Don’t mix metaphors because said “early bird” often turns out NOT to be the one “in the hand.”
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The personal stories of one Realtor’s battles and triumphs in the highly-competitive Bay Area Real Estate Market, seeking to illuminate and humanize the very real ups-and-downs of homeownership.
I’m an “early bird” by nature, typically starting my day at about 5:30 AM, so I adhere to the old adage that states: “the early bird gets the worm.” Truth is, I am more productive between 6:00-9:00 AM than I am the entire rest of the day. Bedtime? It’s also early, much to my husband’s consternation; I’m usually in my jammies and asleep before 10:00 pm. On the positive side, invite me for dinner and I’ll never be the guest who outstays her welcome. (Punctual to a fault.)
However, “early” doesn’t always work to one’s advantage
Recently, Sarah and I have received a spate of early offers from one Agent in particular who routinely emails unsolicited purchase agreements within mere minutes of our listings being posted online. She clearly works for a large developer, which is a problem in an area where the available housing stock is in short supply and the bar is already exceedingly high. While not as prevalent in Oakland, Institutional Buyers are, quite literally, changing the paradigm for home ownership nationwide, and to no one’s surprise, it ain’t for the better. (I’m not a fan.)
In 2021, institutional Buyers, including companies and LLCs, purchased approximately 13.2% of residential properties. A recent study by Redfin indicated that investors – including both institutional and individual – purchased about 19% of U.S. homes sold during the first quarter of 2024. Unfortunately, competing against large institutional Buyers is one more hurdle that’s difficult to overcome for younger Buyers struggling to get a toe hold in the marketplace at all.
Pitfalls of dealing with the institutional Buyer
These institutional Buyers know that ALL offers – whether expected or not – must be presented to the Sellers within 24 hours, which means that before anyone has seen the house (including the submitting Agent), or read the reports, or done ANY due diligence whatsoever, an offer is landing in our laps with the expectation that it must be presented (and it must). In other words, institutional Buyers are counting on anxious Sellers to jump at the first offer they’re handed; they’re capitalizing on both fear and “the bird in the hand.”
Given that nearly 20% of homes are now being gobbled up by professional investors, this predatory tactic obviously works, but as we’ve just spent a good deal of time and money getting your house ready for the market, AND as the housing stock in our area is entirely unique, AND as we’ve “strategically priced” the property in order to create urgency and demand, why in the world would we EVER encourage Sellers to take these uninformed, early, lowball offers? (And they have all been WELL BELOW the asking price.)
We wouldn’t.
Not that Sarah and I are universally opposed to preemptive offers. We’re not. In some cases, preemptive offers can be an elegant solution for all parties involved, especially for the Seller who prefers privacy and time in the house, over the certainty that they absolutely received top dollar. (That question is only laid to rest when a house has been market tested.)
That being said, preemptive offers are rarely ever a walk in the park due to the uncertainty on BOTH sides of the transaction, nor are they meant to be a bargain . . . Given the nature AND the emotions of selling personal property (aka: our homes), more often than not, Sellers begin to wonder if they sold their house for too little. Conversely, Buyers start to believe that they’ve somehow overpaid?!? (You didn’t; you paid for the privilege of not having to compete on the open market.) So while the early offer can be elegant, it is rarely ever easy.
All this is to say, that in the world of Real Estate, there is absolutely a time and a place for the “early offer,” but only if the property has been fully investigated, if the price is right, if there’s a meeting of the minds with respect to value, and if the Buyers are qualified and patient. Otherwise, fly on little birdie; we won’t be doing any business with you, early or otherwise!
How can we help you?
Julie Gardner & Sarah Abel | Compass Realty
Not just Realtors, but consultants in all things house and home, we’re here to educate, explore, examine and refer . . . In short, you may count on us to take care of your home as if it were our own and anyone who knows us, knows we take pretty darn good care of our homes.
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