Best Offers - How high to go?

hoping24

We’ve been in one of these before- 6 viewings in one day and apparently had 6 offers. All had to put in our best offer after ours was already at asking price. We offered slightly more than we would have if only offer but not more than we thought it was worth. We didn’t get into odd £1000. 

Apparently we wouldve been second choice but the EA never helps- they won’t say how much others are offering so ends up difference of money & who knows if the winning bidders can really afford it.
that means it could always break and come back on the market. 

arrows123

I went through best and final three times and missed out all three times. I hate it, I actually would have preferred a bidding war, it’s more transparent. Went in to view the fourth property top end of my budget expecting it to go for £20k over asking like all the others. Told the estate agent I was sick of the process of best and final and wouldn’t be getting involved if that happened again. They actually gave me advice about holding off a few days before offering and suggested a second viewing and gave me info that it didn’t look like it was going to sell in 24hrs like all the others. 

I went in with offer under asking, sellers came back saying slightly too low but said what they would accept which met me half way. This is actually my favourite house out of all of them. 

In the last 8 weeks there has been nothing else come on that I would have even viewed so I’m glad I went to top of my budget. 

Newnoel

Round my way, South West Surrey / Sussex borders, the market is really busy. One of the (soon to be ex) neighbours put their house on the market at £1.8m, and it sold within the week for £2.2m. 

The point for the OP is that there is little point in the current market offer £5k or £10k over asking, You need to be offering at least 10% over asking to win the deal.

london21

Offer what you think it is worth and you can afford.

Those highest bids can easily turn to a bidding war.

The EA sometimes purposely list at a low price to get lots of interests.

Read the terms and conditions if there are any others fees payable. 

arrows123

Just to add to my previous post, one of the ones I lost out on by literally 5 mins, the sellers had set a deadline for offers of 5.30pm.

Was told by the agent, they aren’t greedy etc etc. My offer was highest at 5.25pm of £291k then someone came in, in the last five mins and bid £307k and sellers accepted it. Ten days ago I got a call from the agents.. it had fallen through and would I still be interested. I said no and it went back on the market for £10K more than the original asking price and is showing sstc again. 

Even if you don’t win at best and final things can and do fall through. 

Thrugelmir

lookstraightahead said:

Greymug said:

jenni_fer said:

lookstraightahead said:

I would offer nothing over asking price. I wouldn't do it in a shop, or buying a car, or paying fir a holiday, and I won't do it on a house. 

it's all a game.

Sadly, in the current climate round here, not playing the game = never moving.

Exactly. All these people who are just suggesting to walk away/not play the game/stick to the original offer they don't know what they're talking about. They are people who I suspect either bought a house ages ago or bough a house in a less desirable area where bidding wars don't normally happen.

The area I live in and also the surrounding areas are desirable and ALL the people I know, both sellers and buyers, had to go through the last and final offers system.

Don't worry about overpaying, if it's your forever home it won't matter and if you sell it you'll get it back. Happened to me: I paid 7% over home report valuation when I bought, but when I sold I got 13% over the new home report valuation.

Bidding wars are a very recent phenomenon and everyone has a choice as to whether they really want to be part of something that will either stay, or more likely disappear.

There's nothing new in having two or more interested parties in a property........... 

In the boom years of the early 00's there was a property near Marlborough that was listed on the market for £2.25 million. There were some 53 interested parties. The eventual selling price of the property was £3.75 million.  A property is worth what someone is prepared to pay. Particularly if there's development potential. 

BV88

 We were involved in a few of these blind bidding wars, here is what I learnt taking part and what I would consider the ‘best’ strategy of maximising your chances of getting the property at a reasonable price (although it’s morally questionable).

Firstly, you need to consider how the EA and vendor will view all offers, usually with three primary considerations:

1. How proceedable is the buyer 
2. Price 
3. Other relevant factors important to the vendor, such as flexibility/patience in finding their next place etc.

You need to attack all three in this game and point three requires some digging/probing of the EA.

When making your offer do the following:

- Include proof of your deposit (ideally at a good LTV such as 25% to 40%), this could be proof of the equity in your current property if you have not yet sold
- Include your AIP
- Include the name and contact details of your solicitor 

All the above tells the EA you are a serious and organised buyer and they will paint your offer in a good light.

