The following was compiled from:
1. Turning down an early offer, in the hope that a better one will come along later on, may not be in the home seller’s best interest. Holding out for a better price tends to ultimately result in a greater level of price discounting as time on the market increases. A property is more likely to receive offers when it is newly listed for sale.
2. Buyers who have been looking for a while, understand the market, and are ready to move on the right home. The offer they make is based on recent local sales on properties they have viewed during their search. They know the market.
After a property has been on the market for a while, new buyers enter the market. They are only at the start of their property search, they don’t know the market as well, and they are most likely to be more cautious and submit offers on the lower side. Most often lower than the ‘first offer buyer’ who knows the market and puts in a strong, early offer when the property is fresh and newly listed.
3. It is easy to be lulled into a false sense of security, receiving a good offer in the early stages of listing your home. ‘If I have an offer this good, this early, just imagine how much better the offers will be when more people see my place!’ There may be only a few motivated buyers willing to make a decent offer on your home when it is first listed … but there are many happy to sit around and patiently wait for the price to be discounted over time. I have patiently waited for price reductions myself and actually purchased my last block of land in that perfect buyer’s scenario!
4. The longer a property is on the market, the perceived value erodes. It loses it’s lustre. I know I wonder ‘what is wrong’ with a property the longer it has been sitting on the market. Hidden costs increase too … holding costs (mortgage, insurance, rates, utilities, etc). Time is against you in every way.
5. Some data analyses found that homes sold in the first 30 days on the market recorded the lowest level of discounting.
Thus, there are few reasons to believe that the first offer on a property is usually the best. At least we need to explain the above to the sellers, when they get the first reasonable offer.