Should You Take the First Offer you get?

So, you've just received that exhilarating call—someone wants to purchase your home! But the thrill can soon dampen if the offer isn't what you had in mind. It's a rollercoaster, isn't it? You're now left contemplating, "Should I take this first offer or hold out for something better? And how do I even negotiate?"

This is where a seasoned real estate agent can make all the difference. We're not merely here to list your property and coordinate showings. The real expertise comes into play when that offer arrives. We understand the ins and outs of the market, and we're seasoned negotiators. You're not navigating this journey solo; we're with you every step of the way.

A few key Factors to Consider Before Accepting the First Offer, (but by no means all of them.)

All-Cash Offers

When you get an all-cash offer, there are usually fewer hurdles to clear, (contingencies) particularly concerning financing. This often leads to a faster closing process, which can be a lifesaver if you're pressed for time. However, it's not a guarantee. For example, if your agent finds out that the cash buyer plans to flip the property, they might drag out the inspection phase, as a second price negotiation point. In such cases, waiting for another offer might actually be in your best interest. Some cash buyers aim to secure a property just to keep it off the market, intending to negotiate terms later.

The Particular Lender Involved

Knowledgeable real estate agents are up to date with the mortgage industry. For example, did you know that right now, due to the market slowdown, 35,000 loan officers quit the industry and 14% of producing loan officers changed employers. Being aware of such changes can help you assess the strength of an offer, if a lender is involved. A lot of transactions are being delayed right now while companies juggle personnel. Delays can cost you money when your moving plans get turned upside down.

Out-of-Town Sellers / Inherited Properties

When managing an estate-sale property, possibly from out of town, the logistics can be challenging. Accepting an early offer that closes quickly might relieve you of a significant burden. However in some cases, if you are dealing with multiple beneficiaries or need for court approval, selling fast may not be practically possible so waiting for another offer may be better for you.

Seasonal Market Trends

Believe it or not, the real estate market has its quiet days too. Whether it's Mother's Day, a Seahawks victory parade, or other significant local events, these can slow down buyer activity. Your agent's experience can be invaluable in understanding the seasonal ebb and flow of the real estate market. If you receive an offer during a known slow period, that first offer might be as good as it gets for a while. However, f the market is starting to enter a boom time, it may be worth it to wait and see if you get more than one offer.

Regulatory Changes

New laws or initiatives can change the playing field overnight. If you're aware that a legislative change is in the pipeline, like Tacoma's Initiative 1, which may make it tougher to be a landlord, locking in an offer before those changes take effect could be wise. Once the law takes effect you may find yourself with more competition as other landlords put their rentals on the market. Laws can also influence property valuations. If Initiative 1 in Tacoma is negatively affects property values, accepting an offer early might save you from potential future losses.

Of course there are other laws that take effect, with a timing element to them, like the excise tax triggered when real property is sold. This law went into effect Januray 1, 2020. Before 2020, we had a uniform rate of 1.28% on the sale of all real property. After Januray 1, 2020 there is a variable rate. Currently in 2023, if you home sells for $525,000 or less, then your tax is 1.1%. If your home is sold for $525,000-$1,525,000 then the tax will be 1.28%, If you are $1,525,000-$3,025,000 then your tax will be 2.75% and finally if your home sells for over $3,025,000 then your tax will be 3%. Imagine if you were selling a home back in December 2019 for less than $500,000, you'd probably weigh the initial offer against the potential savings of holding out for a better one that might come in the New Year? But if you were dealing with a property valued over $1.525 million, you would have been more inclined to consider a lower offer, since the extra cash from a higher one, coming in later, might just end up going straight to taxes. Here again, the awareness of your agent would be crucial to guide you in the right direction.

Interest Rate Fluctuations

The actions of the Federal Reserve, particularly with interest rates, can profoundly impact homebuyer behavior. Rising rates often lead to decreased buying power and lower offers. If you get a reasonable offer while rates are low but expected to rise, it might be beneficial to lock it in. When interest rates start to dip by 1/2-3/4 percent, you will start seeing people jump back in, resulting in  more buyers interested in your listing. More buyers = more competition, and potentially more offers could come your way. Taking an early one too quickly might leave some money on the table.

To Take or Not to Take, That is the Question

So should you take that first offer? It really comes down to your individual circumstances. By working closely with a knowledgeable real estate agent who listens to your needs and understands your situation, you can be better positioned to make a decision that's right for you. Sometimes that first offer, when examined in the right context, might turn out to be the best one you could hope for. Other times, an experienced agent might advise that the market is strong, and waiting for another offer is practical and likely to get you better terms. After all, wasn't their experience and knowledge of what is happening in the financial, legislative and real estate world why you hired them?