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Usually in an auction, you can see and know what the other bids are.
I wish it WAS more like an auction in multiple offer situations, so you could know what you're up against... and you know what you lost to also, without waiting til it closes.
"OK folks, we have a 320K conventional at 60 days... can anyone top that?" would be better and seem less like trickery to nervous clients than bidding up in the blind, not even knowing for sure if they are or are not already the high bidder or whether the other bidders even exist.
And then you get down to the fact that, in the end, it is the seller's choice. A heartfelt letter might pull at the heartstrings, and they don't mind giving up a small amount to a young family (extra points when the wife is expecting their first child, it seems). Or someone is an ardent gardener, and is anxious to sell to someone who will care for their antique roses as much as he does . . .
So they say 45 days instead of 60? What if the seller preferred a longer closing period, because their new house wasn't completed yet? Then the buyer who bids $320 at 45 days is going to be surprised that they aren't accepted . . .
In the end, sometimes you don't know which way the seller will jump.
And then you get down to the fact that, in the end, it is the seller's choice. A heartfelt letter might pull at the heartstrings, and they don't mind giving up a small amount to a young family (extra points when the wife is expecting their first child, it seems). Or someone is an ardent gardener, and is anxious to sell to someone who will care for their antique roses as much as he does . . .
So they say 45 days instead of 60? What if the seller preferred a longer closing period, because their new house wasn't completed yet? Then the buyer who bids $320 at 45 days is going to be surprised that they aren't accepted . . .
In the end, sometimes you don't know which way the seller will jump.
There are really so many factors in an offer other than the raw offer price. So many potential reasons for a seller to make a decision.
Maybe a buyer's agent cannot properly complete the offer docs and the offer is vague and off-putting in some incompetent way that diminishes the value of the buyer's position.
Or, the buyer's agent has aggravated the sellers in some way. "Is that the one who used the toilet, didn't flush, and said the house was dirty in feedback?"
Look at all the complaints we have here from CDers who have had their houses torn up in showings. A few bucks may not make up the difference.
Or, the buyer is only prequalified by a lender scourge like BOA or Wells Fargo or some internet lender 19 states away.
Or, the successful buyer offers a rent back.
Maybe the successful agent called the listing agent and asked when the sellers wanted to close, and hit that date in the offer.
It could be that the higher offer was so unrealistically high that the seller and listing agent don't believe that the property will appraise at offer price, and is a ploy to get a deal and renegotiate after appraisal.
Or, the successful buyer or their kids played soccer, did boy scouts, or goes to church with the sellers' or their kids.
Successful buyers in multiple offers here tend to bring cash, and to sweeten their offer with huge Due Diligence Fees.
If publishing all offers meant publishing all terms, and all paperwork files, it would still be a dumb idea, but would be more interesting than just posting prices.
Successful buyers in multiple offers here tend to bring cash, and to sweeten their offer with huge Due Diligence Fees.
Agreed. Cash speaks very loudly. To the point where one client brought in $150,000 in cash in an Adidas gym bag for her earnest money and didn't understand why she couldn't just hand it over and have us give her a receipt! No clue about banking laws. Kinda awesome, in a way. :-)
Can you explain the "huge Due Diligence Fees"? I haven't seen that used down here.
In our NCAR Standard Offer to Purchase and Contract, we have a line for a "Due Diligence Fee."
The boys at the Bar Association screwed up the forms. And, ignorant agents screwed up the process.
When they were revised several years ago, the NCAR Forms Committee prevailed on the NC REC to allow a "Due Diligence Period" in the Standard Forms.
That started the Great Debate...
Was it necessary for the buyer to give money, to have specific skin in the game, to avoid an illusory contract?
Or, would the investment in due diligence, inspections, appraisal, loan application, be adequate to avoid possible voiding of a contract for a lack of money crossing hands?
Opinions were evenly split, and form development was halted.
Compromise:
Provide a field for an Optional, negotiable, and non-refundable Due Diligence Fee to be paid directly to the Seller, and to be credited to Buyer at closing.
Even with language in the form stipulating that the contract would be legit even without a DD Fee, we have suspenders and a belt in the language.
The full intent was a $10 or $20 fee to meet a minimal "skin in the game" requirement.
Ignorant agents prompted their sellers to hold that the fee should cover their house payment, dining out, whatever. Since they have been misled by weak agents that they were "taking the house off the market," sellers agree readily.
Now, in this sellers market, we see $1000+ fees routinely. If you want that house, and you are financing, vs. cash offers, boost it to $2000 or $3000.
Non-refundable, except in case of proven seller breach. Good luck with that.....
The hoped for outcome was that sellers would make repairs, do pre-listing inspections, clearly disclose, etc.
IOW, properly prepare the house for market.
For $3000, buyers should get a survey, appraisal, inspection report, repairs, and a professionally presented property.
We have sunk to just stinging buyers, rather than any sense of market fairness.
I tell my buyers that they first have to "buy a contract." Then go find all the stuff the seller didn't disclose.
If this market pendulum ever swings the other way, we will see buyers saying, "Take a $10 fee and be glad I don't steal your dog."
when we had an Option Fee, not the Due Diligence Fee, many years ago (that nobody wanted to use), the given explanation during Continuing Ed was that you were compensating the Seller for the period of time your Option lasted.
Nobody liked to use it, and the market turned, so we didn't use it.
It is quite correct that $0 is allowed, and often quite appropriate for a DDF. In reality, if a Seller gets your offer at a pittance, and other offers with $1K or more, your chances are going to suffer greatly.
As noted, it's all a pendulum. One problem is just how long it will last, just how ingrained these habits/demands will be by then.
We've still got PLENTY of Sellers and Agents who think Earnest Money means more when it's upfront and not at some later date.
I had the attorney who's been head of the Forms committee, and a very well-versed residential contract issues guy to boot, tell us the NCREC says we're not supposed to use escalation clauses. And given his reasoning, it was good enough for me.
Because we have no right to demand to see the offer we "beat".
So, we CAN use them - nothing prohibits us from following the lawful direction of our client, which is "I want to include an escalation clause, and here's the verbiage I want to use". But we'd still open ourselves to real and significant liability if, through no fault of our own, it was determined they were essentially conned into paying more than they had to.
Texas seriously frowns on escalation clauses and considers agents using them a violation of the Licensing Act and Commission Rules. That from the Texas Real Estate Commission themselves.
Texas seriously frowns on escalation clauses and considers agents using them a violation of the Licensing Act and Commission Rules. That from the Texas Real Estate Commission themselves.
Why? I'd like to understand better why are 'seriously frowned upon' or even considered violations in some states...
Of course, I can only speak for NC situations. But, the intention of NCAR and NCREC is crystal clear to brokers and REALTORS®.
Because they are wide open to manipulation and there are enough games already.
Because money is only one aspect among many when it comes to contract terms and conditions.
Because, in NC, one is not allowed to shop the offers one receives.
Because, in NC, they have to be drafted and presented by attorneys. Agents cannot draft or present them with advice. We have no standard form, and there are not intentions to provide one. IOW, such a clause is an added expense to a seller, not to mention the buyer.
Give me an escalation clause, and I might agree to accept the maximum number offered and tell you to rewrite without the clause, if it is competitive and important terms and conditions are acceptable.
Why complicate the transaction, when the buyer already has agreed to a price?
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