You’ve taken the plunge to put your home on the market, starting a new chapter, and your agent has just received your first offer—how exciting! Now what? Several factors can help you make an objective decision!
The First Offer to Purchase
The first offer is most often a motivated buyer that has been perusing the market for some time already, understanding the market and what kind of inventory is available. They are excited about your home and want to beat their competition. However, you can negotiate with the buyers, coming back with a counteroffer for a better deal. If the first offer is below your goal range, you can use their fear of losing out and attachment to the house as leverage to bring it closer to your goals.
Turning down the first offer outright can be a gamble, as the longer it is on the market, the less likely you are to receive a higher offer. Going past the average amount of a property's "days on market" may prompt potential buyers to wonder if the price is too high or even if there is something wrong with the property. When the threat of competition diminishes, the strategy will shift from competitive offers to bargaining.
Unless you are in an ultra-hot market, you are simply looking for the best overall offer. Depending on your objective when selling your home, each component will carry different weights.
The closer the offer is to your listing price, the better—but beware of getting too greedy! First offers within 10% of the listing price may be worth negotiation if other offer components are sound.
Cash vs Financing
Cash offers tend to be more reliable compared to those that are mortgage-backed as they guarantee a swifter close on the deal. Pre-approved buyers may be denied later for a multitude of reasons, such as changes in employment or low results of a home appraisal.
Purchase contingencies can be quite common in a deal stating that the offer is valid only if the listed criteria are met. On the seller’s side, you want as few contingencies as possible. There are few contingencies, such as home inspection and appraisal, which are relatively standard, though in some cases, buyers may remove them to make the deal more enticing to the seller. Home sale contingencies are not the most ideal as they may jeopardize your closing timeline if the buyer’s home fails to sell.
A buyer’s flexibility with closing and moving dates may influence your decision to accept the offer depending on your circumstances and if you need extra time in transition after the sale.
There is considerably less pressure to accept the first offer if you are in a competitive seller's market with multiple great offers. In which case, sellers and their agents can accept offers while they come in or put in an offer review date for the property.
A buyer's market means that the current housing supply exceeds the buyer's demand. Thus homes may sit on the market longer, and price depreciates over time. Suppose a home similar to yours is selling for a lower price than what you have it listed for. In that case, the lower price may actually be a more accurate depiction of what your home is currently worth on the market—no matter the other seller’s reasoning for pricing it as such, it will also affect you.
Discuss the areas of the offer you wish to improve with your real estate agent and craft a reasonable counter offer and deadline for the buyer’s response to keep the ball rolling. Contact me today about becoming your REALTOR® to help you navigate the busy Saskatoon housing market!