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"Best Offer"

Discussion in 'The Buying & Selling Process' started by Jasmine, 1st Jul, 2016.

  1. Jasmine

    Jasmine Well-Known Member

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    Hi PC,



    I haven’t brought nor sold a property in a few years, however, I have a deposit saved up for my area of interest. I am utterly floored by the lack of business professionalism by RE agents, for example, not retuning phone calls and one line email reply’s. I am even more shocked, at the lack of negotiation and always been told to put in my “best offer”. How long has this “best offer” practice being in use? This has turned private sales into a type of silent auction. In the last few months I have registered offers just slightly lower than asking ($10k-$30k), and no RE agent has ever replied with a counter offer. This is the new normal? When did this change? Why would a buyer place his/her "Best offer" when there are no other offers, and he/she has the highest offer? I understand that this only favors the vendor, and would like to know if this is the new game.



    Does anyone have any similar stories or advice in this area?



    J
     
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  2. markson

    markson Well-Known Member

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    You will find that if its a sellers market then the agents don't have to work as hard and can be a bit "slack".

    If a property is listed as "best offer" I will normally ask the agent what price range is the vendor looking for? At the end of the day you can only pay what you think the property is worth. Run the figures. Make an offer and move on.
     
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  3. David Kaity

    David Kaity Member

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    Jasmine, a real estate agent is legally obligated to present offers to the vendor. Of course like with many of the other rules in the industry, this one is broken all too frequently by many agents.

    To increase your chances of at least engaging the agent in negotiations, submit your offer on a signed contract. This will show that you are more serious than most buyers who just put forward verbal or emailed offers.

    I have heard some people even attach a cheque for a deposit to show how serious they are.
     
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  4. Marg4000

    Marg4000 Well-Known Member

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    If a property is being marketed as "best offer" then obviously you only get one chance, unless none of the offers meet vendor requirements. If you want the property, you cannot assume you will get a chance to negotiate.

    And the RE agent is employed by the vendor, so you cannot be surprised if the sale method favours the vendor!!
    Marg
     
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  5. Jasmine

    Jasmine Well-Known Member

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    The properties I have registered my interest are the ones listed as $500,000 - $570,000. In this case I might offer $555K after walking the lot and kicking the bricks.
     
  6. Jasmine

    Jasmine Well-Known Member

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    Very true, but I see also this as hurting the vendor. I most likely have more money up my sleeve, and if they want to "see" it they should come to the table.
     
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  7. Jasmine

    Jasmine Well-Known Member

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    I like this and will use this one. Thanks!
     
  8. kierank

    kierank Well-Known Member

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    To me, "Best Offer" is just words. I don't really take any notice of them.

    For our latest purchase earlier this year, we submitted multiple "Best Offers", all via email. We even submitted a couple of "Final Offers" via email as well before we finally snagged the property.

    I know the REA works for the vendor but I always reach out to the REA and aim to create an "open, real, friendly and business-like" relationship with the REA, preferably face-to-face (if not possible, by phone and never by email).

    I tell the REA information that I want them to know (and don't tell them stuff that I don't want them to know). I want to get to a place where it is perceived by all to be a win:win:win - a win for the vendor, a win for the REA, and, of course, a win for me. I always remind REAs that I have the money to pay their commission and to give the vendor.

    With the above purchase, the REA even found us a tenant before we signed the Contract or a PM Agreement.
     
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  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Great post!

    I work it much the same way you do mate. Work the REAs and you will be AAAAaaamazed at what can be achieved :)

    Its a complete myth that most REAs work for their client. They may want a good outcome for their client but their interests are always first and foremost imho.
     
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  10. David Kaity

    David Kaity Member

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    Great comments kierank and Leo2413. If you make an effort and reach out to the agent personally and face to face, and establish a real human relationship, then the chances of being taken seriously are far higher.
     
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  11. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Hammer on the nail head there buddy :)
     
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  12. Leo2413

    Leo2413 Well-Known Member Premium Member

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  13. Azazel

    Azazel Well-Known Member

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    This is good advice.
    Too many people begin the process with an adversarial attitude.
     
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  14. Jacque

    Jacque Buyers Agent and Bookworm, Sydney Business Member

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    Hi @Jasmine it can be frustrating can't it? The RE landscape has changed, especially in Melb and Sydney in the last 4-5 years and if you've been out of the game it can be a bit of a shock dealing with selling agents who don't appear to woo or win your confidence. After all, the attitude of many is "there's plenty of fish in the sea" but you will prevail.

