Happiness in homebuying for most people is not about whether they got a great deal. It’s about their perception of how great of a deal they got. The best deal in town will be passed over because of a buyer’s inability to get the seller to come down slightly in his price. Ego gets in the way of happiness. Sometimes though, even when you “win” in getting a home for the price you want, you’re still not happy. Buyer’s remorse can set in, causing the buyer to second-guess their decision. I see this most often when you have your first offer accepted.
Psychology calls this counterfactual thinking. For example, bronze medalists at the Olympics are usually happier than silver medalists. Bronze medalists are happy just to get a medal while silver medalists will forever ponder what might have been. Studies (Dissatisfaction of having your first offer accepted - PDF) have been done that accurately predict that if the first offer is accepted, the buyer will be less likely to be happy with the outcome. They feel they left something on the table.
While there are some reasons a seller might take the first offer, I would never recommend it. Even if you’re worried the buyer will walk, make some sort of change even if it’s not price. Move up the date of closing or the inspection. Anything that will create feeling that you’re not giving up easily.
As for buyers, most buyers fail to educate themselves enough to understand if they’re getting a good deal or not. They are negotiating against a number or percentage in their heads that is independent of value. Do your research and create a target price. Negotiate towards the target price you decided in your head. If you had your offer accepted right off the bat, review your numbers. It’s best to have your situation reevaluted before your inspection deadline has passed. Above all, don’t let your ego steal an opportunity from you.
Other Posts: Buying a home? Think before making your first offer
