Hi
Ive been told by an agent that there is another buyer intrested in the propety I like. Im told sect 32 & contract will be ready soon & they will give me a copy. They will not indicate to me what the other offer is in round figers.
I need some advise/ opinions on the following as I have had no propertry expiriance or dealt with real estate agents before:
Can I take the agents word that there is another offer?
Can they disclose, tell me what the other offer is legally?
They told me that they will take the 2 offers to the vendor & the highest or best terms will get the property. My question is do I get a chance to raise my offer if the other offer is a bit more?
They surgested no, I dont, so give us your best offer first!!!! Great for them & the vendor but I dont want to over pay or miss out because of 1k or so.
Can I trust the agent to act in my favour, for example if the other offer is a bit more than mine the agent may suggest to the vendor "well this person is keen and may go a bit more I can contact him for a better offer". Can they do this and is it legal. They are ment to get the best price for the vendor?. I have read that some buyers have been upset when not give this oppertunity.
Is it best not to play games as its not an Aution, and give my best price then bite the bullet if the other party buys it, even if its for only $500 bucks more.A few questions to all you that have sold property in the past:
If your had an asking price of $150,000 & had an offer of $147,000 suject to finance. Then a second offer of $145,000 not subject to finance with a 20% deposit that had a 48 hour expirery clause which would you take?
I feel $145,000 based on my research is a fair price for vendor in fact the max its worth.Is the 48 hour clause a good idea?. If they reject it in 2 days Im out of the game, and then I have to put in another offer. This shows I like the property and will pay more. Any surgestions at this stage of the process from a vendors point or buyers would be much appreciated.
Regards to all
Tony B.
Hi Tony,
I'm not sure if the same applies in your state, however in Victoria agents generally dont accept offers before the S32 is available. In such an event you would certainly want to make your offer subject to satisfactory review of the S32.
I would recommend you try and view the "other" offers in writing by simply requesting it from them agent. Although the agent is not obligated to send you this information (generally they will site the privacy act but its always worth a try). I personally dont like getting into an "over the phone auction" as the offers cannot be verified.
It would be worth knowing if the other offer is conditional and what the settlement period is (this gives you some bargaining power should you not be able to match the "other offer" in terms of price.
With regards to "Is the 48 hour clause a good idea? I thinks its imperative, however I would be making the offer after reviewing the S32 as the property cant be legally sold without a S32 (again depending on state). Or you can always make if subject to the S32, but would need to review the deadline depending on when the S32 actually becomes available.
Also, it might not be necessary to place a 20% deposit. I try and to keep the deposits to a minimum as its essentially money that isnt working for you. Try a shorter settlement (if thats what the vendor wants)and no conditions with say 5-7% deposit. With that said I dont know the situation you're in in absolute terms…something to consider though
Anyways…hope that helps
Good luck
KrisI am also not sure about Vic, however I assume that most states will be the same as regards the deposit. If a deposit of more than 10% of the purchase price is accepted by the seller/agent, the contract becomes a term contract and would not realy be in the interest of the seller.
On the issue of an agent telling you what the other offer is – Think about it!!! I sure many of you would think it ok if he only tells you but not ok if he then tells the other buyer. In Qld we have a form that we ask the buyer to sign which states that the buyer has been informed that there is another offer on the property and that this offer is the best offer and the buyer may not have a opportunity to make another offer. This is fair to all parties. If an agent is intent on running a dutch auction, he would be best advised to run an open auction.
My opinions for what they are worth.
Kris
Correct on the Sect 32, property in Vic. can not be sold as it must be viewed by the buyer & be part of the contract. This is what Im concerned about one of the agents told me the property was sold because he want the commishion from the prospective buyer that came to him and took a holding deposit from them. Sect 32 will be ready next week, I will not make any offer before I see it. The other party is uninformed because its not wise to make such an offer before you look at what you are buying. Having said that theit offer is not enforcable by law as no section 32 was supplied at the time they made their offer. As for the holding deposit well Ive learnt its all a part of the show. It makes me think that the other party may not even exist. I would like to see the other offer in writting as you said. The 20% was only an idea to show the vendor Im a genuine buyer. The differance of oppertunity cost of the 20% & 10% after tax is to small to mention on a 30 day settlement. But I may offer the 10% after reading the last reply. I feel the agent knows Im intrested and just like the used car sales person " there is always another buyer intrested so you best act now and grab it". I will have to wait till I get the section 32 check it out, then make the offer. It seems buying real estate is no different than any other business transaction you choose a stratagy then see how it plays out.
