18

October

Deadline or First In Line? When to present your offer.

Cullen P. Watson, Esq.

Deadline or First In Line? When to present your offer.

For better or worse, supply and demand is currently dictating that most of the close-in real estate in the DC area is a seller’s market. So whether eyeing property in McLean, Chevy Chase, or Bloomingdale, buyers need to be prepared. So when the perfect place comes on the market, when should you submit your offer? It depends.
 

 

Scenario I: The listing agent set a deadline for offers.


Generally, great properties will go live on the MLS on Wednesday or Thursday. The listing agent will hold an Open House on the weekend to make sure anyone and everyone has a chance to see the property. Then they will ask for offers by a defined time on Tuesday or Wednesday of the next week. So what do you do?

 

Option 1: Be aggressive, submit an overwhelming offer right away and try to get the sellers to cancel the Open House. Just because the agent set a deadline for offers, that doesn’t mean the sellers can’t sign an offer if it’s presented. There isn’t a law dictating that the deadline has to be followed. It’s a free market, afterall. The upside to this aggressive option is that you might not have any competition, and the sellers may believe your offer to be too good to pass up. Maybe someone would offer more, maybe not. It’s an aggressive play. But if you want the house, it’s an option. The drawbacks to this approach are obvious. First, it’s probably going to take a really strong offer to convince a seller, and you’ll likely have to set your own deadline for the offer, e.g., “sign by midnight or it’s off the table.” Also, you’re tipping your hand early as to what you’ll offer, which can backfire if the sellers proceed with the Open House and original offer deadline, and you end up competing with other buyers.

Option 2: Wait until the deadline and submit an offer with an escalation clause. The escalation clause allows you to make an offer for X amount, and if there are better offers, your offer will increase incrementally to beat out other offers until you reach your maximum price. For example, you can write an offer for $500,000 with an escalation clause up to $550,000 in increments of $5,000. So if the second best offer comes in $545,000, your escalation clause will allow you to buy the property at $550,000. If the second best offer is $530,000, then you would be the best offer at $535,000. The upside to this approach is that you pay only as much you want to, and only a bit more than the second best offer. The downside is that by waiting to submit your offer until after the Open House and at the deadline, there will likely be a lot more competition. You also run the risk that someone else tries Option 1, gets there first, and shuts you out from even being able to make an offer.

 

Scenario II: The listing agent presents offers as received.

Only Option: If you love the place – get there first!!!! Drop everything you are doing, see the place, and be prepared to make a solid offer. The listing agent will present it, and the seller may sign it. You might not be the highest price, but you might land the perfect house just by being first in line. This isn’t as common as Scenario I, but it does happen.

 

DISCLAIMER:
This is for informational purposes only, and is not intended as a pressure based sales technique. Every situation is unique. If we look at listings, know the market, know what you want, and know comparable sales, you’ll KNOW how to approach your unique situation. It won’t come down to a decision, but more of a reaction. If there is any trepidation, the above scenarios suggest that it isn’t the perfect house at the perfect price.  Also, terms matter. It isn’t always about price. There are ways to make a great offer, have it accepted, and not be the highest price. But I’ll cover that in a future blog post. Until then, Buy Smart. Live Well.

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