What kind of statement is that? How often have you heard that?
Actually, that sort of gratuitous comment comes with almost every offer.
Does it really ever mean anything? No, it’s absolute nonsense!
The only purpose is to have you consider the first offer seriously and sign it back very close to its stated price, or just accept it outright.
The real issue is who is saying it.
Buyer’s Agent
If the buyer’s agent says it, then, it’s probably just “puffery” and you can safely ignore it.
Seller’s Agent
If the seller’s agent says it, then, this is a little more disturbing. Here, notwithstanding the listing price, the seller’s own agent is trying to encourage the seller to accept it and move on. This type of comment is often followed by the great and deep philosophical comment:
“let’s all get on with our lives”.
That comment, is, of course, just as absurd!
You are here to list and sell your property. You need to sell it for a good price. You don’t need to hear that “you should be getting on with your life”, and you don’t need to hear that “the first offer is the best offer”.
The Variations
Here are some of the variations:
· the first offer is frequently the best offer
· the first offer is always the best offer
· the first offer is probably the best offer
· the first offer is sometimes the best offer
· the first offer is possibly the best offer
· the first offer is many times the best offer
· the first offer is oftentimes the best offer
· the first offer is usually the best offer
· the first offer is just about always the best offer
What you won’t hear is:
· the first offer is never the best offer
That would be silly. They would never say that. It makes no sense. They would just simply have to go back, and increase their offer!
So, when does it makes sense? Actually, it only makes sense, if you succumb to the pressure and accept it. Then, you only got one offer. You accepted it, and of course it was the best offer.
Substantive Value
Is there any substantive value to the comment? I mean it’s used by somebody in almost every deal, so it comes up all the time.
There are two real examples of truthfulness in the comment:
1) declining market, and
2) the bully offer,
The Declining Market
If the market is actually declining which has been the case in the recent past several times, that is
May 2008 to January 2009,
April 2017 to August 2017,
February 2022 to September 2022,
then, there is a reasonable chance that the overall market will have declined by the time you receive another offer. So, that would mean that all things being equal, a second offer, made perhaps 30 days after the first would reflect new, but worsened economic conditions.
Naturally, you should ask for the statistics to back up the statement.
The Bully Offer
Should you be so lucky as to receive a bully offer, then, it truly might be the best offer.
You will recall that a bully offer is an offer substantially higher than the listing price. It comes in early just after you have listed the property, and is designed to have you accept it outright without seeing other offers. The person submitting the bully offer reasonably believes that you have a good property and that you have under-priced it to the market conditions. They want to avoid a bidding war, so they will overbid the property right at the outset.
Now, if that is the situation that you are looking at, then clearly this is a situation when “the first offer is often the best offer”. But, you have to admit, that’s rare.
It occurs infrequently. It happens in the Spring market with hot properties in hot neighbourhoods, otherwise, you are not going to see it.
So, all in all, when someone says “the first offer is the best offer”.
It’s usually just “sillytalk”.
Brian Madigan LL.B., Broker