Thanks for the reply and help Kris
Kind Regards
Tony B.Joh
Thanks for your reply and advice, much appeciated.I think I will ask for such a form or decleration to be signed by the agent re. we have another offer. As it's being comunicated to me loud & clear. If another offer exists thats fine & if they want to pay more than the place is worth thats fine also. However I dont like the over the phone auction system. Im up for the real thing on the day no problem at least you can see the other party (well most of the time) I dont think we have the best offer forms stating there is another buyer in Vic yet but is a good idea.
"If a deposit of more than 10% of the purchase price is accepted by the seller/agent, the contract becomes a term contract and would not realy be in the interest of the seller."
Jon, can you please tell me a bit more about the term contract as Im new to real estate contracts and would like to know more as you surgest 10% would be better.
"On the issue of an agent telling you what the other offer is – Think about it!!! I sure many of you would think it ok if he only tells you but not ok if he then tells the other buyer. "
I totally understand where you are coming from with this comment Joh. However just because an agent will not tell me what the other offer is does not mean that he/she will not tell the other buyer what mine is, specialy if its more. I think I will just offer what Im comfortable to pay with no conditions. I would like a soil test do you think this would be a disstraction to the seller, it would be the only condition.
Thanks JohKind Regards
Tony B.If you were to increase your offer by, say, $5000, at the end of the day this would mean about a difference of $10 per week to your mortgage (at 9.5% interest). Would you miss out on the house of your dream for $10.00 a week? I know I wouldn't. You keep saying that if someone wants to pay more than it's worth, so be it. Isn't a property worth what a buyer is willing to pay? It's not so black and white.
I sold real estate for 8 years and often would have more than one offer on a property. My approach was the same … you have one go at this so make it your best. What's the property really worth to you? Are you prepared to let it go and start searching again? How long have you been searching? At the end of the day, when the property has gone up in value, will the $5,000 really mean that much? All property appears dear at the time but with the passage of time, they are cheap! My husband and I bought a property about 14 months ago for $513,000 (at auction). We were bidding against another buyer and had had the intention of paying only $470,000-$480,000 at the time (which was fair market value). We wanted the property and that was the upshot. We paid some $30,000 more than we had intended. The property's value is now $800,000 and that is without exaggeration. So, in hindsight, it was a good move.
Do you intend to live in the property for some time? I know that there are no guarantees in life, but if your plan is long term and you can afford it, increase your offer by $5000 and GO FOR IT! I'm not saying that you'll get it for the extra $5,000 but one would think it would put you in the ball park. If the $5,000 takes you over the listed price, EVEN BETTER. I have sold many properties for more than the listed price and I've never once had a buyer say that they had regretted paying the extra money. In fact, with the property that my husband and I bought, that I mentioned above, the reserve was set at $490,000. We didn't quibble about the fact that we had paid $23,000 more than the seller wanted. We're just so glad we bought it!
At the end of the day, the agent is working for the Vendor as he is the one who is paying the commission (not you!). How would you like it if the agent told the other buyer your offer? To not tell each buyer what the other one's offer is, is the fairest system to all buyers involved and to the vendor. By the sounds of things, your agent is very ethical and one that I would recommend you sell through as you would want an agent to work in your best interest if you were selling.
STOP MUCKING AROUND or you're going to miss out. GOOD LUCK.
Regards
Jacqueline
Don't let the real estate agent rush you too much, they are always in a mad rush to sell (read FREAKONOMICS to see why) and playing the "other offer" game…
Amazing how short that gap between the Section 32 being available and the offer having to be made is.. despite every other party in the transaction maybe getting weeks on the paperwork..
In my opinion now (several offers, one failed attempt to buy due to agent screwing up the contract) the SUBJECT TO FINANCE clause in the offer can be your helper here.. if you have offered too much the mortgager provider may not approve finance after valuing the place.disclaimer.. I don't know much about this.. late night rambling..
