Is it illegal to disclose prices of other offers on a home? (contingency, appraisals)
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Your thought to offer $175 my seem like a win for the seller to you but there is nothing to guarantee that the appraiser and bank would agree the home is worth that much, which would put you and the seller in a bad place. Mortgages can't compete with a cash offer. Good luck on your search.
Sellers have to be careful with how they handle multiples. They run the risk of running one or all buyers off by calling for best and highest. I've seen buyers withdraw their offer when informed of multiples because "I won't play that game." Plenty of threads here confirm the common suspicion that agents frequently lie about multiples. It's rare to nonexistent in my world but doesn't mean that the public doesn't believe it.
Wouldn't you have been just thrilled if your agent told the competing buyer that you had bid $150,000 and all he had to do was to beat that price. You'd be crying on the other side of the ethics of it if you lost out because someone else found out what you had bid.
If it is a tight market and you can't find anything you like, you might give up on the idea of getting a real bargain. You had been looking so you knew that the price was low and the house was desirable. Well, somebody else knew that, too, and they didn't want to lose it by dinking around and trying to get it for the lowest price. So they made an offer that was more desirable than your offer.
We are in Illinois. We are first time buyers and having been looking for a home for an emotionally draining 2 months so far (That's probably not terribly long, but we are looking to buy immediately - new job, baby on the way, rent is more expensive than mortgage, etc etc, so the wait has been rough). So far we have made three offers on homes and all have unfortunately fallen through due to various issues, mostly on the sellers end. Recently, a home came on the market and we viewed it on the day 4 on the market. It was wonderful, we fell in love, and it was listed at 150k, well within our budget.
I know you are hurting now, but believe me, you will find another home and probably one that you like even better.
Losing a home after falling in love with it, and then finding a better one and buying that one instead, is something that has happened to me and probably to a lot of others here. So I am saying, don't give up. This just wasn't the house. As people sometimes say, "This just wasn't meant to be". Keep looking and you will find a great house. Don't insist on a bargain; look at the comps and ask your real estate agent what he/she thinks of the asking price.
Also, if you have a really good real estate agent, he/she will be experienced in this type of negotiation and can help you to close the deal on a great house if at all possible.
My point is, can sellers/agents really not disclose the price amounts of multiple offers on a home? I always assumed that agents would say something like "X home already has an offer in at Y amount, you should offer higher if you really want it". That seems to make sense in the both the sellers and buyers interest honestly. Feeling very sad we missed out on this one when we could have easily offers 20-25k more than list for it, but I would love to know this information as we continue our home search in the future.
Sorry you're having trouble. First time buyers really struggle with this phenomenon, because on the surface, it SEEMS like it should all be on the table for everyone to look at -- like at an auction, when people are raising their hands and upping everyone's bid out in the open. No one is going to tell you what an offer on the table is -- what if the sales price is $150,000, and they offered $140? You might only be moved to offer $142, and there goes $8,000 for the seller. Otherwise, if you panic and don't know, you might offer $155 :-)
But this is not an auction. Look at it this way: Buyer A finds a house for $150,000. He offers $148,000. Seller mulls it over. Is it fair to that buyer to have Buyer B come in and say, "What did they offer you? I'll pay more!' No, it's not. Buyer A has gone to the trouble of making a legitimate offer. Buyer B hasn't -- and maybe hadn't felt like pulling the trigger on the deal until someone else wanted it (the ol' "if someone else wants it, it must be good.")
Personally, I hate "highest and best" calls -- since we can't go back and say "what's your lowest and worst price you will consider?" And they often have appraisal problems down the road, because people get all carried away by the auction-y feel of the process. You would have been willing to offer $20K over list price? 13%? Would the comparables support that? Then how would you feel if the appraisal came in at $149,000? Pretty frustrated? Most contracts have some sort of re-negotiation clause if the appraisal comes in low. (Except some cash buyers waive it -- another advantage to a cash buyer.)
Here's where your agent needs to step it up. Ever play poker? You gotta know when to hold 'em, and know when to fold 'em, and know when to up your bet. Your agent should have made it clear that you were in a position to do a cash deal, if that was the case. Or you should have offered a cash deal, and then gone ahead and gotten a mortgage -- they don't care, at the closing table, where the money is coming from, and you are on the hook for cash if the mortgage falls through, but at least you've got the house. You will be able to find out what the house sold for after it's closed -- until then, most parties in a transaction keep their mouth shut, pending inspections, appraisals, etc. It never helps the seller on the street to find out what an offer was.
