Out bid . Has anyone had this scenario happen ? REA feedback please

[see_change]

We got out bid for a property last week .

Senario - asking price 600 - 650

We made offer of 610 ( after first open ) after agent indicated they had offer of 605 .

Came back and said that owner wanted to go to second open .

After that open , the agent said the owner would accept offer over 620 . We offered 621 .

Then agent said there were two other interested parties and he didn't want to spend days going back and forth getting small price rises.

He said he had agreed with the owner that every one had to submit their best offer by 10 the next day and the best one would have 4 hours to exchange and there was no further debate .

We missed out , but in reality would have been happy to go slightly higher , but we were annoyed by the process , though as they say , there's another next weekend ( actually three to think about )

Thinking about it , if I was faced with a similar situation , when he said , he didn't want to spend days going back and forth getting small increases , I'd say
" under the fair trading act , you have an obligation to get the best price for your owner " ( they do , I check recently to see what their obligations are after one quoted the Fair trading act as the basis of his actions ) " How about you spend 30 mins going between the bidders and see what happens . eg every one has their first bid . after that people can stay in they go up on that by say 2 k intervals " . Sort of Dutch auction , but more organised .

Would that be legal ?

Cliff

 

[Peterw]

Cliff, sadly, I think you don’t understand a Dutch Auction. I believe it is called a Dutch Auction, as it was used to sell flowers in Holland. The Auctioneer starts with a high price, and then calls gradually lower numbers until someone signals that they will pay the last called bid.

In your situation, it is a bit different, when they is more than one person interested in the property. They can either have an auction, or remain with private treaty. Sadly, private treaty means just that, its private. You are not told of the others persons offer price. If you were, it effectively becomes an auction. I believe you were given the offer to put in your highest bid. You choose not to, and someone put in a higher offer. Had you put in your highest offer, you never know what would have happened.

I do appreciate, that negotiating this way does not make it easy, however when the seller chooses to go the private treaty path, every ones position must be treated in confidence.

Hope that helps.

 

[see_change]

The issue for me was that once we put in an offer , we weren't allowed to put another offer in . That's the bit I haven't come across before .

We missed out , I have no problems with that . I' m not angry just puzzled.

The reality is that the agent could have got a higher price by coming back and saying , yours isn't the highest offer , would you have liked to make a higher bid ?

We are already negotiating for another property and the agent is up front about what offers he has . I'd prefer that situation .

When we drop out of a negotiation , I want to do that because I don't want to pay any more , not because they're not accepting any more bids .

This wasn't an expressions of interest , just a normal sale " offers over .... "

The loser was the owner who missed out on a potential five thousand or more .

The winner was the agent who didn't have to spend time chasing things around ..

Cliff

 

[Aaron_C]

The loser was the owner who missed out on a potential five thousand or more .

The winner was the agent who didn't have to spend time chasing things around ..

Cliff

Well if the agent got an extra $5,000, that's an extra $100 for him....for the risk of getting jerked around by a nervous buyer. Human nature prevails.

 

[see_change]

Cliff, sadly, I think you don’t understand a Dutch Auction. I believe it is called a Dutch Auction, as it was used to sell flowers in Holland. The Auctioneer starts with a high price, and then calls gradually lower numbers until someone signals that they will pay the

.

My understanding of the way the term Dutch auction is used is an unofficial auction . A claytons auction. the auction you have when you're not having an auction .

Cliff

 

[MRO]

The fear of missing out usually extracts good offers from buyers. This means that buyers may 'bid' more than others due to the fear of missing out. If the position was negotiable afterwards then you would not put your best offer in.

You may have been prepared to negotiate up another $5k but the other buyer may have been worried about securing it so offered his best price of an additional $10k.

Bad for buyers, good for sellers.

 

[Peterw]

Cliff, I think the claytons auction is sometimes erroneously called the dutch auction. In relation to an agent telling you what offer they have, is by some not considered ethical. As I said, the term is "private treaty", and offers should be kept private. If they are openly stated, then yes, in reality you have an auction, with out an auctioneer. Again, I think in some quarters that would be considered inappropriate activity be the agent. We even have the buyers sign a form, confirming that they have been informed that there is competition for the property, and they may not get another opportunity to alter their offer. This form is provided by the Real Estate Institute of Queensland.

 

[see_change]

Maybe .

As this was an investment property I'm never going to offer my top price in that senario. Maybe the other party would have gone higher , but , they had already offered a higher price which they had subsequently withdrawn ...

My main issue for this post was to ask on whether this senario was common . In 30 years of buying and selling close to 30 properties I haven't met it .

I'm not asking about the psychology of where you place your offers etc .

