First and final offer.

[tropic]

We are going to put an offer on an IP.
What does 'First and final offer' really mean?
If the offer get rejected, that's it? We can't make other offer?
We don't want to go higher than our first offer but can't put a lower first offer too because we feel it will be way too low from the asking price.

It's a duplex with no strata fees. No common wall.
What should we watch for.
What other things should we take into consideration buying a duplex?

Thanks.

 

[thatbum]

Who is saying its a first and final offer?

 

[tropic]

We are going to put an offer but we won't pay more than our first offer.
Should we put a first and final offer so the seller get the idea?

 

[shorty]

You're putting pressure on yourself for no reason. Just make an offer, put a 24 hour expiry on it and tell the agent you have another property you're considering (hence the clock) . That puts pressure on the vendor, provided your offer is reasonably attractive.

 

[tropic]

Thanks shorty.
I thought first and final offer would put the vendor under pressure.

 

[thatbum]

Thanks shorty.
I thought first and final offer would put the vendor under pressure.

Perhaps, but it doesn't really change your strategy does it? It just may or may not work.

 

[westminster]

Thanks shorty.
I thought first and final offer would put the vendor under pressure.

I don't think it will put them under any pressure at all. Even if you put first and final offer on it ( and where do you write it??) then they have the option to say no or even ignore it and counter offer.

Offer what you want and be prepared for a no. If you can't afford or don't want to offer more then you walk away.

 

[see_change]

Thanks shorty.
I thought first and final offer would put the vendor under pressure.

Depends on the vendor . Some won't feel the pressure and some will respond badly by being put under pressure . Many people are irrational at times

Someone made an offer on our PPOR and led off with " we don't negotiate , we're going to make one offer and that's it "

As the vendor , that already makes it sound like they think it's a low offer , so it's already conditioning us to reject it , which is what we did . A week later they came back saying would we consider 100 K more which we also rejected ....

In reality their second offer was not a bad offer and was the price we ended up selling for , but not to them ... We had wildly differing values put on our house by local agents , and due to various factors it was hard to know the " true value " .


Cliff

 

[MarkB]

We don't want to go higher than our first offer but can't put a lower first offer too because we feel it will be way too low from the asking price.

Asking prices are irrelevant (see thread). It it what the property is worth to you - that matters (so do your sums).

Also, unless you have some inside information (none suggested in your thread, so I am taking that as a "no") then you can't possibly make a judgement on whether an initial offer is "way too low" for the vendor.

If the property has been on the market for a while (again no information provided) then the REA and the vendor will be pleased to get an offer - even if might be a low one - as is can be used as the basis for further negotiation.

Even if the property is a recent listing - and unless the bargaining power (by way of market or personal conditions) is heavily weighted in terms of one party or the other - most vendors will expect to go into some form of negotiation on price.

TL;DR - Make your "first and final offer" if you want, but if you do that and it fails walk away - or offer more and be prepared to look a little silly (which you may or may not care about depending on just how low your FaF and subsequent offer are).

Or.... and this is what I think you should do... do your sums on what it is worth to you, go into the negotiation with an offer that is lower than that - and try to save yourself some bucks. If the negotiations cross your dollar threshold, walk away.

 

[Jamie M]

Thanks shorty.
I thought first and final offer would put the vendor under pressure.

It could also annoy them.

I've seen offers which are marginally higher than the final sale price not get accepted because the buyer had offended the vendor in some way.

Cheers

Jamie

 

[Ed Barton]

It could also annoy them.

I've seen offers which are marginally higher than the final sale price not get accepted because the buyer had offended the vendor in some way.

Cheers

Jamie

Best offer sounds much better.

 

[beachgurl]

Some agents do this as they are getting lots of interest on the property and can't handle it. While the agent says it gets the best price for the vendor as people put in strong offers up front I'm sure that if someone misses out by a few grand they would've been fine to increase their offer.

I was the highest bidder in a best and final and the next best bidder was pretty cranky he couldn't secure the property with a higher offer than mine.

Silent auctions are very much the luck of the draw. I have seen agents give the 3 highest bidders another shot but they still don't disclose the highest. I've been the second highest offer once and disappointed that I couldn't find out what that higher offer was when I was given the opportunity for another offer.

 

[Hypnotic Cat]

I agree, 'best and final offer' sounds much better than 'first and final'. However, I don't see how that is going to put any pressure on the vendors. I think, if anything, you are putting pressure on yourself.

It always depends on how much demand there is for the property in question and in a broader sense whether the market you're in is a buyers or sellers market. If it's been sitting on the market for months with few offers in a stagnant market you may be in a stronger position to succeed with that strategy.