In order of priority:
Cash offer, no appraisal, no closing costs, quick close
Cash offer, no appraisal, no closing costs, longer close
Cash offer, appraisal
Cash offer, appraisal and closing costs
Conventional Offer with 80% or less mortgage, no closing costs vs. closing costs
Conventional Offer with >80% mortgage (less downpayment), no closing costs vs. closing costs
VA or FHA mortgage (some debate on this one, but because of slightly stricter appraisals and often longer processing time, some sellers would choose a different buyer.)
On top of this is the amount of earnest money a buyer is willing to put down. All things being equal, a minimal EM is at a disadvantage when compared with a larger EM. And, to just make the process even more random, every once in a while, all other things being equal, a heartfelt letter (not too sappy, but sincere) from the buyer on how this is their dream house can often sway the decision in your favor.
It's probably just my perspective and way of doing things, but I think you would get top dollar by starting a bidding war. You're not going to start a bidding war if you don't disclose the other offers!
There's a name for that process: It's called an AUCTION.
Personally, I'd prefer an good ol'-fashioned gloves-off auction, with a reserve of the minimum amount I'd take, instead of "highest and best". The back-and-forth gets tiresome, and all of the buyers feel duped.
I've also seen several times where buyers would withdraw during due diligence after a round of "highest and best" -- once the acquisition fever wore off, they work up in the clear light of day, looked at the price and said, "Good god, why did I agree to THAT?!" and end up terminating the contract during due diligence (which, in this state, you can cancel a contract for ANY reason, or not even give a reason, during due diligence.) So, OP, have your agent stay in touch with the seller's agent, or go one step further and ask to place a back-up offer -- who knows what may happen? I've sold two houses in the past year from a back-up position when the original contract fell out. :-) A seller with a back-up offer in their pocket is a lot less likely to wrangle over inspection items -- it's basically, "If you don't like it, I have another offer right here . . ." so who knows what may happen?
Sorry you're having trouble. First time buyers really struggle with this phenomenon, because on the surface, it SEEMS like it should all be on the table for everyone to look at -- like at an auction, when people are raising their hands and upping everyone's bid out in the open. No one is going to tell you what an offer on the table is -- what if the sales price is $150,000, and they offered $140? You might only be moved to offer $142, and there goes $8,000 for the seller. Otherwise, if you panic and don't know, you might offer $155 :-)
But this is not an auction. Look at it this way: Buyer A finds a house for $150,000. He offers $148,000. Seller mulls it over. Is it fair to that buyer to have Buyer B come in and say, "What did they offer you? I'll pay more!' No, it's not. Buyer A has gone to the trouble of making a legitimate offer. Buyer B hasn't -- and maybe hadn't felt like pulling the trigger on the deal until someone else wanted it (the ol' "if someone else wants it, it must be good.")
Personally, I hate "highest and best" calls -- since we can't go back and say "what's your lowest and worst price you will consider?" And they often have appraisal problems down the road, because people get all carried away by the auction-y feel of the process. You would have been willing to offer $20K over list price? 13%? Would the comparables support that? Then how would you feel if the appraisal came in at $149,000? Pretty frustrated? Most contracts have some sort of re-negotiation clause if the appraisal comes in low. (Except some cash buyers waive it -- another advantage to a cash buyer.)
Here's where your agent needs to step it up. Ever play poker? You gotta know when to hold 'em, and know when to fold 'em, and know when to up your bet. Your agent should have made it clear that you were in a position to do a cash deal, if that was the case. Or you should have offered a cash deal, and then gone ahead and gotten a mortgage -- they don't care, at the closing table, where the money is coming from, and you are on the hook for cash if the mortgage falls through, but at least you've got the house. You will be able to find out what the house sold for after it's closed -- until then, most parties in a transaction keep their mouth shut, pending inspections, appraisals, etc. It never helps the seller on the street to find out what an offer was.
