'One chance to make an offer' strategy

Hi all

I'm interested in why a real estate agent recently employed the following tactic, if anyone has any idea?...

House due to go to auction this weekend, and the agent wrote to me (and other interested parties) yesterday stating 'the owners have instructed me to get your best and final offer by 5pm today and have made a decision to sell prior to auction.'

I'm guessing they did this as they didn't feel the auction would be successful.

So I put an offer in almost 100k over the price guide, and also said 'please advise me if there is a higher offer.'

The agent wrote back and said - you get one chance to make an offer, you've made it, and there is a higher offer, so you've missed out.

I questioned this approach with the agent, asking why further offers wouldn't be considered as I imagine the vendor would want the highest price possible, however he stuck to his 'one offer per buyer' guns...

Can anyone explain this tactic? Why would a vendor not be interested in a high offer? The agent knew we would sign unconditionally immediately, so it can't be due to time constraints....

Cheers
 
Re-read your post....you will find the explanation of the tactic in there.


pinkboy

Perhaps I am dumb, but the only tactic i can see is to obtain the highest offer by a certain time. I'm trying to understand why it is in the agent and vendor's best interest to then refuse any other higher offers, even if the other buyers are prepared to exchange immediately.
 
The seller must have wanted a quick sale and/or avoid auction fees.. doesn't seem to be in their best interest though.. could have had an auction over the phone and sold for more?

It's a shame you missed out but you should have offered more? You knew the rules..

I recently made an offer on a unit over the asking price and tried to get a quick sale since the agent listed it too low. The agent then took his time getting back to all offers and it turned into an auction over the phone. It drove me mad :mad: the price was going up in $1k increments since the agent was disclosing all offers.. I let it go.. It ended up selling for $15k over.

I learnt my lesson for the next one. First open house I offered $5k over with a sunset clause and the agent assured me it would be a "one offer only". The vendor signed the next day :)
 
I'm not fussed about missing out, I'm more curious about the desired outcome for the vendor/agent. I agree re: phone/silent auction, in similar situations I've always had agents come back and say 'there is a higher offer' in an attempt to get the highest price possible.
 
If everyone knows that they get another chance to make an offer, they will not put in their highest offer, hoping they get it cheap. The one offer only policy forces people to give their best offer (and more) because they won't get another chance.
 
In many ways the agent could be reacting to a reasonably hot market (even though they may not be confident of a good auction result). They're trying to force the interested buyers into a position where they'll put their best offer in, they're also giving the buyers the fear of missing out.

In various markets at the moment there are people who are getting frustrated in missing out, this tactic does pander to those emotions a bit. The offer $100k above asking price tends to confirm this.

It's also possible that the agent got an offer that is just too good to refuse. If they engage you again, there's a chance the first buyer will walk and they may suspect others won't match the offer on the table.
 
In many ways the agent could be reacting to a reasonably hot market (even though they may not be confident of a good auction result). They're trying to force the interested buyers into a position where they'll put their best offer in, they're also giving the buyers the fear of missing out.

In various markets at the moment there are people who are getting frustrated in missing out, this tactic does pander to those emotions a bit. The offer $100k above asking price tends to confirm this.

It's also possible that the agent got an offer that is just too good to refuse. If they engage you again, there's a chance the first buyer will walk and they may suspect others won't match the offer on the table.

Thanks - that makes some sense. We hadn't encountered this situation before as every agent we've ever dealt with is more than happy to facilitate gazzumping.

Cheers
 
Sealed bids by a deadline is a very common tactic employed by agents. It is effectively the same as an auction without wasting time on the theatrics and essentially determines interested parties walk-a-way price achieving the objective of the highest price for the vendor.

Offering $100K above guide is actually irrelevant, as unfortunately guide prices are completely useless and are by design a means of generating interest to drive a higher price. Agent's will value based on comparable sales and in a heated market, unless there are recent and accurate comp's then by nature the agents will underquote using the existing sales data to protect themselves regardless of how unrealistic this may be in the real world.

It is half the reason BA's like myself have so many enquiries from frustrated buyers.
 
So I put an offer in almost 100k over the price guide, and also said 'please advise me if there is a higher offer.'

The agent wrote back and said - you get one chance to make an offer, you've made it, and there is a higher offer, so you've missed out.

Add another 100k on top and you may have been in with a chance... price guides in Sydney these days means "price + 200k"
 
Sealed bids by a deadline is a very common tactic employed by agents. It is effectively the same as an auction without wasting time on the theatrics and essentially determines interested parties walk-a-way price achieving the objective of the highest price for the vendor.

Thanks for that - it's a tactic we've never encountered before, hence our reaction. I guess in this instance they didn't achieve the highest price possible, as our immediate reaction was to offer around the value of similar recent sales rather than our limit. Had the auction gone ahead, our walkaway price would have been higher than the price they ultimately achieved.

I guess I usually prefer the transparency (or appearance of it) at an auction, so I've certainly learnt something this week!

Cheers
 
We had a similar experience and again would have gone higher . I think it's the agents being lazy.

My parents are selling in a similar situation and the agents have gone to auction one week after going on market so they can get a genuine highest price.

Cliff
 
In Queensland this is pretty standard practice for 'multiple offer' situations. The agent gives all potential purchasers one chance only. Best offer wins. The REIQ have a standard acknowledgement of multiple offers form that can be presented to the buyers to sign beforehand.

Cheers

Jen
 
Common practice around here as well, particularly in the outer east, although we tend to find most inner suburban agents are happy to run to auction in the current market.

Vendors tend to love the system as it creates competition and invariably one of the buyers will be emotionally attached and bid over the odds.

Half the battle as a buyer is working out whether there is actually another offer.
 
Same thing happened to me on a property i purchased back in April this year.

Agent said one chance and one chance only. Apparently i offered 10k more than required. The tactic is that i (the buyer) mess around with my own head. The amount of times i kept questioning whether i should offer more in case i miss out....

I worked out my price that I was happy to part with and offered that... and got it. Rather than have the agent talk to me and play mind games, the agent said a single sentence and i played mind games with myself.... much more efficient (for the agent that is).
 
I had a similar experience this week.
I saw a place I really liked and asked the agent prior to making an offer "Is it a best and final offer situation, one chance only?" He said "Yes it is." So I put my offer in $12k over the $450k asking price.

Agent calls me the next day to say "Yours is one of the top two offers, but did you want to increase your offer?" I replied, " When I spoke to you at the open you said it's a best and final offer situation. So on principal I will not increase my offer because that's not what was agreed."

The other party made a higher offer and got the property. I stuck to the agreement made and missed out. I'm starting to really dislike real estate agents...
 
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