08 Mar the early offer conundrum
This refers mostly to private sales but has some relevance to auctions as well.
Selling your property in a reasonably short timeframe is every vendors’ dream. It is second only to selling for the best possible price. Yet most agents will tell you one of the biggest mistakes owners make is rejecting a great offer made in the first weeks of marketing.
Understandably most sellers are not familiar with the mechanics of a marketing process. They often think if purchaser “A” is prepared to offer $700,000 in the first week of marketing, then surely, they will offer more. Or purchaser “B” will offer $720,000 next week. They say things like “if the first inspection generates this sort of interest, what will the second one bring?” – as if interest and price increases with time”.
As a seller, it is very important you are aware how buyers behave when a property first comes on the market. From many years of experience, we know a property attracts the greatest amount of attention when it first comes onto the market. A good agent can access the qualified buyers literally within minutes via web advertisements, SMS, or email. All the purchasers that are active and know the market well, engage immediately. They know what they want and they can act fast. They may have even missed out on a similar property recently and don’t want to make the same mistake again.
These are the most qualified buyers – the ones who have done their homework and know exactly what their money will buy. New listings attract qualified buyers, and this strong initial demand creates the competition that generates the highest offers. This is the time when a purchaser is most attracted to a property and may be afraid that someone else will buy it before they do.
Once a property has been for private sale for more than about 2 weeks the sense of competition falls away. Subsequent or newer buyers need time to get to know values and “shop around”. If they come back to your property, they will know it has been on the market for some time and no one else is prepared to pay the price, so they rarely do either.
Your property may then be perceived as overpriced or undesirable by the market. These properties become stale and serve more to educate buyers who are waiting for the new exiting property to come onto the market. Buyers know time is on their side for stale properties which gives them a negotiating advantage. The only way to regain interest and buyer’s attention is to drop the asking price.
A property starts to go stale immediately after all the qualified buyers have inspected it which is generally 10 – 14 days so the first 2 weeks is the prime selling time.
A seller’s two main aims of maximising price and in a reasonable time are closely linked. Selling for the highest price usually means getting serious about that earlier offer. Sellers who fall victim to “Early Offer Syndrome” often regret rejecting the early offer and may end up selling for less later.