In our area, Newnan Georgia, we have a lot of value priced properties that attract many buyers. In many of these cases, the highest bid is either accepted on an electronic Internet system, or the listing agent calls for “highest and best bids: by a certain deadline.
When I am representing a client and they ask me how much they should bid in these scenarios, I always reply with this question:
“Is it more important for you to get a bargain or this house?”
And it’s a fair question. It is possible to offer too much for a house and that might diminish the value attribute. But ff they love the house, and can see themselves spending many happy year there, it could have intrinsic value way beyond mere dollars and cents.
The bottom line is always the same. I advise that they bid the most that they are willing to pay for the property under any circumstance, rather than trying to outwit the other offerees.
And if our offer is accepted, that’s great. And if we lose the house, we’ll go on to the next property.
And we’ll do it until we get just the right house at the right price!
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A house is only worth what a buyer will pay for it.
Richard, That is a great approach to the bid process.
Good advice. In this present market most prices could be considered a bargain!
Richard,
I've seen many cash buyers lose a home because they feel cash FAR outweighs a higher offer with a mortgage contingency. Sellers focus on their net unless $ amounts are very close - especially on "highest and best" electronic offers.
Mel...
But sometimes thety can let passion cloud common sense. Thanks my friend.
Wanda...
I really need to know what they are thinking ... that helps a lot. THX
Gary...
I think you have a good point there. THX
Perfect advice Richard! Passion, like jealousy, has a way of clouding judgements.
Hi, Richard:
I have had to ask that question, too, of my buyers: do you want the home of your dreams, or the deal of the century? That always makes them stop and think. Their answer tells me that I need to do some more educating on the market.
Cheers,
Robin
Great advice Richard! xxoo
Hi Richard. Your post was late this morning!
Highest and best is always a tough situation...
Ken
Richard,
Yes. I sometimes tell folks who seem to be in love with a home that we are in a "No Crying Zone."
Meaning if they offer very low, they are shopping the deal as investors, not buying a home, and as investors, they cannot cry if they fail.
Richard...Good advice...especially as this relates to buying short sales or reduced bargains...Cherise
Richard that is great advice, I'm afraid to many folks focus on the deal rather than the property. If it's not your cup of tea don't bid, If it's your dream house than step up without regards to the silly feeling of "you have to negotiate".
Richard,
This is so true. If buyers LOVE a home and it would totally CRUSH them not to get the home, then they've got to put their big boy and big girl panties on and put together the strongest offer they can.
great advice as always Richard. It's such a fine line!
Richard - Excellent point. Many properties have unique features such as location and layout. My take is if you really like the house - buy it.
Sometimes Richard if there are few or no other bids you can bid under what your max bid will be but you do run the risk of losing out too. That's where you have to judge the supply and demand factors on that particular property. Some houses you can get for less than your max bid. But your advice is dead right on, and it is up to the bidder to make up their mind what THEY want to do. It is their money. But you are pointing out the risks of going in low.
Richard,
I do like the question that you ask your buyers. I have heard many variations but do like this one the best.
Richard: The answer to the great deal vs. get the property tends to change as buyers face more and more multiple offer situations and lose. I had a buyer today that wanted a great deal every time we wrote an offer previously, but today, he was "all-in." I think he's ready to get the house.
Hi Richard, I share your feelings on this. I hope the day comes soon when people will start to think of houses as homes and not just an investment.
I use the same mindset when selling. I basically ask them do you really want to move or just want to see how much money you can make.
Richard, what a great way to get your buyers focused. In the end, the house is worth what they are willing to pay and that is a relfection of how much they want this one over the others.
Richard~ Good advice. I always tell my clients that if it is meant to be, it will happen.
Very well put Richard. As buyers, are they willing to settle for a home that doesn't suit them well for that bargain price, or would they prefer the dream home at a fair price.
That sounds like a great question to me. All you can do tell them to take their biggest swing if they really want to house, and from there fate takes over.