What is a Preemptive Offer On a House?

If you’re in the process of buying or selling a house for the first time, chances are you’re encountering all types of real estate jargon. However, real estate professionals are available and ready to help you navigate that process as smoothly as possible.

One area to seek professional help is before making or accepting a preemptive offer. What is a preemptive offer on a house? Find out what this means in real estate.

What is a preemptive offer on a house?

A preemptive offer is an offer to purchase a property before the property is officially listed for sale.

A preemptive offer can be beneficial for both buyers and sellers. Making a preemptive offer can help buyers avoid getting into a bidding war with other potential buyers. It can also give them a leg up on the competition if multiple offers exist on the same property. For sellers, this type of offer can be a way to gauge interest in a property before it hits the market.

“If they receive multiple offers, they may be able to sell for a higher price than they would have if they had listed the property traditionally,” said Shaun Martin, a Denver-based land developer, investment advisor and owner and CEO of We Buy Houses in Denver.

If you’re considering making a preemptive offer on a house, it’s important to work with a real estate agent with experience in this type of transaction. An agent can help you navigate the process and ensure everything goes smoothly, just like a traditional offer.

When might a buyer make a preemptive offer?

If you’re a buyer, you might make a preemptive offer on a house if you’ve been working with a real estate agent who’s told you about a property that’s not yet on the market.

Meanwhile, if you’re a seller, you might get a preemptive offer on your house if you’ve been thinking about selling but haven’t officially listed it for sale.

As a seller, you may also consider pursuing a reverse 1031 exchange, a real estate transaction that allows investors to defer capital gains taxes on selling their property. Reverse 1031 exchanges can benefit investors looking to defer capital gains taxes on selling their property.

In a reverse 1031 exchange, the investor sells their property first and then uses the proceeds from the sale to purchase another investment property within a certain time frame. “This type of transaction can be beneficial for investors exchanging a property for a more expensive one without paying capital gains taxes,” Martin said.

How to make a preemptive offer on a house

Martin emphasized that if you’re interested in making a preemptive offer on a house, it’s key to start by finding an experienced real estate agent to help you navigate the process.

“Once you’ve found an experienced agent, you’ll need to put together your offer,” he said. “This will include the price you’re willing to pay for the property and any other terms and conditions included in the offer.”

Once your offer is ready, your agent will present it to the seller. If the seller accepts your offer, they will sign a purchase agreement to make the deal official.

Preemptive offer on a house pros and cons

Making a preemptive offer has its advantages and disadvantages.

“Some of the pros for buyers include avoiding a bidding war, getting a leg up on the competition, and having more time to inspect the property,” Martin said. “Pros for sellers include ability to gauge interest in their property and potentially get a higher price.”

“Some of the cons for sellers include the possibility that the buyer backs out of the deal, and they may have to disclose more information about the property than they would if it was listed traditionally,” he said. “Buyers also can’t see how other offers compare to theirs, and the seller may not accept their offer.”

Are preemptive offers worth it?

Preemptive offers can benefit buyers and sellers, especially if you’ve worked with an experienced real estate agent. As a buyer, it can be a good option if you’re trying to avoid a bidding war. If you’re a seller, a preemptive offer might be a good option if you want to gauge interest in your property before it hits the market and skip the time and effort of showings and negotiation.

“Real estate agents might also find preemptive offers beneficial because they can help clients avoid getting into a bidding war or selling their property for less than it’s worth,” Martin said.

Bottom line

Making a preemptive offer on a house can be a successful venture. Start by finding an experienced real estate agent who knows the ins and outs of the process to help make it worth your while.