    Agree with other's comments in that building personal rapport and engaging in face to face communication is also helpful in establishing confidence and relationships with agents.

    Firstly, however, you need to know your market. I can't speak for Melb (as I'm in Sydney) but there could easily be under-quoting going on :D so you do need to know your values and comparable sales, and potentially taking the "guides" with a grain of salt. Knowing what a property is REALLY worth is what counts and your research here is what's needed to establish this.

    Secondly, once you've established true value, know more about the property/vendor motivation/situation and are ready to submit an offer ask the agent how he/she's planning to sell the property- what strategy are they going to use?
    What's going to happen once your offer is submitted?
    What's the timeline?
    Will the vendor definitely sell prior to auction and, if so, on what terms?
    Are they asking for 'best and final offers' or will there be a series of rounds? (becoming more common with some of the agents we negotiate with here in Sydney)
    How long will they give you to exchange?
    Will exchange need to be unconditional or will they accept a cool-off? (not sure if this is pertinent in VIC but it definitely is here in Sydney)

    Good luck!
     
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  15. JessL

    JessL Member

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    I know this is an old post, i've been trawling through this section trying to find information on this instead of posting a new thread - just wondering if you wouldn't mind sharing what sort of information you want to share with a REA and what you want to keep to yourself?

    We are in the early stages of looking for a IP ; we have been doing research on realestate/domain websites but i'm wondering whether it is worth chatting to a few agents to see whether - i'm just not sure how strategic I need to be about it... or if I should just be honest?

    - Do I tell them we're looking for an IP and that we already have a PPOR
    - Do I tell them (honestly) the maximum $$ we are willing to pay or should I underquote in the same way they do ??
    - What else would be useful to disclose or important to keep quiet ?
    Thanks in advance :)
     
  16. kierank

    kierank Well-Known Member

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    For me, the starting point is to tell the REA nothing and to ask them everything. That is, information about me weakens my position; information about the vendor strengthens my position.

    I only disclose information if I believe it will strengthen my position. In negotiations, I always aim to be/always believe I am in the stronger negotiating position. I am trying to get the property for the lowest price, with terms and conditions that are acceptable to me.

    To me, a property purchase is a business transaction. So, I am always strategic. Everything a REA tells me, I take with a fair degree of skepticism (until I can validate the information); I assume that REA does the same with me.

    I always tell them I am looking for a IP; that way they know it is a numbers game, not an emotional decision as with buying a PPOR. I also make sure that they see that I have a requirements list of my IP to reinforce that I am doing a formal analysis.

    I never tell them I own a PPOR. To me, that has nothing to do with this purchase; if anything, it weakens my position. If the REA asks me where I live, I reply 'Brisbane', in a rather annoyed tone.

    I never disclose my budget (as I believe it weakens my position). If asked, I do tell them that price is important but value is more important. That is, the more items the property meets/satisfies on my requirements list (that is why I make sure that the REA sees I have such a list) and the lower the price, the more valuable the property is to me.

    I only disclose attributes about the IP I am seeking such as preferred land size, no of beds/bath/car, distance to railway station, ... as these help that REA in my quest.

    I don't disclose anything that weakens my position. For example, I attend inspections in torn shorts, T-shirt, thongs, ... I am sure REAs think I can't afford the property so they leave me to my own devices to inspect the property. That's the way I like it.

    A couple of years ago, I inspected a property for my son dressed as above and I borrowed his 1986 clapped-out Corona. The REA rocked up in Merc and his dark blue (powerful) suit. He looked down on me and I am sure he thought I was a waste of time. Without going through the whole story, we ended up getting that property for $40K below bank valuation.

    At the end of the day, you have to do what you are comfortable with - you have to live with yourself :) :).
     
    Last edited: 14th Nov, 2016
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  17. Big Will

    Big Will Well-Known Member

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    Sounds like a good deal but with the 40k what sort of percentage are we talking about?

    1%, 5%, 10% or 20%+?
     
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  18. kierank

    kierank Well-Known Member

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    About 8%.

    It was around $500K purchase
    OR
    more than 5,000 times the value of the Corona :).
     
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  19. Big Will

    Big Will Well-Known Member

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    Sounds like a good deal!

    Does your son still drive the Corona by any chance?
     
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  20. kierank

    kierank Well-Known Member

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    No. Unfortunately, he sold it.

    I just realised the Corona would be 30 years old this year. I got a feeling it would now be classified as an antique. OMG, it is probably worth more than the property he bought.

    That is the problem with kids. They never make the right decisions :) :).
     
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