A pre-emptive offer is an offer from a buyer to purchase your home before the date you’ve set to consider offers.
In a hot market, many sellers will instruct their agent when listing to “hold offers” until a specific date. This strategy allows you to compare offers all at once and draws attention from a greater number of buyers, which can lead to a bidding war.
More often than not (particularly in a seller’s market), a pre-emptive offer will show up before that set date. While agents are required to present you with all offers, you are not obligated to entertain a pre-emptive one. Once submitted, you can choose to accept it, further negotiate the price and terms, or stick to the date you set to entertain offers. Rest assured that a buyer who loves your home enough to submit a pre-emptive offer will most likely stick around until the offer date and bid again.
Should You Consider It?
Our answer? It depends.
Usually, a pre-emptive offer will be above the listed price. In an active market, buyers will want to make their offer attractive enough to persuade you to give it immediate consideration and out-bid everyone else. If your agent has done its due diligence, studied the market, ran a comprehensive analysis on comparable properties, and has the savvy and experience to anticipate trends, the list price for your home should be very close to what the market can bear.
If the pre-emptive offer is higher, it’s worth considering and moving on to negotiate even better terms. At this stage, to stir competition, your agent will notify every other buyer about the pre-emptive offer.
What Other Terms Are Possible?
An all-cash, firm offer is an attractive proposition, not only to avoid delays, but also because it sidesteps the possibility that the buyer may not qualify for a mortgage loan.
Or, if the pre-emptive offer includes contingencies, you can request them to be waived. For instance, if the offer is not all-cash and subject to the buyer obtaining a loan, you can ask them to waive that financing contingency, ensuring that in the event the buyer’s loan falls through, they will still close the deal or forfeit their earnest deposit.
In addition, you could also ask them to waive the appraisal contingency which would guarantee that the buyers will honor their offered price regardless of the appraised value.
Depending on your circumstances, you may also ask for a “home-of-choice” and/or “rent-back” contingency to be added to their offer.
A home-of-choice contingency is used in the event you have yet to find a new home. It allows you to continue searching for a specified period of time. If you’re unable to find a suitable new home, you can end the deal and remain in your property.
A rent-back contingency allows you to rent the property from the new buyer for a specified period of time while searching for your new home, thereby removing the hassle of moving twice.
When Should You Not Consider It?
In some circumstances, a pre-emptive offer is rarely worth consideration. These include:
- When the offer is not above your asking price.
- When the offer contains onerous conditions and contingencies.
- When your house is generating great interest and a ton of traffic during open houses.
- When your agent hasn’t had enough time to notify all other interested buyers that a pre-emptive offer has been submitted.
Can We Help?
The inherent risks of a pre-emptive offer demand the expert advice and skilled guidance of a top-rated agent. Julie and her team’s expertise have helped many of our clients successfully navigate preemptive offers. Let us do the same for you.
For more information on Julie and our team’s best selling tips and advice, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.
