In the smash hit from Netflix “The Queens’ Gambit,” we follow the story of a child chess prodigy in her journey from orphanage to the top of the competitive chess world. One thing the show does brilliantly is show how hard the show lead Beth Harmon works at her strategy.
She plays differently against the Russian Grandmasters than she does against her local competition.
It’s not too much of a stretch to think of the real estate market as a chess match. We want to have an opening strategy, make our moves with confidence, and then react and respond to the counter moves that come our way.
The two biggest strategies are having an “Offer Review Date” vs. “Accepting Offers As They Come.”
When you have done all the prep work that we have discussed and everything is ready to go, the MLS will ask us to choose: review date or as they come? It’s our first big decision, and how you answer that question sends a message to the marketplace.
Let’s look at offers as they come first: when we check this box we are signaling to the market “This is our price. First come, first served.” We could have this stance for a few reasons. One is that we know the asking price is at the very top of the range supported by neighborhood comps. This strategy is looking for one buyer. For personality reasons or possibly financial reasons, you want a specific number and you put that out to the market and ask for that.
Another reason might be that the property is being sold “As Is.” Maybe it’s an estate sale or a divorce or a health reason and the property is being sold in its current state.
When you choose “Review Offers Upon Receipt,” the listing goes live and you wait for an offer to come in. That’s it.
If you choose “Offer Review Date,” you’re trying to create competition in the marketplace. When to tick this box, you are signaling to the market “We think our listing is solid. We think there will be multiple people interested in buying this home. We have done our work and this place is front line ready. Therefore to be fair to everyone, we would like all offers to be submitted on a deadline.”
Many times when you choose this strategy, there is some gamesmanship involved. For instance, you could choose a list price that is on the low end of the range for the neighborhood. When the market is hot, that will drive a lot of traffic to the home, and hopefully multiple buyers. Those buyers may then compete by escalating the price above the listing price.
That’s the theory anyhow. The risk is that you may not get multiple offers. You may get one offer on the review date. There is potential for disappointment if you think there will be a bidding war, and it doesn’t materialize.
So when you choose this path, set the price to where you will still be satisfied if there is only one offer.
It’s not uncommon in the Pacific Northwest to see homes in sought after neighborhoods receive well over 10 offers. We’ve had listings in our office get over 50 offers. In extreme cases, price has been driven up 25% or more over asking price.
Those cases can and do happen when it’s a special property. Sometimes you miss the mark or something changes in the mood of the market. What do you do if your listing goes live and there is zero interest?
It’s time to listen to the market. Sometimes you pick a list price that doesn’t meet with the market expectations. Sometimes a seller will fall in love with their Zillow Zestimate or just have a high number that they want for emotional reasons.
The market will tell you quickly if you’ve missed the mark. If the listing is front line ready, has great photos and marketing, and there are no showings, something is wrong. Usually it’s price. But there could be other reasons. I recently saw a beautiful property that is right next door to a fire station. It was getting very little action for obvious reasons.
There is a way to combine the two strategies. It’s possible to launch the listing with an offer review date, then if it’s not getting showings and interest anticipated, the review date can be removed and changed to offers on receipt.
It is however important to know what your strategy is prior to hitting the go button and making the listing live. Things move fast once the home hits the market. You could get an early offer and if you haven’t thought ahead and know what your move will be, it can knock you off kilter.
One other important consideration when it comes to strategy is the idea of timing the market. Many sellers want to know in advance if they are hitting the selling cycle at the absolute peak. If I waited a month would I get more? What if I waited too long and I’m going to get less?
A lot of people have an anecdotal story of a friend of a friend or a person at work that got into a crazy bidding war and got a silly amount of money for their home. These stories are appealing and make you want a bidding war too.
Unfortunately, the real estate market doesn’t work that way. You can look at trends. You can study the past performance of your area, but that doesn’t guarantee the future. The mood of buyers can and does change throughout the year. Buyers are influenced by interest rates, elections, seasonal changes or even a big weather event.
While it’s tempting to try and time the market, it’s impossible to do so. We will do everything in our power to get the maximum price for your home when you decide to sell. That is the best result you can get. The market that exists when you want to sell is the only market you get to play in.