In order of priority:
Cash offer, no appraisal, no closing costs, quick close
Cash offer, no appraisal, no closing costs, longer close
Cash offer, appraisal
Cash offer, appraisal and closing costs
Conventional Offer with 80% or less mortgage, no closing costs vs. closing costs
Conventional Offer with >80% mortgage (less downpayment), no closing costs vs. closing costs
VA or FHA mortgage (some debate on this one, but because of slightly stricter appraisals and often longer processing time, some sellers would choose a different buyer.)
On top of this is the amount of earnest money a buyer is willing to put down. All things being equal, a minimal EM is at a disadvantage when compared with a larger EM. And, to just make the process even more random, every once in a while, all other things being equal, a heartfelt letter (not too sappy, but sincere) from the buyer on how this is their dream house can often sway the decision in your favor.
Thank you. This is wonderful advice and you explained it in a very easy to understand way. We will definitely be remembering this as we continue our search.
Sorry you're having trouble. First time buyers really struggle with this phenomenon, because on the surface, it SEEMS like it should all be on the table for everyone to look at -- like at an auction, when people are raising their hands and upping everyone's bid out in the open. No one is going to tell you what an offer on the table is -- what if the sales price is $150,000, and they offered $140? You might only be moved to offer $142, and there goes $8,000 for the seller. Otherwise, if you panic and don't know, you might offer $155 :-)
But this is not an auction. Look at it this way: Buyer A finds a house for $150,000. He offers $148,000. Seller mulls it over. Is it fair to that buyer to have Buyer B come in and say, "What did they offer you? I'll pay more!' No, it's not. Buyer A has gone to the trouble of making a legitimate offer. Buyer B hasn't -- and maybe hadn't felt like pulling the trigger on the deal until someone else wanted it (the ol' "if someone else wants it, it must be good.")
Personally, I hate "highest and best" calls -- since we can't go back and say "what's your lowest and worst price you will consider?" And they often have appraisal problems down the road, because people get all carried away by the auction-y feel of the process. You would have been willing to offer $20K over list price? 13%? Would the comparables support that? Then how would you feel if the appraisal came in at $149,000? Pretty frustrated? Most contracts have some sort of re-negotiation clause if the appraisal comes in low. (Except some cash buyers waive it -- another advantage to a cash buyer.)
Here's where your agent needs to step it up. Ever play poker? You gotta know when to hold 'em, and know when to fold 'em, and know when to up your bet. Your agent should have made it clear that you were in a position to do a cash deal, if that was the case. Or you should have offered a cash deal, and then gone ahead and gotten a mortgage -- they don't care, at the closing table, where the money is coming from, and you are on the hook for cash if the mortgage falls through, but at least you've got the house. You will be able to find out what the house sold for after it's closed -- until then, most parties in a transaction keep their mouth shut, pending inspections, appraisals, etc. It never helps the seller on the street to find out what an offer was.
In order of priority:
Cash offer, no appraisal, no closing costs, quick close
Cash offer, no appraisal, no closing costs, longer close
Cash offer, appraisal
Cash offer, appraisal and closing costs
Conventional Offer with 80% or less mortgage, no closing costs vs. closing costs
Conventional Offer with >80% mortgage (less downpayment), no closing costs vs. closing costs
VA or FHA mortgage (some debate on this one, but because of slightly stricter appraisals and often longer processing time, some sellers would choose a different buyer.)
On top of this is the amount of earnest money a buyer is willing to put down. All things being equal, a minimal EM is at a disadvantage when compared with a larger EM. And, to just make the process even more random, every once in a while, all other things being equal, a heartfelt letter (not too sappy, but sincere) from the buyer on how this is their dream house can often sway the decision in your favor.
I'd also add that there's a waiving of all contingencies that could influence the seller. Cash deal, wave inspections or remove seller responsibility for anything found? That'd motivate someone to sell to that buyer in a hurry.
Offer wasn't accepted. They said the offer was just presented that afternoon and we had already scheduled our showing that morning before the offer was given to them.
If the other buyers put in an offer and the sellers accepted it before you put in your offer then I am still correct.
It doesn't matter if you viewed the house before the time they offered and the seller accepted. A viewing has no meaning, only an offer has meaning. Once the seller has accepted an offer they have a contract.
Basically the other buyers were faster.
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