as one of the Top Real Estate Teams in the United States. Please contact via the means most convenient for you: www.HBCRealtyGroup.com, 703-734-0192, Homes@HBCRealtyGroup.com