Random
Yes , "STOP MUCKING AROUND or you're going to miss out" must be in the guide for selling real estate for beginers text book. If a person offers too much the lender will not lend, specialy now. So I think this is what you are pointing out. No sect. 32 yet and already a buyer and a holding deposit ???? Its difficult to get finance with out a sect 32. so Im told. I will try to find FREAKONOMICS & check it out. I must admit I like to play the game a bit also and I dont beleive all that Im told in a transaction like this. Being my first buy its a good opertunity to learn from. And there are still plenty of morgagee sales to attend.
Thanks for the input.
RegardsTony B.
Tony, consider this. Is this a property that will be snapped up by the first to view (at or around the asking price)? or is it a property that will stay on the market for weeks, months etc? If you have done your research, submit a firm offer with your terms & expiry date/time (never your best unless you know there is another buyer working on a deal).
SNM
Scott
Its been on the market for 3 weeks. I have been reading that some agents use "another buyer is intrested" as standard to get you to give your best price first up. With a sunset clause it puts the pressure on the seller, as I do "Have other properties on my short list" I guess If I realy want it I pay the asking price. Im sure a seller always puts the asking price higher than the real price. So I should also do the same. Agents opperate on commishion and as long as it sells they dont care if the price diffrence is a few thousand, they also know Im no subject to finance so I can pay more than most other buyers. So they would be likely to keep me informed. The question is do I realy know there is another buyer on the deal? If so I have to think what will they pay, they are suject to finance so it may take a few days for them to get it organised. I best get my offer in before then if its rejected, I will know Im too low. But will still have time to make another. I guess its really up to me to make up my mind how much Im willing to pay simple as that. I get the feeling a lot of buyers buy on emotion and " dont want to miss out" and this deffinety influences their offer.
Thanks Kindly for your info mush appreciated.Regards
Tony B.When I used to work in real estate, if I told a buyer there was another offer, THERE WAS ANOTHER OFFER. It amazes me how many buyers think this is just some line an agent dreams up to get a sale. Sure, agents are paid a commission. It's their job to list and sell houses – that's how they get paid (why do people begrudge this? Would you go to work for nothing?). If you are dealing with an ethical agent, the other offer would be the real thing and I would imagine that the agent would have you sign a Buyer's Declaration which states that you know there is another buyer on the property and you realise that you are putting forward your best offer. If there is no other buyer, I am sure that the agent wouldn't go through this process just to secure a sale. Give them the benefit of the doubt. Not all agents are unscrupulous. Just like not all buyers are particularly nice, honest people.
Jacqueline
Jackie
Yes unfortunety for the ethical agents they cop the stigma for the unethical, just read any book, Neil Jenman in particular, about buying realestate the majority paint the industry in a bad light. "When I used to work in real estate, if I told a buyer there was another offer, THERE WAS ANOTHER OFFER." Unfortunetly your not the agent Im dealing with. A big YES to the Buyer's Declaration. Ive not been offered one. But will insist on one and get the agent to sign it. If there is no other offer it then can be seen from a legal point of law as deception. Using a phantom buyer to push up the price or influance an other persons offer as a point of law is seen as gaining profit by deception (see trade practices act). With your 8 years of selling realestate what offer would you advise your vendor to take (as asked in my previouse post). Thanks for the input.
Kind Regards
Tony B.
I would insist on the Buyer's Declaration. The agent should not have a problem with this if in fact another buyer does exist. Failing that, I would perhaps ask for input from the Principal of the office (mind you, you have no guarantees that the Principal is ethical).
The way our office used to deal with multiple offers was to inform the buyers of the situation, have them sign a Buyer's Declaration, have each contract drawn up and signed by the different buyers (without disclosing to each buyer the other offer or conditions) and then each contract would go into a separation A4 envelope which would be sealed (very coat and dagger, huh?). An independent person in the office (not the listing agent), usually the Principal, would present the offers to the vendor who ultimately made the decision.