For the price, and this is the controversial bit, pick a number you think will blow the competition out of the water. However, you will use a safety net of the mortgage valuation. By going very aggressive on your offer you will likely get downvalued. Now, you use this as your window to renegotiate the price, likely splitting the difference between your offer and the valuation. 

It’s high risk as some vendors may walk at this point but if you have offered the highest bid then the EA will likely be explaining to them that any other mortgage buyers will all face the same issue as you. Here you risk losing out to a cash buyer that you beat with your bid but if they exist in the blind bidding war you have to do something to get the upper hand! If the bank comes back without a downvalue then you can sleep easy knowing your offer was right on the money. 

Now you give the EA a call and start digging about the vendor, find out what is important to them, ask about their future move etc. If they haven’t found anywhere say you are willing to wait, give them flexibility etc. It could be something else, granny lives around the corner, they love gardening and so do you, and so on… We love dogs and I can tell you when we sold if there was someone in the bidding war who said their golden retriever couldn’t wait to use the garden it would probably have been worth £5k to us! Residential properties are not just financial assets, they are emotional connections. 

But you have to do the digging with the EA and if you are local use your connections to find out about the sellers.

I didn’t use this strategy in it’s entirety but elements of it, yes it’s not entirely moral but it does stack the odds in your favour in a highly competitive market.

The main thing I learnt in these bidding wars is they are a load of rubbish. You give your BAFO then the EA calls asking if you want to raise your BAFO to beat someone else’s BAFO! Best way to see that off is to deliver a killer blow from the start, but with the intention of renegotiating post a down valuation. 

This is all an art not a science and many will criticise this approach and I’m not saying it’s ‘right’. It is however what I learnt from taking part in 6+ bidding wars from October 2020 to April 2021 in one of the red hot, second home coastal areas (of which I am a local not a second home buyer). 

Best of luck! 

lookstraightahead

BV88 said:

 We were involved in a few of these blind bidding wars, here is what I learnt taking part and what I would consider the ‘best’ strategy of maximising your chances of getting the property at a reasonable price (although it’s morally questionable).

Firstly, you need to consider how the EA and vendor will view all offers, usually with three primary considerations:

1. How proceedable is the buyer 
2. Price 
3. Other relevant factors important to the vendor, such as flexibility/patience in finding their next place etc.

You need to attack all three in this game and point three requires some digging/probing of the EA.

When making your offer do the following:

- Include proof of your deposit (ideally at a good LTV such as 25% to 40%), this could be proof of the equity in your current property if you have not yet sold
- Include your AIP
- Include the name and contact details of your solicitor 

All the above tells the EA you are a serious and organised buyer and they will paint your offer in a good light.

For the price, and this is the controversial bit, pick a number you think will blow the competition out of the water. However, you will use a safety net of the mortgage valuation. By going very aggressive on your offer you will likely get downvalued. Now, you use this as your window to renegotiate the price, likely splitting the difference between your offer and the valuation. 

It’s high risk as some vendors may walk at this point but if you have offered the highest bid then the EA will likely be explaining to them that any other mortgage buyers will all face the same issue as you. Here you risk losing out to a cash buyer that you beat with your bid but if they exist in the blind bidding war you have to do something to get the upper hand! If the bank comes back without a downvalue then you can sleep easy knowing your offer was right on the money. 

Now you give the EA a call and start digging about the vendor, find out what is important to them, ask about their future move etc. If they haven’t found anywhere say you are willing to wait, give them flexibility etc. It could be something else, granny lives around the corner, they love gardening and so do you, and so on… We love dogs and I can tell you when we sold if there was someone in the bidding war who said their golden retriever couldn’t wait to use the garden it would probably have been worth £5k to us! Residential properties are not just financial assets, they are emotional connections. 

But you have to do the digging with the EA and if you are local use your connections to find out about the sellers.

I didn’t use this strategy in it’s entirety but elements of it, yes it’s not entirely moral but it does stack the odds in your favour in a highly competitive market.

The main thing I learnt in these bidding wars is they are a load of rubbish. You give your BAFO then the EA calls asking if you want to raise your BAFO to beat someone else’s BAFO! Best way to see that off is to deliver a killer blow from the start, but with the intention of renegotiating post a down valuation. 

