Compete With Another Buyer?
Q: Another question for the group-- I'm looking at a different property, which is in good condition and priced near the market value. The market is well suited to the sellers right now. The agent told me it has an offer on it, which has not been accepted yet. If I make an offer, will I be given any idea what the other offer was? It seems logical to me, that if I was the seller, and I had two bids, I would invite the lower bidder to raise-- and if he does... invite the other bidder to compete, until someone drops out. But I suppose the other way of looking at it, is that by keeping all the bidders in the dark, only "serious offers" will appear, and save time all around. What do people actually do in practice?
A: First, real estate agents are not working for you. They are not working for the seller of the house either. They are working for themselves. Their one and only goal is to make a sale. Preferably at as high a dollar value as possible since their commission is based on the selling price of the house. In this fashion they are much like used car dealers and pretty much you need to view them the same way. In no way can you blindly trust anything they say or do. Anything you say to them will be used against you to try to get you to first buy, and then to buy at a much higher price. Nothing they say to you is legally binding. Only what is on the papers. There are two main methods of dealing with the whole issue. 1. Hire someone to be your agent (typically called a 'buyers agent') at a flat rate, or with an incentive where you pay them more money for every thousand they talk the price down. You want someone who has played the game for a while and knows all the just-this-side-of legal things real estate agents can do and say. You really want to be careful that this person is not associated with the selling agent or is a selling agent themselves. Conflict of interest here can wind up costing you big time. 2. Research the property well. Get solid comps and appraisals and inspections, etc. And then determine, by yourself (not with the 'help' of the selling agent) what is a fair price for the property. Then offer somewhat less than this amount with your own internal reservation that you may negotiate up to that fair amount but no higher. Then stick to your guns. Don't let emotional arguments and bidding wars or anything else make you spend more than what the property is really worth. In either method you will probably need a real estate lawyer to help you wade through the documents and insure everything is right. Remember there are no 'standard' real estate contracts, no matter the amount of boilerplate they use and unless you are a real estate lawyer yourself you are unlikely to be able to spot trouble here. The main points are that real estate agents are in it to make a sale. They aren't your best friend. They aren't doing it out of the kindness of their hearts. They aren't helping you out. No matter how nice and charming they may appear they make their money by selling the property. The other main point is that it is your money. The decisions are yours and it is your judgment, not theirs, that you need to rely on. If you get bad vibes, the feeling something's not right, indications of something wrong, if the prices go up too much, whatever, it is better to back out than to make a huge mistake you'll spend a lifetime paying off. Try to inject some rationality to your decision making process. Many people get caught up in the romance and emotions of buying a house or property that their reason is completely left behind. Remember, the agents you are dealing with are professionals at getting people to sign on the dotted line. You might not be equipped with the knowledge or training to deal with them any more than you would be to argue your own case in court.