Buyer First Mover Advantage Offer Strategy
Utilising the First Mover Advantage Offer Strategy
In the fast-paced realm of property transactions, the New Zealand real estate market presents unique opportunities for savvy buyers. One strategy that has gained traction among property hunters is the "First Mover Advantage Offer Strategy". This approach, similar to pre-emptive bidding, can be a game-changer in securing your dream home or investment before it hits the wider market.
The first-mover advantage is an economic concept where being the initial contender in a competitive situation offers certain benefits. In the context of New Zealand's property market, this advantage translates into making an offer on a property before it becomes widely known or open to bids from other potential purchasers. James saw a property that he liked on a property website. As the property looked like it ticked all his boxes, he arranged to have a private viewing on Thursday, before the first open home which was to be held the following Saturday. As it turned out, there was also another private viewing happening at the same time with another family. After looking around the property and finding that it was in excellent condition and met all of their needs, James asked the real estate agent, "What do you think they would accept for this property?" In this situation the real estate agent was either going to say it was too early to say, give a rough figure, decline to comment or give a very specific figure. In this instance the real estate agent gave a very specific value which was $45K less than the value that James had personally placed on the house. James looked around a bit more before telling the agent he would call him with an offer. Later that day James called the agent with an offer 1% above the value they had stated the vendor would accept. This was still much lower than the value James had placed on the property. The agent sent through the S&P and, after entering the standard conditions, James submitted it that day. The next day the agent called James to say the vendor had reviewed and accepted his offer. By Friday afternoon the property had a conditional offer on it, and James was now the sole person in the due diligence phase before the first open home. The next day was Saturday, the day of the first open home. There were 35 groups through the house that day and 28 groups on the Sunday. Of these, there nine strongly interested parties wanting to put in an offer. Legally, all parties had to be told that there was an accepted offer on the property, however, they were free to put in backup offers. The due diligence period went by without issue and James and his family purchased the property. When you adopt this strategy, you sidestep potential bidding wars that not only raise the purchase price but also add stress to the buying process. In the scenario above, instead of competing with dozens of offers, the competition was distilled into a yes or no response, with the potential for negotiation if needed. Being first allows you to shape the negotiation terms and potentially secure a more favourable deal. Pre-emptive bidding is a powerful tool for potential buyers, especially in a seller’s market where property demand far outweighs supply. In these high-pressure scenarios, properties often attract several interested parties as soon as they are listed, sometimes even before. This highly competitive environment can be daunting but also presents an opportunity. By presenting an offer pre-emptively, you can turn the situation to your advantage. In the midst of a bustling seller's market, you want to stand out as a buyer who is keen and ready to move forward. This is where pre-emptive bidding comes into play. By making an offer before others have the chance, you effectively demonstrate your keen interest and readiness to close the deal. Making a pre-emptive bid signals: Offering pre-emptively often compels sellers to view your proposal favourably. In fact, it could be just the nudge they need to consider selling to you over waiting for other prospective bids. Remember, sellers appreciate certainty. They want to feel reassured that once they accept your offer, the sale will go through smoothly without any hitches. Your pre-emptive bid can provide that peace of mind. However, timing is crucial when it comes to pre-emptive bidding. Moving too soon may make you seem impulsive or desperate; too late, and you may miss out on being first in line. It's about finding that sweet spot where your offer arrives just as the seller is starting to consider their options. To effectively employ this strategy, ensure you have immediate access to funds or pre-approved financing. This readiness demonstrates to sellers that you're not merely expressing interest but are positioned to follow through promptly. Implementing a first-mover advantage offer requires agility and preparedness. You must be ready to act swiftly with financing in place and an understanding of what constitutes a compelling offer. While speed is of the essence, it must be balanced with rigorous due diligence. Although moving quickly offers clear advantages, it should never come at the expense of thorough due diligence. Ensuring that the property aligns with your requirements and investment criteria is paramount. Consequently, having trusted professionals such as building inspectors on call can facilitate this process without undue delay. While securing a property quickly is beneficial, ensuring its long-term value holds even greater importance. Take time to evaluate factors such as location desirability, structural integrity and potential for appreciation to safeguard your investment.
A real-life example
Utilising Pre-Emptive Bidding in Seller’s Markets
Demonstrating Serious Intent with Pre-Emptive Bidding
Assessing Value Beyond Speed
Final Thoughts: Is It Right for You?
The first-mover advantage offer strategy isn't for everyone; it requires decisiveness, risk tolerance and confidence in one’s judgment. However, for those ready to navigate New Zealand's dynamic real estate landscape with agility and foresight, this approach can yield significant rewards.
