Full-price offers not enough in hot housing market
Q: We found a new home we loved and made an offer on it for the full asking price. The listing agent came back and told us that the seller did not accept it, but we could make a higher offer. We thought we were a shoo-in for the home. What’s going on? — Dan
A: The information in a home listing, such as size and features, has to be accurate to the best of the seller’s knowledge. However, the listing is more akin to an advertisement than an offer to be accepted.
Before a seller agrees to sign a contract with a prospective buyer, he or she has a lot more to consider than just the price.
The buyer’s financing, contingencies and ability to get approved by the homeowner’s association, are all factors in what makes the best deal for the seller. The seller may be getting multiple offers, all full price or higher, and has to choose among them.
A common tactic in a seller’s market, like the one we are in, is to list the property slightly lower than market price to get quick attention and multiple offers.
The seller then will go back to the strongest prospects and tell them that there is a bidding war and they should submit their “highest and best offer,” causing the property to be sold well above the original listing price.
This sometimes works because everyone loves a deal and can get hooked into the prospect of a great house, similar to the way that auctions can sometimes lead to elevated prices. Of course, the tactic can also backfire, especially if the house isn’t exceptional.
Before making any offer on a house, it’s best to speak to the listing agent to get a feel for the seller’s mindset and motivation. In my experience, good pre-contract communication between the buyer and seller leads to more accepted offers and closed transactions.
Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/business/ realestate each Friday. To ask him a question, email him at gary@garysingerlaw.com, or go to SunSentinel.com/askpro.