The early bid may get the worm, but the first offer doesn't always get the house.It's sensible that house hunters want to carefully consider making an offer on a new listing.
But just how long should you wait to make that bid, and how can you know when to hold back and/or proceed in making that bid on the home of your dreams? There's no conventional advice for this timeline - pace is partially determined by the market and the seller's motivation. But most real estate professionals agree that buyers shouldn't wait too long when they find a house that's a good fit. In other words, if you've done your homework - you understand the neighborhood and comparable residences that have sold recently and have your financials, such as a mortgage preapproval letter, in order - when you see what you like, go for it. "If a buyer knows what's out there and what they want, then they should make the offer right away," says Chris West, a real estate broker and owner of Gustave White Sotheby's International Realty in Newport, RI. "You never know who else is interested, and you could miss out."
Use caution with early offers
Sellers usually have a somewhat predictable reaction to early offers: most think they've priced too low when an offer comes in fast. For this, real estate professionals have a mantra: "The first offer is the best offer." When a buyer knows the market and makes a bid, it's because she sees a good value. "The real estate professional's goal is to sell a house at the highest price in the shortest amount of time," says West, who counsels sellers to negotiate when appropriate but also advises against waiting too long for an offer that might not ever come.
Make a fair proposal
"When a house has just come on the market, that's when the enthusiasm is strongest," says West. Homebuyer Alexandra Scebold, who recently closed on a home in New York's Hudson Valley, learned this firsthand. After she had lost two contracts to cash buyers in late 2014, a great home came on the market in the quaint town of Cold Spring. She made an offer 11 days later, for $10,000 below the asking price. "Of course, the buyers said, â€˜If you think it's so hot, why aren't you offering more?'" she says. "But I'd done my research, and I knew the value of the house and what I was willing to offer." The sellers countered for $6,000 more, and they were eventually able to come to an agreement.
Demonstrate your appeal
Aside from making a fair proposal, there are other ways to make an early bid appealing. First, make yourself look like a good candidate. Buyers who don't have lots of contingencies - those that aren't dependent on selling their current home to buy a new one, for example - are much more attractive to sellers. Prospects with a solid 20% down payment are also more attractive. It's not uncommon for a seller to accept a lower offer from a buyer who is a safer financial bet and has the highest chance of closing.
Understand your market
While an early bid may get you the house you want, it's unlikely to get you a major bargain. "As a buyer, you're going to pay a higher price if you make an offer right away, when a seller is not going to be in a mood to take a lowball offer," says Brian Murray, a Realtor in Hoboken, NJ, where the average two-bedroom condominium with parking sells in just four days. In fast-moving markets, however, the need to make an early offer can be crucial. Bidders are often seasoned buyers who have been looking for months and may have already lost out on multiple bids. "In Hoboken, homes will come on the market on a Thursday, have six or seven offers by Sunday, and be under contract by Monday," says Murray. "If you're a buyer who went skiing that weekend, you're not even going to see those homes. For new buyers, understanding how quickly you need to move can be a real learning curve." Nicole Amico Smith, a buyer with a purchase pending in Bergen County, NJ (a short commute to Manhattan), understood that necessity. She'd been searching for nine months before eventually snagging the first property she and her husband put an offer on. "We jumped on the house the minute it relisted," she says. "We'd seen how quickly â€˜good' houses get snatched up."
Is there ever a good time to wait on making an offer?
The pros caution that if you don't know the market well, haven't looked around, don't know what you want, don't have preapproval, or need to sell your own property to make the deal work, an early bid might not be your best bet. And in slower markets, the sense of urgency may be different. But the general advice "if you like a house, place a bid" holds true everywhere. As Chris West puts it, "Don't wait. If you see something, make the offer. There's not any point in waiting."
Source: Trulia Blogs