Making an Offer Before the Open House
Home buyers often want to make an offer on a new listing that comes on the market on Friday before the scheduled Sunday open house. This compulsion is with good reason. Buyers worry that another buyer will fall in love with the home on Sunday, maybe more than one buyer, and there could be multiple offers, too much competition, and the buyer will lose her dream home. It's a valid concern.
On the other side of the coin, listing agents, for the most part, prefer to put a home on the market on Friday while promoting a Sunday open house. Going live at midnight on Thursday is best because Friday is the best day to list a home. Flipping that switch in MLS at midnight allows all the photographs to download across many platforms, making the images available first thing Friday morning.
The way this often works is the buyer opens her morning email with new listings. Then she calls her agent and asks to view the home right away because the buyer does not want to wait for the open house. After all, it is not unusual, especially in a seller's market, for buyers to immediately flock to a new listing, eager to make an offer. This is when the buyer may turn to her agent and demand to write an offer on the spot.
A potential problem is that, often, sellers might say they prefer to look at all offers after the open house on Sunday. They want the longest exposure possible on the open market and prefer to give a large number of buyers an ample opportunity to bid on the home.
A preemptive offer would need to be mighty attractive for a seller to accept that offer prior to waiting out the results from the open house. Not to mention, even if the seller accepted the purchase offer, the listing agent might still be expected to hold an open house anyway. It's difficult to cancel an open house at the last minute when it has been advertised everywhere online.
Common Practices for Making an Offer Before the Open House
Early Deadline for Acceptance
Obviously, the buyer wants the seller to accept the offer immediately. It's a bird in the hand, they hope the seller might think. A buyer does not realize that an offer from the open house might never materialize.
An early offer might make the seller wonder if she is losing out on potential profit by taking this offer from an excited buyer. To push the seller, buyers might give the seller a short deadline for offer acceptance, say by Saturday evening, at which point the offer will expire.
This is meant to induce action but it doesn't always work and, in fact, could backfire. A seller could resent the pressure. A seller could also make a counteroffer, which would restart the clock for acceptance. It's not always a good idea to try to push a seller to yield to these demands because the seller could retaliate. Not everybody is level-headed during negotiations, and selling a home is a stressful time for many.
Offering List Price
To buyers, offering list price is a sign of good faith, meant to show they are serious and committed. A seller, however, might wonder if they would get a higher price after many other buyers tour the home before and/or after the open house. They might wonder if the price is too low. A million thoughts race through the sellers' heads at this time, often making them hesitant about taking any action at all. They could freeze on you.
Believing Cash Trumps
Some buyers will make an all-cash offer and hope that in exchange the seller will make other concessions. Perhaps the seller will accept an offer with a contingency to sell an existing home or be willing to endure a longer than necessary closing period due to receiving the cash offer. A cash offer means no lender requirements, no bank appraisal, no chance of the buyer not making it out of underwriting, where many things can go wrong. But many sellers realize it is all cash at closing, regardless of its origin.
Tried and True Tips for Making an Offer Before the Open House
Sellers should continue with plans for the open house, unless they receive a super stupendous offer and, even then, they might not accept that offer until after the open house. It's up to the seller to make that decision.
If the seller is serious about waiting to accept an offer after an open house, there are still ways for the buyer to make a solid offer and all but ensure the seller will accept. A seller should also let the buyer's agents know up front that they'll most likely hold out for the Sunday open house.
So if buyers want to have an edge in offer negotiations, they need to act quickly and submit a strong offer. Let's say the seller receives an offer a little bit higher than list price. This will often excite a seller and tend to make the seller feel kindly toward the buyers. Buyers can throw in a few more things, too, just to make the offer more attractive:
- Write a heartfelt letter to the seller about your situation and why you want to buy the home.
- Give the seller a little bit of extra time to move out, without charging them rent.
- Offer to absorb a few closing costs fees a seller would normally pay, which would not interfere with an appraisal but would net the seller more money.
- Offer to buy the home without an appraisal contingency (be sure to discuss the pitfalls of this strategy with your agent).
- Submit a clean offer, backing it up with substantial documentation such as proof of funds and a preapproval letter.
Who do you think the seller will think about all weekend, from Friday morning to Sunday afternoon? The seller will be thinking about you and your offer. The seller will be wondering if they made a mistake and maybe they should simply accept your offer. It will gnaw at them for 3 solid days. Then after the open house, even if there are multiple offers, the buyer to whom the seller will likely gravitate will be the patient buyer who submitted an offer above list price on Friday and has been quietly waiting.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.