The curse of a good first offer... and how to avoid it...

Here is what I tell my sellers in such a situation...

1) The fact that an offer is received the day it has been listed doesn't mean that the property has been listed too low.

It is very easy for them to forget and overlook the fact that the residential real estate marketplace has become very fast and efficient. Today's multiple listing systems (MLS) provide participating agents, and in the end their buyer clients, with virtually instant access to information about existing inventory and what has just come on the market. 

Furthermore, if your listing agent is any good, your listing is being widely and almost instanteniously syndicated via very prominent real estate portals such as Realtor.com and others.

The point is that potential buyers learn very quickly of a new listing that matches their criteria. Thus a flurry of activity at the outset of the listing is to be expected and does not necessarily imply a too-low price... it simply reflects the efficiency of today's marketing systems.

2) A good, early first offer does not imply that the seller should hold out for an even better or for full price one.

We all know that most sellers will insist on building in a little bit of a buffer into the asking price to accommodate the negotiating dance that typically ensues between sellers and buyers. 

However, when a really good offer comes in near the outset of a listing period, sellers forget that very quickly and are very much tempted to hold out for their full (and somewhat inflated) asking price... or expect other competing offers to drive the price above that asking amount. 

Firstly, while this is a normal human reaction, sellers must keep in mind that good buyer's agents always educate their buyer clients regarding comparable and recently sold properties... and because of it they do know you over priced your home just a bit to accommodate the back and forth of negotiating the purchase price.

Secondly, there are often transactional benefits to leaving something on the table. A real estate transaction can end up being a very complex and stressful process, especially if something comes up during inspections or open permits are found. In such cases there are almost always second negotiations to salvage the deal. A buyer who feels beat down in the initial purchase negotiation may well be more difficult to deal with as other issues arise.