Estate agent encouraged higher bid - ethical?

steveyme

So on Saturday, I put down my first ever bid for a house. It had a guide price of £220,000 and seeing as I really wanted it, I put in an offer of £222,000 over the phone at the estate agent after telling him it was subject to my mortgage application today. So today as I'm actually driving to that meeting, the estate agent phones me and says good news, I'm one of the two highest bidders, and if I would like to reconsider my offer the phonelines close at 5pm and someone will win. I tried to eke information - was I close or far away? No, no he replied, that would make it a Dutch auction, and unethical. I was still encouraged greatly by this news and just before 5pm this evening, I upped my offer to £230,000; quite a jump for me. By 6:30pm he phoned and said I had been unsuccessful. I'm obviously disappointed but also puzzled; is it normal for this sort of encouragement of higher bidding? It seems to me this partial reveal of bidding was in itself unethical and maybe I was naive to up my bid given no concrete information on which to work. Maybe he phoned round every single bidder and said the same. What does everyone think?

sinizterguy

Sounds odd.

I personally would have made my final offer and let things fall where they do.

But, if you really want that particular house, you might have to play along.

2 times when purchasing property, they claimed that there was this other cash buyer waiting to snap it up should I not offer higher or complete quicker, etc.

I just told them then sell it to that person .... Guess the other person was either imaginary or didn't want it that much.

That's just my experience and does not mean that the same could be happening to you.

oldbaldman

There are plenty of imaginary buyers out there.

You play along and pay up, or call their bluff.

obm

PS: not ethical at all, but all part of the game.

Hedgehog99

I've ended up bidding against fictional buyers, I'm sure. If an estate agent treats me like that, it puts me off dealing with that agent again. Like sinizterguy says, unless you really really want that house in particular, let the other bidder have it. The house is only worth to you what you are prepared to pay for it. When first house-hunting in a new area, there may be the shock of getting your head round prices for what you get for your money (how much....?!), but you learn that quickly, so don't pay over the odds. That extra £8k could do a lot of improvements once you own the place instead of lining the pockets of your seller & their EA!

DaveTheMus

You were unsuccessful though...so it seems the other buyer did exist...

steveyme

DaveTheMus wrote: »

You were unsuccessful though...so it seems the other buyer did exist...

Presumably he was real, but if the estate agent called us both with the same message, it didn't actually benefit us, in fact we both ended up (one might assume) potentially paying more. Thinking about it, the only logical way in which one could imagine the call was helpful would be knowing that the other interested party had definitely not been contacted. If everyone bidding was called and I then upped the bid, I actually stood 0% more chance of winning and 100% chance of paying more. I guess the bottom line is you pay what you think it's worth and no more. Just wasn't sure if this kind of shenanigans was commonplace, rare or even allowed.

eddddy

steveyme wrote: »

... is it normal for this sort of encouragement of higher bidding? ...

Yep - that's what people pay estate agents for.



Looking at things from a seller's perspective, it sounds like the EA has managed to get the offers up from around £220k to £230k - which more than pays their 1% to 1.5% fee.

DaveTheMus

steveyme wrote: »

Presumably he was real, but if the estate agent called us both with the same message, it didn't actually benefit us, in fact we both ended up (one might assume) potentially paying more. Thinking about it, the only logical way in which one could imagine the call was helpful would be knowing that the other interested party had definitely not been contacted. If everyone was bidding was called and I then upped the bid, I actually stood 0% more more chance of winning and 100% chance of paying more. I guess the bottom line is you pay what you think it's worth and no more. Just wasn't sure if this kind of shenanigans was commonplace, rare or even allowed.

You might have been lucky and the other buyer may not have budged... It's just luck I guess....it'll be Zoopla what it sold for when it does sell, might be worth sticking on the calendar to check in a few months time.

stator

steveyme wrote: »

So on Saturday, I put down my first ever bid for a house. It had a guide price of £220,000 and seeing as I really wanted it, I put in an offer of £222,000 over the phone at the estate agent after telling him it was subject to my mortgage application today. So today as I'm actually driving to that meeting, the estate agent phones me and says good news, I'm one of the two highest bidders, and if I would like to reconsider my offer the phonelines close at 5pm and someone will win. I tried to eke information - was I close or far away? No, no he replied, that would make it a Dutch auction, and unethical. I was still encouraged greatly by this news and just before 5pm this evening, I upped my offer to £230,000; quite a jump for me. By 6:30pm he phoned and said I had been unsuccessful. I'm obviously disappointed but also puzzled; is it normal for this sort of encouragement of higher bidding? It seems to me this partial reveal of bidding was in itself unethical and maybe I was naive to up my bid given no concrete information on which to work. Maybe he phoned round every single bidder and said the same. What does everyone think?

It would be unethical if the other buyer didn't exist, but it sounds like they did.
In your future endeavours remember that the estate agent works for the seller and will be paid by the seller. They will not act in your best interests and in many cases will act against your best interests by trying to drive the price higher.

Voyager2002

steveyme wrote: »

Presumably he was real, but if the estate agent called us both with the same message, it didn't actually benefit us, in fact we both ended up (one might assume) potentially paying more. Thinking about it, the only logical way in which one could imagine the call was helpful would be knowing that the other interested party had definitely not been contacted. If everyone bidding was called and I then upped the bid, I actually stood 0% more chance of winning and 100% chance of paying more. I guess the bottom line is you pay what you think it's worth and no more. Just wasn't sure if this kind of shenanigans was commonplace, rare or even allowed.

Remember the EA is employed by the vendor: the EA's job is to get the highest price possible.

hcb42

I had two identical offers (above asking) on a house once (v desirable location, houses rarely available), and it went to closing date/time.....best foot forward and all that.

One immediately pulled out as he didn't want to be in a bidding war, and the other upped his offer £5K - did pay my fees - and as the seller I was petrified during the process! It does happen and you pay what it is worth to you, I doubt the successful buyer regrets it for one second now

It's no different to buying cars really. Set your max, and be prepared for disappointment, or take a risk that it is the right house long term and offer what you can afford/think it is worth