Best Offers - How high to go?

Ramouth

lookstraightahead said:

grumiofoundation said:

lookstraightahead said:

Gavin83 said:

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! 

Were I your vendor when the EA rung me to
tell me of the down valuation I’d be telling them to stop the sale and re-market the property, even if you then honoured your original offer. I wouldn’t accept being messed around and I’d rather sell to someone who was honest from the start.

And yes, I’d do this even if it meant losing a house myself. However I am admittedly quite stubborn but I am at least a man of my word.

But also look at vendor behaviour (or EA behaviour). There are problems from both and the vendor's approach often gives way to this type of response. 

It's awful all round. Why can't vendors accept fair offers, from serious people, rather than bleeding people dry, and buyers be honest about their financial situations? 

How do you define a 'fair' offer though? 

If you listed a property for 200k, which you thought was fair, and someone offered 205k would you only ask them to pay 200k?

Or would you insist of selling to them for 180k as 10% under is a fair offer to you? (ok yes I am playing silly beggars with that)
But does somewhat show the absurdity of expecting every house buying transaction to be 'equal' unless of course you can force vendors to list at a fair price (however defined)  and prevent me (as a buyer) offering above said fair price.

Agree a price with the first person who puts in an offer and forget the infighting. 

Can you imagine how difficult it would be to get a viewing if that was the system?! 

grumiofoundation

lookstraightahead said:

grumiofoundation said:

lookstraightahead said:

Gavin83 said:

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! 

Were I your vendor when the EA rung me to
tell me of the down valuation I’d be telling them to stop the sale and re-market the property, even if you then honoured your original offer. I wouldn’t accept being messed around and I’d rather sell to someone who was honest from the start.

And yes, I’d do this even if it meant losing a house myself. However I am admittedly quite stubborn but I am at least a man of my word.

But also look at vendor behaviour (or EA behaviour). There are problems from both and the vendor's approach often gives way to this type of response. 

It's awful all round. Why can't vendors accept fair offers, from serious people, rather than bleeding people dry, and buyers be honest about their financial situations? 

How do you define a 'fair' offer though? 

If you listed a property for 200k, which you thought was fair, and someone offered 205k would you only ask them to pay 200k?

Or would you insist of selling to them for 180k as 10% under is a fair offer to you? (ok yes I am playing silly beggars with that)
But does somewhat show the absurdity of expecting every house buying transaction to be 'equal' unless of course you can force vendors to list at a fair price (however defined)  and prevent me (as a buyer) offering above said fair price.

Agree a price with the first person who puts in an offer and forget the infighting. 

And if you can’t agree? Or do you mean a seller should be duty bound (whether morally or legally) to sell to the first person who offers?  

But you haven’t answered - if you were selling and someone offered over the ‘fair’ value you had listed for would you only accept the ‘fair’ value. 

thriftytracey

Since April prices in our desired area have gone up about £25k on the properties we are seeking.  So now, we can no longer offer a best and final just the asking price.

Properties that need updating are cheaper but you have to factor the costs in when thinking about best and final.  

lookstraightahead

grumiofoundation said:

lookstraightahead said:

grumiofoundation said:

lookstraightahead said:

Gavin83 said:

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! 

Were I your vendor when the EA rung me to
tell me of the down valuation I’d be telling them to stop the sale and re-market the property, even if you then honoured your original offer. I wouldn’t accept being messed around and I’d rather sell to someone who was honest from the start.

And yes, I’d do this even if it meant losing a house myself. However I am admittedly quite stubborn but I am at least a man of my word.

But also look at vendor behaviour (or EA behaviour). There are problems from both and the vendor's approach often gives way to this type of response. 

It's awful all round. Why can't vendors accept fair offers, from serious people, rather than bleeding people dry, and buyers be honest about their financial situations? 

How do you define a 'fair' offer though? 

If you listed a property for 200k, which you thought was fair, and someone offered 205k would you only ask them to pay 200k?

Or would you insist of selling to them for 180k as 10% under is a fair offer to you? (ok yes I am playing silly beggars with that)
But does somewhat show the absurdity of expecting every house buying transaction to be 'equal' unless of course you can force vendors to list at a fair price (however defined)  and prevent me (as a buyer) offering above said fair price.

Agree a price with the first person who puts in an offer and forget the infighting. 

And if you can’t agree? Or do you mean a seller should be duty bound (whether morally or legally) to sell to the first person who offers?  

But you haven’t answered - if you were selling and someone offered over the ‘fair’ value you had listed for would you only accept the ‘fair’ value. 

I've never accepted an offer above asking price. In fact, I don't think I've ever sold for asking price. 

grumiofoundation

lookstraightahead said:

grumiofoundation said:

lookstraightahead said:

grumiofoundation said:

lookstraightahead said:

Gavin83 said:

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! 

Were I your vendor when the EA rung me to
tell me of the down valuation I’d be telling them to stop the sale and re-market the property, even if you then honoured your original offer. I wouldn’t accept being messed around and I’d rather sell to someone who was honest from the start.

And yes, I’d do this even if it meant losing a house myself. However I am admittedly quite stubborn but I am at least a man of my word.

But also look at vendor behaviour (or EA behaviour). There are problems from both and the vendor's approach often gives way to this type of response. 

It's awful all round. Why can't vendors accept fair offers, from serious people, rather than bleeding people dry, and buyers be honest about their financial situations? 

How do you define a 'fair' offer though? 

If you listed a property for 200k, which you thought was fair, and someone offered 205k would you only ask them to pay 200k?

Or would you insist of selling to them for 180k as 10% under is a fair offer to you? (ok yes I am playing silly beggars with that)
But does somewhat show the absurdity of expecting every house buying transaction to be 'equal' unless of course you can force vendors to list at a fair price (however defined)  and prevent me (as a buyer) offering above said fair price.

Agree a price with the first person who puts in an offer and forget the infighting. 

And if you can’t agree? Or do you mean a seller should be duty bound (whether morally or legally) to sell to the first person who offers?  

But you haven’t answered - if you were selling and someone offered over the ‘fair’ value you had listed for would you only accept the ‘fair’ value. 

I've never accepted an offer above asking price. In fact, I don't think I've ever sold for asking price. 

Some might then say that you should stop playing silly games with buyers by overpricing your properties and list them at a fair price ! 

Anyway is clear by now that you aren’t going to even attempt to explain how your suggested ‘fair’ prices that vendors should accept are arrived at or the practicalities of how a vendor is supposed to agree a fair price with the buyer who makes the first offer. (Also quiet on answering whether you would turn down the free cash from a buyer offering over ‘fair’ price). 

jenni_fer

@BV88 we would never offer more than we were willing to pay, I think it's morally wrong to try and do so.

Our buyers tried this, our response to 'the mortgage valuation values it at £10k lower than we offered, drop the price please' was 'that's nice, it's still more than we valued it at though,  so you are better off than you thought'

jenni_fer

Really interesting debate, thank you for all your views.

To update a little...an unexpected twist meant we saw a far better property that is 'coming soon' but made us realise the property in question here was too much of a compromise, so we stuck at asking price with no real push.

Unsurprisingly we didn't win, think the winning bid was £30k+ over asking!

lookstraightahead

jenni_fer said:

Really interesting debate, thank you for all your views.

To update a little...an unexpected twist meant we saw a far better property that is 'coming soon' but made us realise the property in question here was too much of a compromise, so we stuck at asking price with no real push.

Unsurprisingly we didn't win, think the winning bid was £30k+ over asking!

Good for you - good luck with this one - all things happen for a reason.