Cliff

 

[Propertunity]

.... this post was to ask on whether this senario was common . In 30 years of buying and selling close to 30 properties I haven't met it .

Yes, Cliff, this is quite common practice.

I've seen it varied a little for us as BAs (not always, but often enough) - we get a 2nd & 3rd chance so we get to win (if we want to).

 

[Peterw]

Cliff, its fairly common here, whenever there is more than one party wanting to negotiate on a property at the one time. Again all I can say is that here, a claytons auction should not happen. From what I have read in the threads here, most people do not want their offer "shopped", which is effectively a claytons auction. I cannot say how things work in other places, however if that’s how it been for you, and you are comfortable with it, then that’s as always up to the individual.

 

[HiEquity]

As a buyer or vendor, if an agent tells me there is competition for the property, I will generally insist on the process outlined above where everyone gets one chance to make their best offer and then the vendor decides, with no possibility of any further offers unless the vendor doesn't accept any of the offers. Then the agents wheel out the form where you agree to those terms and submit your best offer on the basis that it won't be shopped around. I'm not into submitting offers only to have them shopped around.

BTW a Dutch auction is a reverse auction by another name as peterw said... and it's a scenario.

 

[S.T]

I've bought a property this way too. Best offer, no second offers taken. Everything was up front, you weren't bidding silently against a ghost, make your offer and move on if not accepted. Not sure how common it is, but I liked the approach. Similar to best offer by set date also, I see a few properties advertised that way.

 

[MRO]

I bought my current PPOR this way. We put our best offer in and so did the other party. Our offer still was the better offer but still not high enough so they counter offered, we counter offered and we came to an agreement. The seller agreed to only deal with the best original offer.

As long as the agent gives all the same ability to put their best offer in (and does not secretly use your offer in to extract more from another buyer) I don't think it is unfair.

I have bought another property the same way. In WA I think it is non uncommon.

 

[Crabnet]

I sold my last property that way. Three potential buyers were asked to put in their best offers.
I presumed that they would submit their best offers but one wanted to haggle by asking what the other offers were. They weren't going to get it anyway because another offer had more attractive conditions and I wanted it sold so took the middle offer.

 

[HD_ACE]

Sounds like the process turned into a tender?

Cheers

 

[beachgurl]

A few agents round my way are going about offers that way. Some properties are selling as soon as they hit the market and agents are sometimes negotiating with 5 or 6 'bidders'. One agent is now taking signed contracts and deposits and putting them all on the table to the owner in one meeting and they choose which one is acceptable. I'm sure in most circumstances there would be someone who misses out that would've offered more than the eventual sale price but I think it's a tough position for agents when they are swamped with offers.

 

[MRO]

There is a misconception this is for the benefit of the agent to avoid having to deal with too much paperwork, this isn't the case.

This is just another sales technique used when there are multiple buyers. The buyers fear missing out so possibly offer more than they may do in a normal negotiation situation.

As mentioned above, it is basically a tender process.

I think this is the legal and correct method for an agent to deal with multiple offers simultaneously.

 

[Jake Milne]

Yes, Cliff, this is quite common practice.

I've seen it varied a little for us as BAs (not always, but often enough) - we get a 2nd & 3rd chance so we get to win (if we want to).

This. The selling method was standard.

 

[see_change]

This. The selling method was standard.

Thanks guys

Cliff

 

[Deltaberry]

We got out bid for a property last week .

Senario - asking price 600 - 650

We made offer of 610 ( after first open ) after agent indicated they had offer of 605 .

Came back and said that owner wanted to go to second open .

After that open , the agent said the owner would accept offer over 620 . We offered 621 .

Then agent said there were two other interested parties and he didn't want to spend days going back and forth getting small price rises.

Funny thing is the site is massively underutilised even 10 years later (has a NAB on it, a restaurant, a glasses shop) but there're severe height restrictions on it.
He said he had agreed with the owner that every one had to submit their best offer by 10 the next day and the best one would have 4 hours to exchange and there was no further debate .

We missed out , but in reality would have been happy to go slightly higher , but we were annoyed by the process , though as they say , there's another next weekend ( actually three to think about )

Thinking about it , if I was faced with a similar situation , when he said , he didn't want to spend days going back and forth getting small increases , I'd say
" under the fair trading act , you have an obligation to get the best price for your owner " ( they do , I check recently to see what their obligations are after one quoted the Fair trading act as the basis of his actions ) " How about you spend 30 mins going between the bidders and see what happens . eg every one has their first bid . after that people can stay in they go up on that by say 2 k intervals " . Sort of Dutch auction , but more organised .

Would that be legal ?

Cliff

I've seen my folks offer the best price on some of the best properties in Syd/Melb and lose out, because the agent had a grudge against them and probably threw their tender away.