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A Canberra Real Estate Question

By cranky - 10 October 2011 14

Family member (first home buyer) has spotted a very des res at exhibition. Asking price is affordable.

It is obvious that there is considerable interest from a number of potential buyers.

An offer at full asking price is made.

Family member is advised that at that offer, they are fourth in line, a number of higher offers having been made.

Family member will go back with a higher offer, but is this the way the system is supposed to work? Great news for the vendors, but we appear to have a low speed auction happening here.

Would appreciate comments from the hive.

What’s Your opinion?


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14 Responses to
A Canberra Real Estate Question
Holden Caulfield 10:10 am 11 Oct 11

NoAddedMSG said :

It’s only gazumping if the seller has accepted an offer but is yet to sign contracts, and then they get a better offer and decide not to go with the first seller after all. If they haven’t yet accepted an offer yet, it isn’t gazumping it is just plain old bargaining – and I’m not sure I see why that is something you would doubt the legitimacy of…

Glad to see at least someone has a grip on reality, or should that be realty.

To the OP, unfortunately your rellie either needs to make a better offer or start looking elsewhere.

As noted, you will only have cause for complaint if an offer has been accepted and then the vendor starts courting other offers. But it’s illegal AFAIK so it’ll more likely be the vendor and/or agent in strife if the buyer’s claims can be proved.

Classified 9:43 am 11 Oct 11

It’s probably also worth remembering that the job of the agent is to get the best possible while complying with the law. It’s not their job to make things ‘fair’.

Classified 8:17 am 11 Oct 11

I’ve actually good results from making ‘non-expiring’ offers. Simply give the agent the price (which will be below asking), and unless there are others who want the property the agent will soon start pressuring the seller to accept the offer, or at least open negotiations.

peterepete 6:00 am 11 Oct 11

troll-sniffer said :

The fairest thing the agent can do if a bidding war is developing is to announce a sealed bid process, whereby all parties put their bids and terms in writing by a certain date and the seller chooses the most suitable.

I had three interested buyers willing to go over the advertised price for my last sale property, and the agent suggested the sealed bid route. I didn’t take the highest bid, but one of a few thousand less, because it included 30 days settlement and evidence of approved finance. All buyers were advised that settlement terms and finance were important considerations.

Correct. The last thing you want is to be involved in a drawn out never ending bidding war of attrition. If they don’t start a sealed process you can make an offer with an expiry. Decide what you willing to pay, make an offer and tell them that it expires in 24 hours.

troll-sniffer 11:34 pm 10 Oct 11

The fairest thing the agent can do if a bidding war is developing is to announce a sealed bid process, whereby all parties put their bids and terms in writing by a certain date and the seller chooses the most suitable.

I had three interested buyers willing to go over the advertised price for my last sale property, and the agent suggested the sealed bid route. I didn’t take the highest bid, but one of a few thousand less, because it included 30 days settlement and evidence of approved finance. All buyers were advised that settlement terms and finance were important considerations.

screaming banshee 10:01 pm 10 Oct 11

You cant get emotionally invested when it comes to real estate, determine what the house is worth to you, make your offer and stick to it.

We offered $15k below the asking price for the house I’m sitting in now, the agent kept pushing us for a higher price but we didn’t think it was worth any more and clearly neither did anyone else so we got it.

milkman 7:24 pm 10 Oct 11

NoAddedMSG said :

The offers have to be put in writing anyway, so drop by the agent’s office and ask to see the email/written offer (with identifying details crossed out of course.)

I’m not sure this is the case. I’ve bought a number of properties in ACT during the last 7 years, and have never once made a written offer.

Pooks 5:47 pm 10 Oct 11

Our current home was very popular during the open house (in 2011). It had 5 offers (including ours) by the end of the day.

We decided to make our first offer our best offer, and ended up “winning” the home.

Luckily our agent did not encourage a silent auction..both he and the sellers accepted our offer that day.. If the RE had tried to spark a bidding war, we would have paid more than we did.

A previous property that we were interested in ended up in a bidding war. (instigated by the RE agent) We pulled out immediately, as we were not interested in taking part in an auction.

