Making an offer - was I wrong?

[7smurfs]

Hi,

I was looking at an apartment on Saturday that I was extremely keen on purchasing listed at $359,000.

I went to the inspections and made an offer of $340,000 based on an apartment nearby that sold for this approximately this amount. I was then told by the REA that another party had made an offer of $340,000 however was tentative. I stuck with my offer, adamant that I was willing to put a deposit down if everything went well in which the REA said for me to email the offer in writing immediately.

On the way home from the inspection, the REA called me to say that he had spoken to his director and was told that the property was to sell today according to the vendor. Now there are 3 other parties involved, 1 party who has submitted their offer already, another who is tentative and myself. I was then told that in a private sale, the interested parties are to submit their offers and the highest bidder was to win. He wanted me to drive out to meet him and sign papers for a formal offer by COB (5.30) that day (saturday).

Now how I saw this was that the REA probably noticed that I was extremely interested in the property during inspection and trying to milk whatever amount he could out of me. In calling out a bluff regarding the property being off the market today straight after the inspections have closed, I decided to simply call back and tell the REA that my highest bid will be 5k more than what I had said earlier ($345,000) and that I wouldn't be interested if it was to be any more than that. He then told me he would call me back after speaking with vendor/director.

Moments later he calls me telling me to submit the formal offer via email with conditions etc

I do so and 2 hours later I get a call with news that I have been unsuccessful.

In all honesty, I was willing to pay the asking price ($359,000) for the apartment. In reading through my experience and process, I ask, was wrong to have thought the REA was simply bluffing or was it all 'general practice' of how a private sale works.

I have taken my first offer on a property down to a positive learning experience, however cannot help but think of the missed opportunity... Are there any tips anyone can provide with in such a situation if this was to occur again in the near future?

Thanks!

 

[HotRod]

Congrats.

It was only 5k and you now have a property.

The REA was probably telling porkies but it was still well within your comfort zone.

The trick is not to be too emotionally invested in a property. REA can sense this and will work it in their favor. Always be prepared to have your walk away price and be prepared to stick with it.

There's always a better deal just around the corner.

 

[7smurfs]

Congrats.

It was only 5k and you now have a property.

The REA was probably telling porkies but it was still well within your comfort zone.

The trick is not to be too emotionally invested in a property. REA can sense this and will work it in their favor. Always be prepared to have your walk away price and be prepared to stick with it.

There's always a better deal just around the corner.

Apologies, I may have worded it incorrectly - I was actually unsuccessful!
Will keep at it hunting however!

 

[The Y-man]

Apologies, I may have worded it incorrectly - I was actually unsuccessful!
Will keep at it hunting however!

I'd call a bluff 90% of the time - but sometimes it's real! It's juist the way the ball rolls.

The Y-man

 

[locko24]

I'd call a bluff 90% of the time - but sometimes it's real! It's juist the way the ball rolls.

The Y-man

Is it an IP or a PPOR?
If it was a PPOR i think you should have offered the asking price, as you said you were willing to pay that much.

Different story if it's an IP though...

 

[7smurfs]

Is it an IP or a PPOR?
If it was a PPOR i think you should have offered the asking price, as you said you were willing to pay that much.

Different story if it's an IP though...

It was an IP

Yep, would have definitely offered the listed price if it was PPOR!

 

[vaughan]

I have arguments about this with my wife all the time.

My strategy comes from bidding on eBay. You know how you put in a max bid of $55 and somebody else gets it for $56 and you're disappointed because you'd have paid $56 for it too, or even, gasp, $56.01. I reckon you work out what you'd be happy to pay, then go a bit higher and ask again... repeat until the "pain" point is reached and you're happy for somebody else to get it. THAT is your max bid price.

My wife kind-of agrees with that.

It's the negotiating game that we differ. I reckon you should go in with the "happy to pay" bid and be prepared to go to the max bid. If you really want the property, go for closer to the max bid.

She wants to start off with low-ball bids and work up. That works only if there are no other interested bidders. If the deal is good then there WILL be other interested bidders, I reckon go in with the best bid to secure the sale.

 

[7smurfs]

She wants to start off with low-ball bids and work up. That works only if there are no other interested bidders. If the deal is good then there WILL be other interested bidders, I reckon go in with the best bid to secure the sale.

I think I will try for this strategy in the next potential IP.
Feels like a missed opportunity for me since I was actually willing to pay the asking price (was a good deal) however I had a hunch that the REA was playing games with me...

Interesting note however, when the REA called me that night to tell me that I had been unsuccessful, I asked how much it was sold for and was told that they are unable to reveal the amount. Not sure if it general practice that the sold figure is not revealed, however I had the same suspicions that the REA was bluffing again and wanted a higher figure...

Not going to pursue it any further, will move on searching for another bargain!

 

[Ed Barton]

I think I will try for this strategy in the next potential IP.
Feels like a missed opportunity for me since I was actually willing to pay the asking price (was a good deal) however I had a hunch that the REA was playing games with me...

Interesting note however, when the REA called me that night to tell me that I had been unsuccessful, I asked how much it was sold for and was told that they are unable to reveal the amount. Not sure if it general practice that the sold figure is not revealed, however I had the same suspicions that the REA was bluffing again and wanted a higher figure...

Not going to pursue it any further, will move on searching for another bargain!

they generally won't reveal the sales price till gos through.

 

[Aaron_C]

I think I will try for this strategy in the next potential IP.
Feels like a missed opportunity for me since I was actually willing to pay the asking price (was a good deal) however I had a hunch that the REA was playing games with me...

Interesting note however, when the REA called me that night to tell me that I had been unsuccessful, I asked how much it was sold for and was told that they are unable to reveal the amount. Not sure if it general practice that the sold figure is not revealed, however I had the same suspicions that the REA was bluffing again and wanted a higher figure...

