"Offers Over" selling etiquette

Sine_Nomine

Thanks to everyone who took the time and effort to reply to me.

My question was simply around the "difference" of approach the more conventional 'asking price' model and the 'offers over' model. 

My experience of buying has been with the asking price method, and thought that it was a given that one always responded to an offer by saying whether it is highest or not.

To those who said you've got offers over so just take one - my objective is to sell my asset for what it is really worth, not to just screw the bidders to pay over the odds. 

As I think my OP made clear, it isn't really clear what the asset is worth, hence the approach taken.  The property is in need of 'significant modernisation', but I believe would have a market value of circa 150% of the current highest bid price once done up - so the question for a buyer would be around the risk v margin, and in turn that likely depends on whether they want to live in it and do it up themselves, or is a developer/builder who wants to flip it for a fast (but safe) buck.

Thanks for the comments about considering the quality of the bidder in terms of funds availability, chain length etc.  I'm well aware of this and do realise that I don't have to accept the highest offer.  It is tempered by the fact I have neither a chain nor am I in any hurry, I just want to do the best I can for the beneficiaries of an estate. 

  

hpsauce86

Sandtree said:

hpsauce86 said:

In my experience as a buyer estate agents won’t tell people offers unless you have a bit of a relationship with them. They may tell you someone has offered higher, but I’ve not come across anyone giving the actual amount. 

We’ve been in many situations like the estate agent is suggesting to you. Best and final normally generates the offers you’ll be after, those serious will up their offer if they want it badly.  

Personally I think it’s pretty awful to try and force people to offer over what the house is actually worth. Unless they are a cash buyer they have no chance to be able to afford it if it gets downvalued by the lender. 

It comes across as slightly greedy in my opinion but then it is a sellers market. 

There is a strong logic as to why they wouldn't say how much... if you offer £499,000 and get told there is already a higher offer on the table you may bump it to £505,000 whereas the higher offer may simply be £499,500 in which case you have over stepped by more than you needed to.


What do you think is "how much a house is worth"? The normal definition is really what a buyer is willing to pay for it. The intrinsic value of the bricks, tiles etc is likely to have very little correlation to the value of the building... in some areas the build cost will be vastly more than the property's worth and in others a tiny proportion. There is no Glass guide equivalent for homes which says a 4 bed detached in WR3 is worth £300k 


There certainly can be an issue with a lender deciding the property is worth less than the highest bid but that can happen in any mechanism of sale. Trying to maximise your sale price isn't really trying to get people to overpay, in many cases people think the highest bid is notably below what their property is worth but just reiterates what a property is worth what someone is willing to pay for it.

Yeah I guess that’s my point (that you made much better than me!)

Set the offers around asking price at what the vendor would be happy with (or what they think it’s worth), go to best and final sealed bids. Everyone goes mad for fear of missing out on the house and puts in the amount they are willing to pay. Pick the highest/most proceedable offer. 

Sine_Nomine

mayling03 said:

This is what my EA advised. I got 4 offers, then went to best and final without disclosure of biggest bid cos its not fair on the highest bidder at the time.

If it's a mortgage buyer, then the bank survey will value it lower than what you sell it for and the bidder may come back and negotiate with you. 

That presupposes the final agreed price is above fair market value - the whole issue here is it isn't clear what fair market value is and my not wanting to accept an offer way below it.

user1977

hpsauce86 said:

Sandtree said:

hpsauce86 said:

In my experience as a buyer estate agents won’t tell people offers unless you have a bit of a relationship with them. They may tell you someone has offered higher, but I’ve not come across anyone giving the actual amount. 

We’ve been in many situations like the estate agent is suggesting to you. Best and final normally generates the offers you’ll be after, those serious will up their offer if they want it badly.  

Personally I think it’s pretty awful to try and force people to offer over what the house is actually worth. Unless they are a cash buyer they have no chance to be able to afford it if it gets downvalued by the lender. 

It comes across as slightly greedy in my opinion but then it is a sellers market. 

There is a strong logic as to why they wouldn't say how much... if you offer £499,000 and get told there is already a higher offer on the table you may bump it to £505,000 whereas the higher offer may simply be £499,500 in which case you have over stepped by more than you needed to.


