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When you list your home for sale it’s understandable if the waiting game has you stressed. When that first offer does come in, mixed emotions can come with it. You may feel tempted to jump on the offer for fear another one won’t come in — and at the same time may feel underwhelmed and hope a better offer is just around the corner.
Let’s take a closer look at whether or not you should take the first offer. Spoiler alert: There’s no right or wrong answer here.
Do you have to accept an offer on your house?
You aren’t legally required to accept the first offer, or any offer, you receive. But that doesn’t mean there won’t be financial repercussions, especially if there is only one offer.
If you only receive one offer and turn it down, you may run into issues with your real estate agent. Double check your contract in this instance, as it’s fairly common to have to pay your real estate agent their commission if you turn down a full-price offer after they did the work of listing and showing your house to potential buyers. In some states, your contract may state that you have to pay the commission if you receive a full-price offer from a qualified buyer.
You also run the risk of your real estate agent feeling that showing new buyers your home won’t pay off. Agents representing buyers who find your home in the multiple listing service (MLS) with a rejected offer note — which will mention that you rejected an offer at your asking price — may also skip showing your house to potential buyers.
Some MLSs have their own rules regarding rejected offers. For example, if a seller rejects a full-price offer but wants to continue to list their home on Northern California's MetroList MLS, their real estate agent must either raise the sales price of their home or include a note in the confidential agent remarks that the seller rejected a full-price offer.
If you decide you want more for the home than what you originally listed, you can always try to negotiate with the buyer. You may find that either a higher price, waived contingencies, or a flexible moving date are enough to change your mind about accepting the offer.
Should you take the first offer when selling a house?
Now that you know what your options are surrounding accepting or rejecting an offer, let’s take a look at this from another angle: Should you accept that first offer?
When you shouldn’t necessarily accept the first offer
Whether or not you should accept the first offer you receive depends greatly on the type of real estate market you’re in. There’s no guarantee your home will receive more than one offer, but if you’re in a seller’s market, you have much better odds of getting more than one.
For example, in February 2021 (during a seller’s market), NAR’s monthly REALTORS® Confidence Index Report found that there were four offers per home sold that month. A year prior in the same month (when the market wasn’t as hot) there were only two to three offers per home sold.
Your real estate agent will help you determine if you’re in a buyer’s or seller’s market and whether or not it’s worth holding out for better offers. If you’re in a seller’s market, you have the option to include an offer review date in your home listing form, which gives your agent a chance to collect multiple offers before you must decide which offers to entertain.
When you should consider accepting the first offer
If you’re in a buyer’s market, with more housing inventory on the market than there are buyers, then you may be better off taking the first offer you get as another may not come along. If your house has been on the market for a while before you received a first offer, that’s a good sign you will want to accept it even if you don’t have multiple offers to compare it to.
Even if you’re in a seller’s market, you may struggle to find a buyer for your home if your home has more of a niche appeal (indoor pool that requires maintenance) or a black mark against it (located next to train tracks). For example: Maybe you have a historic home that a history buff will love, but that the average buyer won’t want to commit to the higher maintenance costs that can come with an older home. If your home requires a very specific type of buyer, you don’t have as much leeway to be choosey.
If you struggle to get offers on your home, consult your real estate agent on what you can do to make your house more appealing to buyers. Perhaps you priced your home too high or need to be more lenient on your move out date. A fresh coat of paint or some new carpet may go a long way. Your agent will know what steps you can take to increase sellability.
Just because your home is hard to sell doesn’t mean you should accept an offer if it’s below market value. If you have time to spare then you have the option to hold out for an offer that meets your financial needs.
How to incite a bidding war without driving people away
In an ideal world, you’ll have multiple competitive offers to choose from. To better your odds of inciting a bidding war between potential buyers, you can test out a few of these tricks of the trade.
Price your home just below market value
Your real estate agent should run a comparative market analysis that helps you gain an idea of what a fair market value for your property is. More often than not your agent will recommend you list your home at that price, but you do have the option to list your home slightly below that price. Why would you do this?
If you price your home 5% to 10% below the price of other comparable homes for sale in your area, potential buyers are more likely to view your home as a good deal — which means they’re more likely to put in an offer. Once you have multiple offers on the table, your buyers will compete with each other to avoid missing out on your home and will increase their bids. This isn’t a game you want to play in a buyer’s market, but in a seller’s market you may end up with a lot of competing offers on your hands.
Set an offer deadline
As we briefly noted earlier, an offer deadline gives you a chance to collect a few offers so you can compare them all at the same time. This isn’t just a convenient tactic that will help you compare offers.
When buyers are on the fence about whether or not to make an offer you will find that a deadline puts a bit of fire under them. A sense or urgency will encourage them to make an offer and the more offers you have the better your chance of starting a bidding war is. Make sure you choose a deadline that gives your real estate agent enough time to generate interest in your home.
These are just two ideas to get you started, your real estate agent will have the best understanding of the current real estate market in your area and how you can make the most advantageous sale possible.