“Throwing Out Offers” Does It Really Work?

In the competitive world of real estate, where supply and demand are constantly changing, prospective homebuyers often find themselves grappling with a critical decision: whether to throw out an offer or make a calculated offer.

This is a very important decision for any buyer, so it’s important they make an informed decision on what approach they are going to take. One could lead to closing on their dream home while the other could mean losing their dream home. Let’s take a closer look at throwing out offers when buying a home.

What Does Throwing Out Offers Mean?

The practice of “throwing out offers” is a strategy that doesn’t involve offering a price based on comparables or market conditions. It’s usually a random number, a number pulled from mid-air, a number a buyer would “like” to pay for the house, a number they feel would be an incredible “deal or steal,” usually a number that doesn’t align with the true market value of the property.

Can a Buyer Throw Out Multiple Offers at the Same Time?

Sometimes buyers want to throw out multiple offers on multiple properties at the same time to see if one will “stick.” While generally, it’s legal for buyers to submit multiple offers on multiple properties at the same time, even if they only intend to purchase one home. However, there are ethical considerations to keep in mind.

Let’s say a buyer writes and submits 10 offers to 10 different sellers at the same time and they only intend on purchasing one of those properties. So, what happens if all 10 offers are accepted? Now the buyer’s agent needs to turn around and cancel 9 offers? Not only can this be viewed as unethical it can also create a bad reputation for the buyer’s agent. They can become the agent who “throws out offers” and cancels contracts. Do you think listing agents will trust that agent in the future? Probably not.

Additionally, these are the sellers’ lives that a buyer is playing with. What happens if one of those sellers who accepted the buyer’s offer was desperate to sell because they were facing foreclosure? What happens if they were facing foreclosure because their spouse was battling cancer, just died, and didn’t have any money? Now the buyer is going to turn around and cancel the contract immediately and give them a “just kidding we don’t want to buy your home.” These are real situations, so when a buyer decides to willy-nilly throw out offers only to cancel can be devasting and life-shattering.

A lot of time, effort, and consideration goes into submitting and accepting offers. So while legally a buyer may be able to throw out multiple offers doesn’t mean they should.

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Factors to Consider Before Throwing Out Offers

How successful a buyer will be when it comes to throwing out an offer and having it accepted will ultimately depend on the market conditions and the seller’s motivation along with the terms of the offer itself.

What are the market conditions for the price point?

• Is it a seller’s market, a stable market, or a buyer’s market?
• How long are homes taking to sell?
• What’s the list-to-sales price ratio in the area?

What’s the seller’s motivation?

• Is the home owner-occupied, tenant-occupied, or vacant?
• Does the seller actually have to sell?
• Does the seller need to net a certain amount of money in order to sell or move?

What are the terms of the offer?

• Is the buyer paying cash or obtaining financing, if financing what type; FHA, VA, or Conventional?
• How much money will be put in escrow?
• Are there any contingencies, such as inspection, appraisal, or finance?
• What are the deadlines and due dates?
• Any additional clauses or special terms?

The answers to these questions will determine a buyer’s success at throwing out offers. If it is a seller’s market and homes are selling for above list price to cash buyers a financed buyer throwing out an offer below the list price won’t stand a chance. In fact, a financed buyer throwing out an offer above list price most likely won’t have a chance.

However, if homes are sitting on the market for 90+ days because it’s a strong seller’s market and the house is vacant the buyer’s offer could be accepted. Not only could it be accepted they might be able to receive seller concessions from the seller in addition to a lower purchase price.

So whether or not “throwing out offers” will yield positive results or is a gamble that won’t pay off will depend on several factors.

Facts Vs. Realty

Both, buyers and sellers, have access to the same market information. Both, buyers and sellers, may also choose to completely ignore the facts or think they can defy the odds. So there will be some sellers who chose to overprice their house in hopes of finding a buyer willing to overpay, which usually never happens.

Then there are some buyers who chose to ignore the market conditions and “throw out an offer” based on a random number that could be 40% below market value and the odds are stacked against them. So just because all parties have been presented with the facts doesn’t necessarily mean that will be the reality of what happens when they go to buy or sell a home.

Final Thoughts

The effectiveness of throwing out real estate offers largely depends on the specific market conditions, the seller’s motivation, the buyer’s financial readiness, and the approach they take. While it might yield positive results in a less competitive market, it could yield no results in other types of markets.

If a buyer is serious about purchasing a home it’s important for them to understand the market they are attempting to purchase a property in. Also, prior to making any decisions they should discuss a strategy with their real estate agent before they regrettably lose a home by “throwing out an offer.”

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About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “Throwing Out Offers” Does It Really Work?

Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell, or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.

Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.

Throwing Out Offers” Does It Really Work?