I can't think of any other way around the situation. If your agent is not prepared to sign and have you sign a Buyer's Declaration Form, maybe you could ask the Real Estate Institute in the State where you are how to go about obtaining proof from an agent that another buyer does in fact exist.
How did you feel about the agent before this "second buyer" came onto the scene? Did you trust him?
It's been a few days since your original post, have you even heard from the agent? If there was another buyer on the property, how come there doesn't seem to be much urgency behind the sale of the property?
For what it's worth, I was trained under the Jenman System. I can hear the cringes. Love him or hate him, you really can't fault his training – it was pretty good. Personally, I don't think the man is out for self gain. I think he's overly passionate about what he does and he's a bit of an idealist (what's wrong with that?). He does get carried away with his cause but I think his heart is definitely in the right place.
Good luck, Tony. I don't know if I've helped much.
Jacqueline
Jackie1966 wrote:When I used to work in real estate, if I told a buyer there was another offer, THERE WAS ANOTHER OFFER. It amazes me how many buyers think this is just some line an agent dreams up to get a sale. Sure, agents are paid a commission. It's their job to list and sell houses – that's how they get paid (why do people begrudge this? Would you go to work for nothing?). If you are dealing with an ethical agent, the other offer would be the real thing and I would imagine that the agent would have you sign a Buyer's Declaration which states that you know there is another buyer on the property and you realise that you are putting forward your best offer. If there is no other buyer, I am sure that the agent wouldn't go through this process just to secure a sale. Give them the benefit of the doubt. Not all agents are unscrupulous. Just like not all buyers are particularly nice, honest people.
Jacqueline
Jackie,
no-one begrudges a r/e their commission.
I begrudge the LEVEL of commission though.
I have been an agent too, and been involved in a number of transactions of my own, and I can say confidently that the work required to sell a $1mill house is the same as a $200k house.
Why should the agent get 5 times more for the same work? It is a blatant gouge, and all the participants in the transaction know this.
Also, as house prices soar, the commissions increase. It's the same house. I know this happens with every commodity sold on a commission basis, but how many commodities double in cost every 10 years, and i know that when prices go flat they don't get much of a pay rise, but overall, house prices always go up, and go up above inflation.
That's a nice pay rise structure, considering the minimal level of extra study to acquire a Representative's Certificate.
If you are dealing with an ethical agent, then there should be no cause for concern that they are lying about "another buyer".
However, we all hear the stories of tricks and shonky games, and you see it every week with auction results – over-quoting and dummy bidders (the practice is alive and well; despite Govt legislation to outlaw it), conditioning of Vendors etc.
It is automatic that we are not going to listen to any comments from a r/e without having at least a healthy dose of sceptisism. Only the totally inexperienced in r/e transactions would be blissfully unaware of these factors.
It is unfortunate that all the good r/e's are tarred with the same brush as the bad ones, but the REIA consistently does little to reign in the cowboys in their industry – it is set up by Agents for Agents, and they look after their own.
If doctors behaved like many agents, they would be ejected from the Medical Association, fined, and probably sued by their patients.
R/E's get, at worst, a fine. And these examples are very few and far between.
Jackie1966 wrote:I would insist on the Buyer's Declaration. The agent should not have a problem with this if in fact another buyer does exist. Failing that, I would perhaps ask for input from the Principal of the office (mind you, you have no guarantees that the Principal is ethical).
The way our office used to deal with multiple offers was to inform the buyers of the situation, have them sign a Buyer's Declaration, have each contract drawn up and signed by the different buyers (without disclosing to each buyer the other offer or conditions) and then each contract would go into a separation A4 envelope which would be sealed (very coat and dagger, huh?). An independent person in the office (not the listing agent), usually the Principal, would present the offers to the vendor who ultimately made the decision.
I can't think of any other way around the situation. If your agent is not prepared to sign and have you sign a Buyer's Declaration Form, maybe you could ask the Real Estate Institute in the State where you are how to go about obtaining proof from an agent that another buyer does in fact exist.
How did you feel about the agent before this "second buyer" came onto the scene? Did you trust him?
It's been a few days since your original post, have you even heard from the agent? If there was another buyer on the property, how come there doesn't seem to be much urgency behind the sale of the property?
