After listing your home for sale, you eagerly, nervously … anxiously await the news that someone wants to buy it. Eventually, the call comes. But your euphoria at the news that an offer has been made can quickly change to disappointment if that offer is significantly lower than your asking price.
Disappointment may give way to despair, confusion, or frustration as you try to decide how to respond: do you accept the first offer on a house, even if it’s less than you want, counter and open negotiations, or stall in the hopes of another, better, offer coming along.
To help you evaluate your first offer, we’ll walk you through key consideration points, how to weigh the strength of the offer, encourage you to assess your objectives, and how to factor in market conditions. For more expertise, top real estate agent Kris Shook, who works with 77% more single family homes than the average agent in Tacoma, Washington, shares insights.
Here’s why you should take the first offer seriously
Should you take the first offer on your house? It depends.
Sometimes it works out to negotiate or wait for another offer, but an old real estate adage states that the first offer is the best offer. Even if the offer is disappointing, there may be good reasons to give it serious consideration. Here are a few:
- It’s an all-cash offer with no lender involved
- You found your new home and want to avoid carrying two mortgages
- You need a victory right now (relocating for work or going through a divorce)
- Your house has been on the market three months or more
- You’re headed into the doldrum selling season
- It’s an inherited home you’re eager to sell
- Price is not a priority
- The buyer really stands out
How to weigh the strength of the offer
Before you say yes to your first offer, take some time to consider its value. Some aspects to consider include:
Price: Obviously, the closer the offer is to your listing price, the better. All things being equal, if the first offer is within 10% of your listing price, it’s worth serious consideration.
Cash vs. financing: Cash offers usually result in a faster sale than mortgage-backed offers; if speed is an important aspect of the sale, this could make a significant difference.
Even if a buyer has been pre-approved by a lender, the loan could still be denied or delayed due to a change in job status, a low home appraisal, or a dozen different reasons. According to a 2021 National Association of Realtors® survey, financing difficulties were responsible for 29% of closing delays and 10% of terminated contracts.
Depending on your selling circumstances, a cash offer from HomeLight’s Simple Sale platform may be the solution you need for a quick, confident sale. We’ll provide a no-obligation, all-cash offer within 48 hours. If you accept it, your sale can close in as few as 10 days, often concluding with a moving date of your choosing.
Contingencies: Various types of purchase contingencies can delay a sale. If specific criteria aren’t met, the deal can fall through; i.e., the sale is contingent upon various factors outlined in the offer. Therefore, the fewer contingencies tied to an offer, the more likely the deal will reach closing.
Common contingencies include an inspection contingency and an appraisal contingency. A home sale contingency in which the buyer’s purchase is contingent on selling their home first is also common, but can be more problematic by either delaying closing or canceling it indefinitely if the buyer’s home fails to sell.
Buyer flexibility: If the seller needs to postpone closing or defer moving, it’s incumbent upon the buyers to be flexible if they want their offer to be accepted. One solution might be a rent-back that would financially compensate a patient buyer if the seller needs more time to transition after the sale.
Does the offer meet your primary selling objective?
When you partner with a top real estate agent, they can help you identify your selling objectives and priorities. For instance, if you need to sell quickly because you’ve already purchased your next home or have to move due to a job transfer, then a quick cash offer with few or no contingencies is appealing, even if it’s slightly below your listing price.
Finding a top-performing agent with knowledge of your area is easy with HomeLight’s Agent Match. Just input some basic information into this free online platform to find your match.
The longer we’re on the market, the longer people are going to look at it as if it’s not priced right. Eventually, somebody’s going to come in and write another offer under list price.
- Kris & Heather Shook
Real Estate Agent
Kris & Heather Shook
Real Estate Agent at Keller Williams Tacoma
Currently accepting new clients
- Years of Experience
- Average Price Point
- Single Family Homes
How market conditions can influence your decision
Market conditions are another factor that could influence your decision on whether or not to accept that first offer on your home.
1. Are you receiving multiple offers in a hot market?
In a seller’s market when inventory is low and buyer demand is high – especially when mortgage rates are low – it’s common to receive multiple offers. In situations like this, Shook says Tacoma sellers can accept offers as they come in or schedule an offer review date to allow time to receive multiple offers. “This puts the review window in your control, rather than the buyer’s,” she says.
2. Are homes in your market a dime a dozen?
Conversely, in a buyer’s market, inventory exceeds buyer demand, resulting in homes remaining on the market longer and often decreasing in price. In this scenario, if a home similar to yours sells for less than your listing price, anticipate a lower number than you’re asking. That’s because recent sale prices of comparable homes impact the amount of money you’ll get for yours.
3. Has your home been sitting longer than the average ‘days on market’?
The longer your home sits on the market, the more likely you are to receive low offers. The number of days on market (DOM) is often considered a bellwether for price. A high number of DOM will typically indicate that your home is overpriced. “The longer we’re on the market, the longer people are going to look at it as if it’s not priced right,” Shook observes. “Eventually, somebody’s going to come in and write another offer under list price.”
4. Does your home appeal to a niche or limited buyer pool?
If your home’s location, condition, or features limit the buyer pool, it can also limit the number of offers you receive. There are some things you can do to appeal to a wider audience, but you can’t eliminate power lines, train tracks, road noise, or the condition of neighboring properties. For this reason, it’s wise to consider the first offer on the table.
Should I counter before I accept the first offer?
Responding to the first buyer with a counter offer poses some risk. They could accept, but they could also walk away, never to return – or, you might get drawn into an extended back-and-forth negotiation.
Consult with your real estate agent to help you determine whether it’s a good idea to counter and fine-tune the sticking points, such as price, contingencies, closing costs, or moving date. Keep in mind your objectives: do you need to sell quickly? Your agent might also have some insight into how motivated the buyer is.
To accept, or not to accept: Let’s recap
An experienced agent can advise you on the best strategy once you receive your first offer. If you don’t already have an agent, you can find an experienced real estate agent familiar with your area with HomeLight’s free Agent Match.
Consider accepting the first offer if…
- You’re pressed for time and need to sell ASAP
- The offer is close to your home’s market value (even if it’s below your listing price)
- It’s a cash offer
- You have a limited buyer pool
- You’re in a buyer’s market
- Your home has recently gone on and off the market
- An identical home to yours just sold for less
- Carrying costs of paying mortgage, utilities, and insurance
- You’re behind on mortgage payments or facing foreclosure or a short sale
Reject the first offer outright if…
- The offer is way below market value
- Your listing is new and you have time to spare
- You’re in a seller’s market where multiple offers are common
Take these factors into account, and know that ultimately, the choice is yours.
Presley Attardo contributed to this story.
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