Estate agent asking for bids in increments of £5,000.... why?

ailskearney

Good evening, 
I’m new to the bidding aspect of house buying. Our home was a buy to build turn key. We viewed at house last week and offered asking price. This morning the EA rang to inform me that another viewing had taken place and they had increased the offer by £5,000. She said at this stage they were only accepting offers in increments of £5,000. So at this stage we upped the offer by this. What is the reason of the increments? Are EAs allowed to turn down increases of 2-3,000? Based in N.I. 

Thanks 

macman

The increments are determined by the vendor, not by the EA. The purpose is to get a higher price where there is more than one potential buyer.

Grumpy_chap

It makes sense.  Another £5k makes a meaningful increment.  It avoids people making offers at current price plus £1, which would take forever getting to a final outcome.

pramsay13

I imagine it is because they like nice round numbers. 
If you make an offer the estate agent is obliged to pass it on, although the sellers may already have given their views on it.

eddddy

It's probably to speed things up by discouraging people from increasing their offers by, say, £500 or £1,000 increments - which would mean the EA has to keep phoning each bidder to get another £500 or £1,000 added to their offer.

But as others have said, in reality, you can offer whatever amount you choose.

theartfullodger

Increase your next offer by £5,001.  Or, write to vendor offering whatever you wish with such other matters that make your offer attractive: e.g. No chain, no mortgage needed, cash buyer, flexible on timescale...

The "Best" price is not always the highest.

princeofpounds

If you offer less than £5k increment they are still obliged to put it forward and I bet it gets considered. But they'll probably also assume that's your max offer if you can't stretch.

As others have said, this is being done to prevent a back-and-forth auction with non-meaningful increments, which runs the risk of alienating one of the buyers and wasting time.

blue_max_3

It will give a clear winner (by 5k presumably). You will effectively know you have overpaid by 5k.

foxy-stoat

blue_max_3 said:

It will give a clear winner (by 5k presumably). You will effectively know you have overpaid by 5k.

Nope, if the OP increases by another £5K then they would of overpaid by £10K.  I would walk away and find another place, unless the opening offer was too cheap.

Jumblebumble

blue_max_3 said:

It will give a clear winner (by 5k presumably). You will effectively know you have overpaid by 5k.

The OP will know nothing of the sort
How would they know if someone else had offered £4500 ?
PS the vendor is not going to turn down an offer of £4500 unless he is an imbecile

blue_max_3

Jumblebumble said:

The OP will know nothing of the sort
How would they know if someone else had offered £4500 ?
PS the vendor is not going to turn down an offer of £4500 unless he is an imbecile

Well, if the OP pays 5k more, the offer of 4,5k is effectively rejected. You might ask, wouldn't they just go to the full 5k if rejected. But anyway, it seems likely the strategy may encourage bigger jumps in the offers made. Whether that results in a sale is another matter altogether.