Not going to pursue it any further, will move on searching for another bargain!

Bad luck chances are the REA was playing games. Just in the future if you are confident about the price make a signed, unconditional offer with a decent settlement period and you will most likely get the property. Signing the contract of sale helps the REA sell your price to the Vendor.

 

[7smurfs]

Bad luck chances are the REA was playing games. Just in the future if you are confident about the price make a signed, unconditional offer with a decent settlement period and you will most likely get the property. Signing the contract of sale helps the REA sell your price to the Vendor.

Thansk Aaron... that probably explains why the REA wanted me to drive back up to the office and sign some papers. Will take that into account for future offers I make.

In interesting developments, the REA called me back about a minute ago once again telling me bad luck and provided me with other opportunities that he has found. In doing so, he asked what my upper limit of my price range was in which I hesitantly answered.

I mentioned the recent sale and informed him to only contact me if there are similar properties available that fit my criteria in which he replied uneasily to "give it a week" and that he will be in contact with me again regarding the recently sold property.

Again it feels like games - probably waiting on other interested parties to submit a higher offer.

Now i've definitely moved on from this property now, however cannot help but think if there is any possibility to contact the vendor bypassing playing games with the REA. Has anyone done this or been through a similar process before?

 

[The Y-man]

... but think if there is any possibility to contact the vendor bypassing playing games with the REA. Has anyone done this or been through a similar process before?

If I was selling and someone called me, I'd tell them (nicely) to speak to the agent.

The Y-man

 

[7smurfs]

If I was selling and someone called me, I'd tell them (nicely) to speak to the agent.

The Y-man

That's fair! I'd do the same thinking logically about it

 

[DaveM]

Just because you were unsuccessful doesnt mean its a done deal for someone else. They might have a higher offer, or none at all and the vendor has just rejected yours and a nig ht or two of mulling it over might get an acceptance. The other party might cool off after strata search, or have bad finance, or some legal issues they wont agree to.

Its not that uncommon to get a phone call a week or two later to advise its back on the market. If that happens (the agent suggesting to give it a week sounds a lot to me like the other buyers may fall through) stick to your guns and see how it plays out.

 

[HotRod]

I generally don't want to get into a bidding war with another buyer. It can just end up being a silent auction. If there is another buyer I will generally look somewhere else.

Only want to negotiate with one party, not two or three.

 

[kathryn d]

I generally don't want to get into a bidding war with another buyer. It can just end up being a silent auction. If there is another buyer I will generally look somewhere else.

Only want to negotiate with one party, not two or three.

You are forgetting, that this IS a game.
Bid to the point where you don't want to pay anymore.
Simple.

 

[Belbo]

In interesting developments, the REA called me back about a minute ago once again telling me bad luck and provided me with other opportunities that he has found. In doing so, he asked what my upper limit of my price range was in which I hesitantly answered.

Having once worked for an RE agent, my advice is: If you ever feel you need to hesitate, DON'T ANSWER!

1. Agents are not your friend. They are working by law against your interests for the vendor (and, in so doing, in their own interests).

2. Every single piece of information you give an agent will be deployed to serve this objective, being to get a sale on the best possible terms for the vendor (often determined in practice as the least that the agent can convince the vendor to agree to sell for).

3. So yes, it definitely is a game, one in which you should never tell an agent anything that you think doesn't work first and foremost to your advantage. As the saying goes: If you're playing poker with a bunch of people and you don't know who the sucker is, you're the sucker they're setting out to fleece.

Similarly, the only question for the agent is, who is going to be fleeced more: the vendor (who pays him a percentage), or the buyer (who has all that lovely cash)?

At the very minimum you need to practice how not to answer an agent's questions.

 

[locko24]

Having once worked for an RE agent, my advice is: If you ever feel you need to hesitate, DON'T ANSWER!

1. Agents are not your friend. They are working by law against your interests for the vendor (and, in so doing, in their own interests).

2. Every single piece of information you give an agent will be deployed to serve this objective, being to get a sale on the best possible terms for the vendor (often determined in practice as the least that the agent can convince the vendor to agree to sell for).

3. So yes, it definitely is a game, one in which you should never tell an agent anything that you think doesn't work first and foremost to your advantage. As the saying goes: If you're playing poker with a bunch of people and you don't know who the sucker is, you're the sucker they're setting out to fleece.

Similarly, the only question for the agent is, who is going to be fleeced more: the vendor (who pays him a percentage), or the buyer (who has all that lovely cash)?

At the very minimum you need to practice how not to answer an agent's questions.

Good one. I missed that.

Had one ask my upper limit recently. Looked him in the eye, and asked:
'Are you kidding mate?'

He looked away, and mumbled something like, 'Thought i'd try...'

At least he had a sense of humour...sort of.

 

[Macca]

I suppose it depends on the agent but I am usually happy to give my price range but when I am looking I make a point of telling the agent " No, I won't pay that much for that" I am looking for "value"

After hearing this a couple of times they figure out that I work out my own prices and won't be rushed into something. After that we usually get on OK, they know I will buy something when I think the price is right.

Sure I miss a few but I still have my ammo and the agents do love someone ready to buy if the deal is right

 

[locko24]

I suppose it depends on the agent but I am usually happy to give my price range but when I am looking I make a point of telling the agent " No, I won't pay that much for that" I am looking for "value"

After hearing this a couple of times they figure out that I work out my own prices and won't be rushed into something. After that we usually get on OK, they know I will buy something when I think the price is right.

Sure I miss a few but I still have my ammo and the agents do love someone ready to buy if the deal is right

I hope you wouldn't tell them how much you'd pay for a particular place though!