Why don't real estate agents tell you the highest offer price?

We were recently looking at a property which was going to auction priced at 800-850k Then the real estate agent says they have received an offer and will be sold today unless a better offer is made

I call the agent and he won't tell me the current offer. He says "its a strong offer between 900k and 1m". To be honest I think this is a bad negotiation tactic by the real estate.

If he told us the offer was exactly 930k, we would have offered 940k, if he told us the offer was 970k we would have probably offered 980k. But since he hasn't told us the price we decided to not make any offer. There is only 8 hours for us to make an offer and I can't be bothered making random offers to try and beat this hidden price. Am I odd for behaving this way? It seems pointless and unfair to us to make offers to try and beat some unknown price. I feel like the vendor would get a better price if the offer price is public as in an auction.

Does anyone know any strategies for these types of scenarios? I was considering calling him and saying "is it worth signing a contract with offer price X" and based on his response I will know if it's better than the current offer.

 

The thing is yours isn't the only type of reaction.
What the agent is betting on is the buyer really wanting the property and afraid of missing out, and just offering 1m. Or the highest they are willing to pay, as opposed to 'just higher than the existing offer'.

This is the idea of auctions too. Sure it's just the 'bid higher than the second highest bid', but when buyers get emotional......
Only needs one.

 

It's their interest and vendor's interest to get you bid up, bid against yourself and just keep bidding. This might put you off but others who really want it, will probably pay more than you wish anyway. So yes, they only need one bid to take the house off the market.

 

It's less transparent than auction, so a bit more frustrating, but if you can bear with that, it could get rid of some of your competition too. If it's a property you are interested, just give them a number (not your max) to show your interest and not to regret if it's sold for that amount or less. Based on their reaction, you'll know if it's too low or not.

 

This is probably the reason.

You are prepared to pay $980K, but if you know the offer is $930K, you will only offer $940K.

If you really want the property, then offer what you are prepared to pay. If you don’t care one way or the other, walk away.

 

Different agents will use different strategies to get buyers to make an offer/increase their offer. Often buyers will prefer the transparency of an auction, so you can see exactly what other people are prepared to pay but there are some agents who believe that an auction doesn't get the best price. e.g. If the agent was having an auction and the best offer was $930k, you might end up buying it for $940k. By negotiating privately with individual buyers, they might be able to get you to pay significantly more than this. Ultimately it is likely to depend on the individual property, the skill of the agent and the market at the time.

If you really want the property, you don't have much choice but to play their game. Will you be annoyed if the property sells for a price you would have been willing to pay, but miss out because you were scared of paying too much?

Do you have a friend who can enquire and discuss the possibility of an offer of X? This may be a way for you to obtain information, without showing your hand but the agent will probably realise that it is not genuine if your friend hasn't even inspected the property.

 

This. Run your own race,pay what you are happy to pay plus maybe 20k more, that way you wont be dissapointed if you miss out. What you offer should be relative to other properties you are interested in, what others are prepared to pay is irrelevant. There is more to an offer than price, terms can trump best price. Often the highest price doesnt end with a settlement and the property will be back on the market in a month or two, the seller is ****** and just wants/needs a sale and some dosh. You could put in a high offer with conditions that will give you an out, or a lower price with settlement more attractive to vendor. Make a good offer with take it or leave . I have found the agent will ring a few hours before the deadline and ask for a final offer that is when you decide if you will add another 20k. Often I refuse, the sale falls through and it is offered to me again, then you can choose if you reduce your offer. I have bought a lot of properties below previously accepted offers.

 

"Why don't real estate agents tell you the highest offer price?"

One could equally ask:
"Why don't you present your highest offer price?"

Same reason.

 

Its a bad negotiation tactic because….

you wont offer your best price? Then you dont get the property.

maybe someone else will. Maybe nobody will. But at least understand why they are using that tactic.

 

If you like the property I don't understand why this would deter you from making an offer? You said if someone offered $970 you would offer $980, so why not just offer $980 now?

Agents try all kinds of strategies, this one is common, usually paired with the "best and final" opportunity for all parties to put forward their best offer. It is basically a tender process. Ignore the games and offer a price you are happy with, if it doesn't get accepted walk away.

 

I would never make an offer before auction, you could possibly end up paying a lot more than the property is worth - do your homework, look at price of comparable homes in the area, decide how much you would be willing to pay, organise your finances and go bid at the auction ... if you miss out there is always another property ...
BTW the agent has no intention of selling the property before the auction, he is feeding the would be buyers offers to the vendor so a selling price can be set ...

 

In QLD this is normal process when there are multiple potential buyers EXCEPT the difference here is you only get to put forward 1 'best and final' offer in a 'multiple offer' scenario.
The agent legally cannot tell you any other potential buyers offers either.
This happened to me when I was buying and I just offered what I was willing to pay for the property and I won.
Definitely works in the sellers favour as I was tempted to offer an extra $20K 'just to get it' but I'm glad I stuck to my guns and got it anyway.
Good agents know all the tricks to get the highest offer possible for their clients

 

What would you do if you were the agent?
Tell the buyer it was 930 and get 940 from another?
Or tell them a range and maybe get 950 or 990 or 1.1 or whatever.

Remember also, the number on the page is not the only variable in the deal.

 

I wouldn't. He will then use your offer to get others up and/or use your offer to help the sellers position in any way possible. You will just be giving them more ammo.

In a strong market, buyers can do very, very little to get the upper hand. You need to know what it's worth to you, don't reveal anything to agent via auction, and don't bid over your maximum number at auction.

Get ready for attending many auctions.

 

Yes - a competent and effective real estate agent would be able to get an interested and serious buyer to bid against themselves to hit their max to get the best price.

 

This! If you want it, and you are prepared to pay $980k, just go with that.

 

The multi-offer system in QLD can be very challenging when buying in the current market conditions. I had an agent joke to me that buying property in QLD is like playing the ""price is right".

I would check out everything advertised in my price range. Then have a coffee Saturday arvo and submit offers for every single property I was happy to live in. Sometimes I had 4-5 offers going at the same time. In the end, I knew the price of every single property that had sold in the last 6 -9 months.

I lost a high number of offers due to conditions. I had a high number of agents try and suggest I should remove the financial conditions as I was the higher offer because the buyer is going to take a lower price and it sold for a lower price.

As others have said, value the property at what you are comfortable paying. Put in your best offer and start to check out the next property. Check with the agent if you can revise your offer and if you can move it 5k higher.

I found networking and chatting and being straight up with agents often got a price range or additional information.

 

Call the agent and let them know you're serious. Ask the agent if the "offer" was a written or verbal. A verbal offer means nothing. If the agent says they have a written offer then ask to see the particulars page (they can white out the buyers name/address).

 

Just offer the max value your willing to pay for it. $20k-$30k here or there wont make no difference over 10+ years.

That is a mistake I made a long long time ago. Umming and arrgging over $20-$30k. Thats a drop in the ocean if I look back in hindsight.