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You're Really nitpicking over semantics...To use your language, nobody should assume that they will have an opportunity to make another offer. The point is that the seller doesn't owe you another opportunity to bid, and that when placing a low(er) offer you may not get another bite at the apple.
If you don't think the house is worth more than your initial offer, you can stand by your original offer, and if no one else thinks it is, than you've effectively called the seller's position.
No it's not semantics as we are talking about materially different strategies, not just wording. I've explained my point clearly so no need to repeat it. I agree that nobody owes you anything and you should not assume that you'll have a second shot. We're all grown up and we get that. Like I said, it's chess. You don't know what they will do and they don't know what you will do.
You're Really nitpicking over semantics...To use your language, nobody should assume that they will have an opportunity to make another offer. The point is that the seller doesn't owe you another opportunity to bid, and that when placing a low(er) offer you may not get another bite at the apple. ............
It was traditional to offer a little less and the seller would counter. That doesn't work so well in a tight market. If there are multiple offers, the seller probably won't give a counter offer. He'll either accept the better offer or else ask for highest and best.
If the market is slow, you can probably start a little low and negotiate to save a small amount. If other buyers are out there competing for limited inventory, you take a risk if you play games
It was traditional to offer a little less and the seller would counter. That doesn't work so well in a tight market. If there are multiple offers, the seller probably won't give a counter offer. He'll either accept the better offer or else ask for highest and best.
If the market is slow, you can probably start a little low and negotiate to save a small amount. If other buyers are out there competing for limited inventory, you take a risk if you play games
yes, no single strategy is best for all situations.
And if the home's value is hard to determine both buyers and sellers will more likely want to 'feel out' the market. Most homes I've been involved with are very difficult to gauge. Some are beautiful but with a flaw that you simply can't determine the impact of (e.g. bad parking - someone can come along and not care at all or it can turn off everyone who sees it). Some are ugly ducklings with horrible layouts and the right people come along to see a vision in these places. Other times, they sit for months unwanted. Sometimes people even anticipate a 'feature' and the market ends up seeing it as a 'flaw'. One place I know of was beautiful and a very unique original period property but was very close to a dumpy house. Nobody knew how these characteristics would play out in the market. Many of these places have not been sold for decades so each one is a new adventure for the market.
Most markets where I've lived can easily have swings of 15 or more percent expected sale price vs. actual.
On our latest purchase we found a house that had been on the market for almost 90 days with multiple price reductions, we offered asking price which was what the house was worth to us. We had a second house that was a bit more expensive that we liked as a contingency plan. Sure enough, seller's agent came back and said they magically received another offer the same day after 90 days on the market and wanted highest and best. We replied that we already gave our highest and best and that we'd wait 24 hours before pulling the offer and offering on the backup house. Magically, the other offer disappeared and our offer was accepted with haste.
Offer what it's worth to you and be ready to walk away if the seller thinks it's worth more.
It's no surprise that many agents will favor going in with your highest and best offer as your first move. Why?
1. It increases the chances that a deal will get done faster. Buyer's agents don't get paid until a deal is done. Tougher negotiations with price create delays and increase risk that the house will be lost and the agent will have to start over with another house. Delays and starting over also increase risk that the client will walk away. Every day that a deal is unsigned, the aggregate risk of the client walking away increases (no different in sales in any industry). All businesses, even healthy ones, need cash flow, just like most people need their pay check on pay day, not some unknown date in the future. Delays can be detrimental. Even if the client is OK losing the home (i.e. they are willing to take a risk to get the house at the lowest possible price), the agent has their own incentive to get the deal closed. And because of this conflict of interest, the client can never be sure about the motivations.
2. The agent doesn't know how the client will react to losing the house. Every case is different and sometimes people absolutely 'need' the house and don't mind overpaying. Other times clients really don't want to overpay and feel that life goes on and there are other houses. Regardless of how they may have discussed this, the agent never REALLY knows how the client will react. In other words, it's less risky for an agent to suggest going in with the highest and best right away. If the house is lost, it's perceived as less of the fault of the agent because it was the client who could not pay more, rather than the agent's failure of negotiation strategy. All deals balance the risk of paying "too much" vs losing the house. There is much more risk of client wrath if the house is lost vs. if the client pays too much. It's just logical behavior that agents would take this strategy but it's not always in the best in interest of the client.
Some cynics may say that the buyer's agent gets more commission if the client's highest offer is accepted vs. going in lower and having that accepted. Yes, that's true but I think that the two drivers above are stronger than this one. But, yes, you can add this incentive to the cauldron of conflicts of interest.
Sometimes going in with your highest and best is a good strategy but if an agent says that it's always the best strategy, consumers should consider the incentives above and think about the mix of motivations involved.
I haven't read the entire thread, but are there agents that have said ALWAYS go in with your highest and best, regardless of the individual market strength and house considerations (time on market, etc)?
I have certainly advised clients that there is a risk if they go in with anything less than their best offer. On homes that are only two days on market, where three other lookers showed up while we were there, that kind of advice is good advice, IMHO. And you know what.... sometimes the client has still offered less! And you know what? ....We submitted what the client wanted to submit. My job is to offer what the client wants to offer, no more, no less. My job is to give my client the best advice I can I then let them choose from the options. My job is not to try to predict the future, but rather, to try to advise our client on the best chance at getting what they want in a future decision that will be made by someone else. The outcome is never certain.
I have certainly sat with sellers looking at competing, multiple offers. You'd be surprised that it is not always about the total asking price. Sometimes its about other parts of the offer, the amount of down, the type of financing, the lender chosen... It can be very emotional for clients, and sometimes it comes down to the story the buyer presented with the offer.
It's not always a good option to let buyers bid it up, even if they want to. It still has to appraise. Sometimes a bigger down payment or a better closing date might make a bigger difference than price in making one offer seem better than the others.
My seller asked for a "best and final." They said they had another offer. So, I gave a best and final. Then they came back and asked me to go higher. I told my agent no. I had given my best and final. I was in a position where I had time to buy, so I was under no pressure to take this particular house. The sellers took my offer. I think I was going to be able to close faster than the other offer and they didn't want to pay another month of mortgage. But it was aggravating to be asked to increase my offer after giving "best and final."
indeed it would be, especially on the flagship item - price.
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