For what it's worth, I was trained under the Jenman System. I can hear the cringes. Love him or hate him, you really can't fault his training – it was pretty good. Personally, I don't think the man is out for self gain. I think he's overly passionate about what he does and he's a bit of an idealist (what's wrong with that?). He does get carried away with his cause but I think his heart is definitely in the right place.
Good luck, Tony. I don't know if I've helped much.
Jacqueline
Well said Jackie.
If only all transactions were conducted this way.
I'm a big fan of Neil, read all his books, receive his newsletter, follow the website.
And I agree with you; his intentions are honorable. Many people don't tagree as he tends to be a bit "in your face", but I think that unless he is, then no-one will pay attention.
Jackie1966 wrote:If you were to increase your offer by, say, $5000, at the end of the day this would mean about a difference of $10 per week to your mortgage (at 9.5% interest). Would you miss out on the house of your dream for $10.00 a week? I know I wouldn't. You keep saying that if someone wants to pay more than it's worth, so be it. Isn't a property worth what a buyer is willing to pay? It's not so black and white.I sold real estate for 8 years and often would have more than one offer on a property. My approach was the same … you have one go at this so make it your best. What's the property really worth to you? Are you prepared to let it go and start searching again? How long have you been searching? At the end of the day, when the property has gone up in value, will the $5,000 really mean that much? All property appears dear at the time but with the passage of time, they are cheap! My husband and I bought a property about 14 months ago for $513,000 (at auction). We were bidding against another buyer and had had the intention of paying only $470,000-$480,000 at the time (which was fair market value). We wanted the property and that was the upshot. We paid some $30,000 more than we had intended. The property's value is now $800,000 and that is without exaggeration. So, in hindsight, it was a good move.
Do you intend to live in the property for some time? I know that there are no guarantees in life, but if your plan is long term and you can afford it, increase your offer by $5000 and GO FOR IT! I'm not saying that you'll get it for the extra $5,000 but one would think it would put you in the ball park. If the $5,000 takes you over the listed price, EVEN BETTER. I have sold many properties for more than the listed price and I've never once had a buyer say that they had regretted paying the extra money. In fact, with the property that my husband and I bought, that I mentioned above, the reserve was set at $490,000. We didn't quibble about the fact that we had paid $23,000 more than the seller wanted. We're just so glad we bought it!
STOP MUCKING AROUND or you're going to miss out. GOOD LUCK.
Regards
Jacqueline
I totally concur with the above comments. If you really like the property go for it!!! Don't worry if you have to pay a little bit extra as long as you can meet the repayments.
About 4-5 years ago, a relative of mine paid $320,000 for a house in the inner suburbs of Brisbane . A few months later he had buyer's remorse thinking that he had overpaid by $10,000 to $20,000. Do you know what? It is now worth $600,000 plus.
Thanks to all replys.
Jackie
Please let me know what offer you would have recommended to your vendor (see my original post). As I previously worked in the small comodeties market I may be playing it a bit hard. The buyers declaration can work doth ways for or against me. It can show if there is another buyer, depending on the wording most say" If there is another offer" the key word is "If" not that there is currently another offer. So this does not mean that much. A big YES to the why have n't they call me yet. Im unconditional in my potential offer not sudject to finance. If I had the best intrest of the vendor in mind I would call me and say Hey Tony got a contract signed will be taking it to the Vendor Tomorrow, want to make an offer best do it now. Have not received that call yet. I was told that if they get a cash buyer in over the week end they will not call me????? Why not, nothing legally stopping them? I will make up my mind over the week end and make an offer Tuesday. I have told them that. So I would expect that unless someone comes in with cash, has done their research and makes an offer that the agent thinks is going to be better than mine it may get sold. There are lot of way at looking at making an offer: What can you afford. What is it worth. Whats it worth to you. How many others may be intrested. At the end of the day its what you feel you can live with. To end with a quote by Neil Jennman " you can be too clever in your offer"
Thanks Jakie and othersRegards
