Also published on the Huffington Post
Let’s dive in because I know you’re chomping at the bit to figure out how to handle this property frenzy. You feel totally out of control playing a game where rules change all the time. A new property hits the market with no offer deadline. You quickly submit a great offer at the encouragement of the listing agent and get some mumbo jumbo which amounts to worse than a rejection. They want to hold until other offers come in. Now you have to wait through the weekend for the seller to have their open house, collect more offers and use those offers against you. What do you do, besides chew the insides of your cheeks off?
Let’s review the options.
1) You think “Oh, okay, well I want this house so I’ll wait.”
2) You think, “I should have offered more, I’ll do that now.” And you re-submit hoping for an acceptance.
3) You think, “Eh, whatever. I’ll withdraw my offer and maybe resubmit in a few days.”
Option #1 isn’t a good strategy. In fact, it sucks. Being nice, flexible and patient will get you absolutely nowhere. Think about it – the listing agent has your offer in hand and holds the open house. People ask “Do you have any offers?” And the listing agent says “Yes, we’ve received an offer.” Now what happens?
Well, remember that old boyfriend you dumped who used to clip his toenails in bed with you and let the nails fly everywhere and not clean them up? Yes, him. You find out he’s got a new girlfriend and suddenly you want him back because he’s the one that got away and just seeing him with Suzie makes you realize that you love him so much? Yeah. That. Except this time, it’s YOUR offer that incites someone else to desire a property they were formerly indifferent about. Nothing makes someone want something more than when someone else also wants it.
Option #2 is also the sucks. Think about it. Even if you go high from the start or you bid against yourself to go higher when the first offer is rejected, at some point there’s a cross over into “too much money.” The seller sees how much you want to pay and they don’t read that number as the representation of your desperation plus the extreme lack of inventory. No, they read that number as “My stupid listing agent made me list my house too low, and it must be worth 18 million dollars so now I’m holding out for that. Step aside small potatoes, I’m holding the equivalent of goldmine here!”
What can you do about this? When you submit an offer to an agent who has no memorialized deadline and the seller does not accept, WITHDRAW YOUR OFFER. Do not allow yourself to be used as a pawn to drive the price up at your own expense. So you see, #3 was the right answer. It’s always the right answer.
What if you just can’t withdraw your offer? What if you want to take a chance and hope you have a reasonable seller who may just accept an offer on Day 1 and cancel the open houses, what should you do to improve your chances?
1) Write an offer higher than list price. I know, I know, I hate escalations and offering more than the seller agreed to accept. But since you’re submitting early and you’re the only offer, there is no escalation that would kick in even if you included one. Add some money to that offer and be prepared to waive your contingencies. Sorry. If this is something you can’t or won’t do, then do not go running out to look at properties on Day 1. You’re going to make yourself insane. Just don’t do it.
2) Deadline. Deadline. Deadline. And stick to it. Put a short window of time in which they need to respond or the offer is withdrawn, and stick to it. Time is not on your side here, don’t afford the seller the opportunity to “shop your offer.” This strategy obviously isn’t for the faint of heart or the emotional though. You have to be prepared to walk away otherwise your integrity is compromised. But at least you will know you didn’t cave in on all your principals. There will be another house, I promise.