The opposite of that is you are bidding for an in demand property in a hot market. There could be 10 offers on the table with many offers well over the asking price, and yours is just another offer. If yours is not the best offer with the best conditions... next.

Is it the agent saying 'first and final offers' or you?

I have dealt with a number of agents who would say, "It's best and final offer only, absolutely no second chances", only to call me the next day to try and extract a better offer out of me - to which I always refused.

 

[ZachAnSel]

Tropic, its not straight formula unfortunately. There are books and discussion for "put an offer". Its always start with preliminary discussion, before we inspect the property, we call/visit real estate agent to find every info that help us. The objective is to find out reason of selling, and see what strategy we will use. Based on our experience, this is the most effective way to put better offer. Better not always higher price, could be short settlement due to divorce, or they need money for health/operation cost, etc

Agent can put every word, suggest you what to do. Doesnt mean we have to follow..
One of my mentor said this "prepare your heart over your money"
If your best offer get rejected, then time to move on. Better house just around the corner..

 

[Big Will]

. I've been the second highest offer once and disappointed that I couldn't find out what that higher offer was when I was given the opportunity for another offer.

All this would do is make your offer $1,000 more than theirs and then they would have to do the same to the other party. They asked for your best offer and gave you an opportunity to increase your best offer if you wanted or it was maybe or going to be sold to the other party.

An agent that discloses the price of another offer is either lying or breaking the privacy act.

 

[beachgurl]

All this would do is make your offer $1,000 more than theirs and then they would have to do the same to the other party. They asked for your best offer and gave you an opportunity to increase your best offer if you wanted or it was maybe or going to be sold to the other party.

An agent that discloses the price of another offer is either lying or breaking the privacy act.

I think any buyer (well most anyway) is prepared to increase their offer by a few thousand more than they want to pay if it secures them a property. I understand the disclosure issues but just making a point that this method isn't necessarily the best for an owner as it generally doesn't provide the best sale price for them. For interest purposes, if an agent went back to the top 2-5 offers I'd say at least half would say they may have gone higher to secure a place.

 

[MRO]

I think any buyer (well most anyway) is prepared to increase their offer by a few thousand more than they want to pay if it secures them a property. I understand the disclosure issues but just making a point that this method isn't necessarily the best for an owner as it generally doesn't provide the best sale price for them. For interest purposes, if an agent went back to the top 2-5 offers I'd say at least half would say they may have gone higher to secure a place.

What you are suggesting is an auction.

The concept of 'put your best offer in now' can be a good sales technique that works on getting purchasers to make a high offer based on the fear of what others may be offering. This whole concept doesnt work if the buyer knows they get to make a second offer.

 

[kathryn d]

Make your offer, a little bit lower.

If they counter, you can raise it to what you were originally willing to pay.

Booth sides feel good.

 

[Big Will]

What you are suggesting is an auction.

The concept of 'put your best offer in now' can be a good sales technique that works on getting purchasers to make a high offer based on the fear of what others may be offering. This whole concept doesnt work if the buyer knows they get to make a second offer.

exactly, if no offers are acceptable the vendor can still negotiate if they wish or just keep listing.

I went to auction and bought my PPOR for 40k less (about 10%) what my best offer would of been. Even if I left room and put my best offer as 10k less than my best the vendors would of been 30k ahead and I would of still been happy. Even if I did put my best offer they would of had 40k more and I also would of been happy.

Could I have gone higher than that, yes of course but I was comfortable with it and the bank value was 20k above what I originally purchased the property and I would of only paid 20k above bank value which we all know is on the conservative side.

Good thing with an auction you can see what the other people are bidding and can go $1k above them, private sale you have no idea what the others are doing and have to make your own assessment. Although you can get more emotional with an auction but stick to your game plan.

 

[tropic]

Thank you everyone for very helpful advice.

I do not want to annoy the seller as it will not be help us get the property.
The property is advertised for 799K but we only want to offer 750K. That is our max.
Offering say 720K - 730K sounds too low and I feel it might annoy the seller.
The agent asked me if that was my first and final offer. I simply said that is how much I am willing to pay. After reading the advice on this thread I feel a bit naive.
I won't be surprised if they get very close to the asking price but I am not willing to go that high.

The seller is an elderly man with few IPs. He is serious but not desperate to sell. That is what the agent said.

It has not been on the market for long and I only saw another couple during the home open. Maybe close to Christmas and a bit quiet in general?

The problem now is I have mentioned my best offer to the agent.
He hasn't written the letter of offer yet.

'Best offer' sounds much better but I would think a skilled agent will know what to say to the seller so it doesn't annoy him?

So much to learn (through practice).
I'll do better next time.