Tony….Hey all,This is a finance question so I hope I am not putting it in the incorrect post or anything.Anyhow, I have just recently been the bank to get a reevaluation and maybe some finance as I would like to acquire my first rental. However I walked away basically being told I can only do it such and such a way. What I did want was to top up my mortgage and use the cash for deposits on a new home or homes. Let’s say 30g as a separate loan but tied into my mortgage which would increase my payments. Then I (assumed) I could find my house, place a deposit and get a separate loan even maybe through a separate bank.I do understand that they will want some security but even with the 30g I asked to have the interest charged only when I access the money. “Oh no he said u can’t do that. It will be charged when u receive the money”.How do say. ”um yes I can” (so to speak) I just felt that the bank is working for the bank (obviously). I think if I had 1.5 mil already I would have gotten the whole handshake “Hi Dave how are you today, yes we can do that, what else do u require”I guess knowledge is power but my question is how do get around these hurdles and actually start building a relationship with these people. Also would love to hear anything else that this brings to your mind.Secondly I now have only 1 income as me and my partner have gone our separate ways. This was the second problem as I didn’t qualify for anything.Its just the loan officer added 1.5% to the loan which took it to like 10% (“just to cover market increase” he said) and also had my personal expenses at like $1200 a month. Which I told him there is NO way I spend that much on myself per month.So if I don’t qualify then how do I get Finance? HmmmI have plans to go and see a broker soon.Lastly does anyone have information on all this Interest Rate increase, unaffordable homes, Share market issues, American Rescission and how this all fits into perspective and what it will mean. I understand we are at the top of the boom or if u like just past but what does this all really mean for the future and how do we make money from a down turn. Plus what time does anyone think it is on the property clock.Thank you in advance to anyone who can help me.
Dave From Townsville Nth QLD
Hey Tony
I can't remember the exact wording of a Buyer's Declaration but I'm pretty sure it didn't contain the word "if". It would have been more like: [name of buyer] is aware that there is another offer on the property at [address] and acknowledges that he/she must make their best offer blah, blah, blah. No if's or buts … definite wording. Perhaps if you were to contact a Jenman Office in the area where you live, you could tell them your problem and ask if they could provide you with the wording. Then you could prepare your own Buyers' Declaration and go and see the agent with it.
As far as what offer I would recommend to a vendor, I wouldn't recommend either but would outline the pros and cons of both. Ultimately, the decision would be the vendors. However, if I was a vendor in the scenario above, I would go with the cash offer for $2,000 less. At least then I would be fairly assured of the deal happening. In my experience, most vendors would take the cash offer if the amount offered in both contracts are not that far apart. But I guess there are always exceptions to the rule.
How badly do you want the house? It doesn't sound like you're that keen. Maybe you should move onto another property. If you want a win in the negotiation aspect, this may not be the property for you. Obviously the vendor hasn't accepted the offer even though it is cash. Can I ask what the property is listed for?
You know, everyone expects to beat the "vendor" down on price. I often hear comments along the lines "Oh, they wouldn't list it for the price they want. There's got to be room for movement." I ask: "Why does there?" If a property is worth $150,000 all day long, and the property has been priced realistically, why should a vendor drop his price? If someone wants it, they will pay the price. It's only if it's not competitive in the market place (there's similar properties on the market for less) that you could expect to negotiate the price. Maybe the property you want is worth the amount the vendor is asking. Maybe it isn't. Obviously the vendor seems to think it is otherwise I would have imagined he would have taken your offer (if it was a fair offer).
Thanks LA Aussie and Hieung for the words of support. And LA Aussie, I'm with you on Neil.
Tony B,
Well, I am pretty new to property investment – in fact I only purchased my first investment propery in Feb 07. However, it did take me 9 weeks to get to the sale. During that 9 weeks, I had made offers on 5 other properties all with a 24 hour deadline for the vendor to accept or reject my offer – this allowed to move onto the next opportunity.
My recommendation is to make the offer, wait the nominated deadline period and if no acceptance then move on. Of course, this depends upon how much you really want a specific property. I can only suggest you 'monitor' your emotions when buying.
As investors as opposed to owner-occupiers, we don't really 'need' the property as we can move onto the next one.
By the way, just for the record, of the other properties I made offers only one of the vendors (via the agent) pursued me afterwards to see if I was still interested 1 week later!
Good luck to you in your investments.
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