This is all an art not a science and many will criticise this approach and I’m not saying it’s ‘right’. It is however what I learnt from taking part in 6+ bidding wars from October 2020 to April 2021 in one of the red hot, second home coastal areas (of which I am a local not a second home buyer). 

Best of luck! 

This is very interesting and entirely why I call it a game and why I walk away 😂

Tokmon

thriftytracey said:

Here is our experience.

We want to relocate to a desirable area where houses are in short supply.  We had been searching since April and this would be our forever home.  In July we finally viewed a bungalow that ticked quite a few boxes (not all and we have made compromises in our searches) and was in a great location (a probate sale).  We knew it would go to best and final.  I wrote a long letter to the EA offering £15k over the asking price of £350k and emphasising we were in a short chain and did not need a mortgage  The property needed new kitchen and bathrooms (and it really did need them it wasn't just a case of not to our taste).  We did not win and I imagine the successful buyer probably offered £25k over.  

We were gutted and my husband admitted to me today he was still depressed about it.  But you have to draw the line somewhere.  Yes, we wanted the property but not at any price.  However, at the end of the day money wins every time.  There were several beneficiaries and they went for the maximum amount they could get.

Since then there has been nothing - the very few new properties since have been apartments or terraced houses.

I am resigned now to not moving.  We don't want to move to another area.  I will be calling the estate agent tomorrow to advise that although we are still looking in September we have a long holiday booked which we intend to take.  If we lose our buyer so be it.  If we do then I think we will take the house off the market and wait until the market is calmer whenever that will be .....

Why did you write a letter? I wouldn't recommend this because the market these days is so fast moving you need to view a house make an offer and get it accepted asap. There isn't really time to write letters and the EA can just be told all the relevant information over the phone when making the offer.

thriftytracey

Tokmon said:

thriftytracey said:

Here is our experience.

We want to relocate to a desirable area where houses are in short supply.  We had been searching since April and this would be our forever home.  In July we finally viewed a bungalow that ticked quite a few boxes (not all and we have made compromises in our searches) and was in a great location (a probate sale).  We knew it would go to best and final.  I wrote a long letter to the EA offering £15k over the asking price of £350k and emphasising we were in a short chain and did not need a mortgage  The property needed new kitchen and bathrooms (and it really did need them it wasn't just a case of not to our taste).  We did not win and I imagine the successful buyer probably offered £25k over.  

We were gutted and my husband admitted to me today he was still depressed about it.  But you have to draw the line somewhere.  Yes, we wanted the property but not at any price.  However, at the end of the day money wins every time.  There were several beneficiaries and they went for the maximum amount they could get.

Since then there has been nothing - the very few new properties since have been apartments or terraced houses.

I am resigned now to not moving.  We don't want to move to another area.  I will be calling the estate agent tomorrow to advise that although we are still looking in September we have a long holiday booked which we intend to take.  If we lose our buyer so be it.  If we do then I think we will take the house off the market and wait until the market is calmer whenever that will be .....

Why did you write a letter? I wouldn't recommend this because the market these days is so fast moving you need to view a house make an offer and get it accepted asap. There isn't really time to write letters and the EA can just be told all the relevant information over the phone when making the offer.

Well - we were told to submit bids either by email or letter!  We chose letter method because we couldn't get phone signal very well whilst in the location on holiday.

"Further to our recent conversations, you are now aware there has been considerable interest shown in the above property and after consultation with the vendor it has been agreed to request “Best & Final Offers”.

This is to either arrive at our XXXXX Office in a sealed envelope or by email on or before Monday 26th July 2012 by 12 noon. Please mark your envelope/email “ XXXXXXX".

Final offers by email to xxxxxxxxxx or post  Webbers Estate Agents, xxxxxxxxxxxxxxxxxxxxxxxxxxx

Your letter/email should include the following:-

1. Offer Price

2. Full details of your financial situation ie; cash or percentage of mortgage required

3. Is the purchase subject to the sale of another property, if so, please state the current situation and supply details of your estate agent

4. Desired timescale/completion dates.

5. Will the purchase be subject to a survey

 We hope the above information is clear, however, if you have any queries then please do not hesitate to contact us at the xxxxx Office Finally, we would like to thank you for your patience, but hope you will appreciate that in a situation such as this, a sealed offer is the only fair and professional way in which to handle the situation.  Following the offers we will be in discussions with our Vendor and will contact you on as soon as we have a decision.