Multiple Offers Process

[ned261]

Hi, I've recently made a written offer via signed contract. At the time of signing the REA advised that there was much interest in the property and said that he would now advise the other interested potential buyers that an offer had been made on the property, without disclosing my offer amount, and would give them the chance to put forward their best offer.

Once other buyers make offers, am I likely to only get one more chance to put in a higher offer, ie. my best offer? If not, how does the process (or how should the process) work? I assume that the REA would not disclose the dollar amount of any higher offers to me.

Thanks in advance.

 

[BayView]

This could simply be a bluff by the Vendor and agent to get you to offer more - as is their right.

Or it could be a legitimate statement, therefore you need to offer as much as you feel happy to, and what finances allow.

If your next offer is not as high as the current offer, they will (usually) tell you that you are too low, and ask if you would like to make a higher offer.

 

[kissfan]

Hi Ned.

I assume you've done your figures on what makes this deal attractive enough to you. If that's the case, then you would/should have already worked out a price that is great by your estimations and a price that is your cut off point.

If the agent comes back at you with a price that is at or beyond your 'cut off point', then leave your last offer on the table. The agent may or may not be just trying to extract extra $$$'s off you but don't get drawn into a 'get this property at all costs' frame of mind. In other words, don't get emotionally involved.

The above applies if the property you are looking at is for investment. If it is for a PPOR, then you have to decide how much you really want it.

Regards
Marty

 

[ned261]

Just curious, is there no way to tell if the REA is bluffing?

Thanks.

 

[The Y-man]

Just curious, is there no way to tell if the REA is bluffing?

Thanks.

Only after they sell it to someone else

Cheers,

The Y-man

 

[Bradsdad]

Just curious, is there no way to tell if the REA is bluffing?

Thanks.

You may wish to refer to a Kenny Rogers song for the answer

You could call the agents "bluff" and leave the offer where it is. he may be holding Pocket A's or have 2/9 offsuit.


You have to remeber that it's the REA's role to obtain the highest possible purchase price for the vendor.
As has already been mentioned, set yourself a maximum amount that you believe the property to be worth. If you miss this one there will be others about.


Regards
Steve

 

[BayView]

You can also bluff, as every buyer does, and say you cannot go any higher, and see what happens, but if the agent isn't bluffing you are out of a purchase.

If it's a PPoR, then offer your best price if you want to secure it.

If it's an IP, there are a million of them every week, so offer what your financial brain says and if it's not good enough then move on to the next one.

 

[ned261]

Thanks for the great advice gents, much appreciated.

Couple more questions from the uninitiated if you don't mind:

1. If the REA comes back and says my offer is too low, is it standard practice for him to allow me only one more offer, or could the dutch auction keep perpetuating itself?

2. My offer to the vendor has been on the table for 1 business day. The REA has told me that the vendor is overseas and has yet to respond to my offer. If there were any 'real' other potential buyers, wouldn't they have had the opportunity to counter my initial offer by now regardless of whether or not the vendor has been able to respond?

 

[RumpledElf]

No idea, I've only ever bought 4 properties and only one did we have to make a second offer ... and they accepted it. There were no other bidders at any time ...

 

[buzzlightyear]

Thanks for the great advice gents, much appreciated.

Couple more questions from the uninitiated if you don't mind:

1. If the REA comes back and says my offer is too low, is it standard practice for him to allow me only one more offer, or could the dutch auction keep perpetuating itself?

It can keep going as long as bidders want it and are prepared to up their offer. There are no rules here. Personally, I back away from these type of negotiations because I don't like the lack of transperancy and my cynical side is saying that you are bidding against yourself. You can ask to see the other offers legally, but I don't think you want to go down this path, as you need to work the relationhsip with the REA. If you can build a good rapport with the REA, that will help you.

If the REA comes back to you is saying it is too low, say "I am interested at the right price, so what price will buy the property?" Put the ball back in his court.

2. My offer to the vendor has been on the table for 1 business day. The REA has told me that the vendor is overseas and has yet to respond to my offer. If there were any 'real' other potential buyers, wouldn't they have had the opportunity to counter my initial offer by now regardless of whether or not the vendor has been able to respond?

Yes, no, maybe! There are so many variables that will affect people's ability to respond it is pointless to try and guess.

 

[Perp]

This could simply be a bluff by the Vendor and agent to get you to offer more - as is their right.

It is not their right to lie to you; that would be fraud. In such a circumstance, I ask the agent to send me a fax confirming that there is a valid competing offer on the property. I say something like "In the past I have been burnt, by being told that competing offers exist, only to discover that they didn't, and the vendor was trying to get me to offer more! [sounding surprised] I hope you understand that although I'm sure you wouldn't do this, my policy now is that I will only consider revising my offer upon receipt of written confirmation of the existence of the competing offer." This usually clears things up pretty quickly.

1. If the REA comes back and says my offer is too low, is it standard practice for him to allow me only one more offer, or could the dutch auction keep perpetuating itself?

Usually the agent would allow each bidder to submit their best offer by a certain time, and then the vendor decides which offer to accept.

2. My offer to the vendor has been on the table for 1 business day. The REA has told me that the vendor is overseas and has yet to respond to my offer. If there were any 'real' other potential buyers, wouldn't they have had the opportunity to counter my initial offer by now regardless of whether or not the vendor has been able to respond?

It's amazing how often the vendor is "uncontactable" in such a situation. I think they're stringing you along, hoping you'll be panicked into making a higher offer. Put an expiry date and time on your offer, of 24 or 48 hours.