Home sale strategy: set a date for offers, or not?
You have prepared carefully for the big day when your property goes on the market; first it goes on MLS, then you have a Realtor tour, and an open house during the week end. The critical “exposure” time has started, a full marketing campaign is in place, with paper advertising and internet advertising - the world is starting to learn about your house.
Should you hold off for offers until a certain date (hoping for multiple offers), or do you take offers as they come?
Holding off for offers is a good strategy, if the house is well priced: it ensures that the house has been seen enough, and that potential buyers have had the time to decide what they want to do, and look at all the disclosures and reports your agent carefully helped you prepare upfront. When offers are reviewed, chances are they are well thought out, and you have a choice between solid offers. Odds are higher the transaction will close without problems.
But the down side of this strategy is that some buyers are turned off by the process, and do not want to participate in a competition. Also, if you hold off too long, other competing properties will come on the market and you will lose some potential buyers. Finally, with this strategy comes the difficult choice to make if a “preemptive offer” is presented to you, often higher than the asking price. If you take it you will never know what the other offers could have been (the ones that followed your instructions and waited for the “offer date”). If you do not take it you could lose out on that high offer.
So the alternative is to “take offers as they come”. But what do you do when one comes too fast, may be even higher than your asking price, and you have the feeling that “not enough people have seen the house”? Could you have a higher offer by waiting for more people to have the time to see the property and work on an offer? In real estate we say that the first offer is often the best one... In a typical market it is often true (the subject of another blog), but the Bay Area market is not typical.
Several elements are in play here:
1/ the (pricing) strategy you prefer to use (low, average, high?)
2/ how active the market is at that precise moment.
3/ how easy it is to show your property,
4/ how desirable your property is (objectively),
5/ the quality of the information you get. The tools your Realtor is using are going to be critically important, in order to assess the real interest your property generates. You’ll want to know: - number of showings, - number of page views on the various web sites, - how many people are looking at the info online, - and what exactly they are looking at: some info, or all of the info available?
What I would like to stress here is that you must have this conversation with your Realtor ahead of time, and stick to your chosen course of action. One cannot really have it both ways. If you set a date for offers, and take a pre-emptive offer, you may hurt yourself by never seeing the offers that played by the rule, and waited to come forth. The thing is that you will never know - it is a gamble. My experience has been that, in very active markets, it is better to hold off until about a week after the house has been in full marketing mode. Taking an offer too fast may leave you with a lot of question marks about what other offers could have been a few days later.
Finally, it is critical that your Realtor follows closely any interested party, and answers questions as best as possible: better informed buyers, or agents, will bring you an offer, and one additional offer may mean a big difference in the final sales price.
Thank you for reading,
Silicon Valley real estate specialist
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