What do you think is "how much a house is worth"? The normal definition is really what a buyer is willing to pay for it. The intrinsic value of the bricks, tiles etc is likely to have very little correlation to the value of the building... in some areas the build cost will be vastly more than the property's worth and in others a tiny proportion. There is no Glass guide equivalent for homes which says a 4 bed detached in WR3 is worth £300k 


There certainly can be an issue with a lender deciding the property is worth less than the highest bid but that can happen in any mechanism of sale. Trying to maximise your sale price isn't really trying to get people to overpay, in many cases people think the highest bid is notably below what their property is worth but just reiterates what a property is worth what someone is willing to pay for it.

Set the offers around asking price at what the vendor would be happy with (or what they think it’s worth), go to best and final sealed bids. Everyone goes mad for fear of missing out on the house and puts in the amount they are willing to pay. Pick the highest/most proceedable offer. 

Which is the normal practice in Scotland (assuming there is competition). And (from a seller's point of view) generally works fine.

Sine_Nomine

Jenniefour said:

I think that's how it used to be with only a couple of interested and serious potential buyers. Probably still is. Very likely the OP is in an area where there's a big shortage of properties to sell and it's common to receive multiple offers. Around here it's normal to arrange three block booking days to accommodate a large number of interested people usually well into double figures and sometimes over twenty.  A friend has just put her house on the market and agents have said, based on selling similar houses in last few months, they expect to receive seven or eight initial offers. They will then make sure, as far as they reasonably can, that all those potential buyers can actually proceed before asking for best and final offers. Crazy market. 

Bang on!

That describes the situation exactly - dearth of similar properties locally, loads of viewers, block viewings, huge 6-bed house, a great doer-upper opportunity.

Slinky

Is there not a duty on you as executor to achieve the best price you can for the beneficiaries? In which case, a best and final would seem the right approach to me, then pick what appears to be the most proceedable offer with reasons you can justify for picking that offer.

Sine_Nomine

Slinky said:

Is there not a duty on you as executor to achieve the best price you can for the beneficiaries? In which case, a best and final would seem the right approach to me, then pick what appears to be the most proceedable offer with reasons you can justify for picking that offer.

Hi Slinky,

That's exactly what I plan to do.  

The issue was, I guess, entirely about the etiquette of whether the current highest offer should or shouldn't be disclosed before the best and final offer process.

sheramber

Sine_Nomine said:

Slinky said:

Is there not a duty on you as executor to achieve the best price you can for the beneficiaries? In which case, a best and final would seem the right approach to me, then pick what appears to be the most proceedable offer with reasons you can justify for picking that offer.

Hi Slinky,

That's exactly what I plan to do.  

The issue was, I guess, entirely about the etiquette of whether the current highest offer should or shouldn't be disclosed before the best and final offer process.

But all the bidders get the chance to give their best offer so the current highest bidder has the same chance as everybody else to increase their offer.

Of course, the other bidders may not want or be able to increase their offer.

Slinky

Sine_Nomine said:

Slinky said:

Is there not a duty on you as executor to achieve the best price you can for the beneficiaries? In which case, a best and final would seem the right approach to me, then pick what appears to be the most proceedable offer with reasons you can justify for picking that offer.

Hi Slinky,

That's exactly what I plan to do.  

The issue was, I guess, entirely about the etiquette of whether the current highest offer should or shouldn't be disclosed before the best and final offer process.

When we were in a best and final, we weren't told what the highest bid was. When we did a best and final to our bidders, we didn't tell them what the highest offer was. I've never heard of a best and final being conducted with the highest bid being advised.

Greymug

Sine_Nomine said:

The agent is now saying I should go to all those who offered and ask them for a "final and best offer within 24 hours", and then choose.  I am of the view that one should go to all of those who offered and tell them what the current highest offer is, and ask if they want to improve their offer. 


  

Both these things are wrong. I'm actually surprised that the estate agent made such a dumb suggestion. Surely not getting agent of the year award.

If you give potential buyers an ultimatum and ask them you submit an offer within 24 hours, you'll lose some of those buyers.

Also telling them what the highest bid is is likely not allowed and surely not smart.  If you tell them the highest offer is say 200k, I wouldn't expect them up their offer by a lot more than that.

In these situation, if your aim is to make the most money, you need to leverage and capitalise on uncertainty and their fear of losing a property they want. So, don't tell them what the highest bid is. Just tell them how many offers you've had and give them a reasonable amount of time to stew and think about it, say a few days.