As our market conditions change, so too should the operating strategies of agents, buyers and sellers. The most pressing question as of late is, “Is it wise to impose an extended delay for responses to offers on new listings?”
There are many things to consider and an equal number of opinions about the pros and cons of each strategy. In most cases, the reason for the delay is to hopefully collect offers, potentially create a bidding war and in the best scenario get the seller the most amount of money and/or most favorable terms possible. That way of thinking makes sense, if it works. Some requests for a delay in response time is due to seller’s availability (i.e. traveling, outside of cell/internet range). In our opinion, if a seller isn’t going to be available for an extended period of time (more than a few days typically), it’s probably better to just hold off on listing their property because it quickly starts to lose its feel good. If a buyer writes a great offer and they are in limbo for days on end, we have found buyers continue in their search and sometimes will decide to withdraw their offer. As buyers withdraw, the days on market continue to go on.
Forward momentum in a real estate transaction is crucial whether it’s the beginning of the listing, contract negotiations or haggling over repairs. Any delay creates time for contemplation, opportunity for doubt to settle in, family to give their input, etc., all of which can quickly influence the buyers’ level of tolerance for just about anything.
We recently showed property to a ready, willing and able cash buyer who needed to decide on a property like “yesterday.” They found a home that suited them well, they were willing to offer full price, all cash, and accommodate the seller’s need for some extended possession after closing. What the buyers couldn’t wrap their mind around was waiting ten days to get a response to their offer. For them, the idea of putting in a solid offer with terms that align with exactly what the seller was hoping for and then waiting, coupled with the uncertainty of whether or not they’d get it, just caused them too much anxiety. The buyers were also uncomfortable with the idea of all the new listings that would hit the market over the next 10 days and possibly missing out on those as well as the house they were submitting an offer on.
In the past, we have had other similar situations arise and after submitting an offer with a shortened response time, we were pleasantly surprised the seller was open to considering something sooner for fear they may not get something better and our contract was accepted. In this situation, we broached the idea with the listing agent and ultimately the seller decided out of fairness to the other brokers they wanted to stay with the deadline originally advertised in the listing. We get it and at the end of the day, it is our jobs as real estate brokers to honor our clients’ wishes and negotiate in order to try and get those “dreams” to materialize. In this situation our client continued to look and ended up writing a contract on another home.
Ultimately, brokers are hired to represent buyers and sellers. We have a fiduciary responsibility to proceed as instructed by our clients so it’s not that the brokers have the ultimate say, but we do think it’s important for all parties to understand the pros and cons of delaying the submission of offers in an effort to create a bidding war. Do some end up with multiple offers at incredible prices and terms? The simple answer is yes. But, as the market shifts, make sure you are looking at the pros and cons of each strategy to be sure you aren’t doing more damage than good.