Canberra agents seem to go both ways. I advise you to steer clear of agents who promote bidding wars. No house is worth it, especially in the current market.

NoAddedMSG 4:29 pm 10 Oct 11

It’s only gazumping if the seller has accepted an offer but is yet to sign contracts, and then they get a better offer and decide not to go with the first seller after all. If they haven’t yet accepted an offer yet, it isn’t gazumping it is just plain old bargaining – and I’m not sure I see why that is something you would doubt the legitimacy of. If there are several interested parties, isn’t it slightly unreasonable to expect the owner to not then try for the highest price they can get? If you doubt the agent, ask to see proof of these other offers. The offers have to be put in writing anyway, so drop by the agent’s office and ask to see the email/written offer (with identifying details crossed out of course.)

You don’t just have to bargain on price either – from what I can tell talking to agents, a fair number of offers fall through when the buyers can’t get financing. So tell them that finance won’t be an issue/you have pre-approval, tell them you will make it a priority to get to the contracts stage asap, tell them you have flexibility on settlement date – make it seem like you will be the nicest, easiest people on the planet to sell a house to.

milkman 2:48 pm 10 Oct 11

Sammy said :

It’s called gazumping, and it’s perfectly legal:

http://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Buying_property/Making_an_offer/Gazumping.html

Unfortunately, real estate agents tend to value property for quick sales. Let’s consider a scenario where a property priced at $500,000 has ten very interested buyers, and at least a couple of them are perfectly willing to pony up the $500k straight away. Your property sells very quickly, and perhaps before even being exhibited, and the agent (working on a 5% commission) get’s their $25k quickly, and they didn’t have to do much work for it.

Let’s now say that you’re not happy with the $500k that the agent put on the property, and you want it listed for $550k. Now the sale drags on for weeks and weeks (and months), and eventually sells for $520k. The agent gets $26k (an extra $1000) and they’ve had to put about fifty-times as much effort in.

Which scenario do you think suits the real-estate agent? Of course, the seller might just want a quick and painless sale as well, so the first scenario can suit both parties. The first scenario also often leads to gazumping, which doesn’t really benefit anyone.

Someone’s been reading freakonomics…

taninaus 12:57 pm 10 Oct 11

Par for the course at that level and perfectly legal (although not desirable for the buyer) – in reality you will have no idea whether the agent is playing a game or genuinely has other players in the mix and is just trying to find who will pay the best price – their job is to work for the vendor not the purchaser. Don’t get silly but if there is that demand a higher price is reasonable – just be prepared to walk away if the price gets beyond the capacity to pay or above what you would consider to be a reasonable price.

arescarti42 11:27 am 10 Oct 11

“Asking price is affordable.”

Well no wonder there is considerable interest, that must be Canberra’s only affordable residence.

alaninoz 11:06 am 10 Oct 11

Yes, it’s a low speed auction. Is it supposed to work like that – no. Does it work like that – yes. Can you do anyhting about it – no, Get your relie to work out what the property is worth to him/her. Walk away if the price goes higher than that.

Sammy 10:57 am 10 Oct 11

It’s called gazumping, and it’s perfectly legal:

http://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Buying_property/Making_an_offer/Gazumping.html

Unfortunately, real estate agents tend to value property for quick sales. Let’s consider a scenario where a property priced at $500,000 has ten very interested buyers, and at least a couple of them are perfectly willing to pony up the $500k straight away. Your property sells very quickly, and perhaps before even being exhibited, and the agent (working on a 5% commission) get’s their $25k quickly, and they didn’t have to do much work for it.

Let’s now say that you’re not happy with the $500k that the agent put on the property, and you want it listed for $550k. Now the sale drags on for weeks and weeks (and months), and eventually sells for $520k. The agent gets $26k (an extra $1000) and they’ve had to put about fifty-times as much effort in.

Which scenario do you think suits the real-estate agent? Of course, the seller might just want a quick and painless sale as well, so the first scenario can suit both parties. The first scenario also often leads to gazumping, which doesn’t really benefit anyone.

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