Home Buying in 07430>Question Details

melgreeneyes…, Home Buyer in Mahwah, NJ

Thoughts on what happened with my offer?

Asked by melgreeneyes68, Mahwah, NJ Sun Aug 18, 2013

I bid on a condo and we were told there were two other people interested - but only verbally. We submitted my offer within hours. I bid at 10% under asking knowing that I'd come up in negotiations. This was a place that needed renovation. I've been pre-approved by my lender for more then the asking price - but we submitted a pre-approval letter for my offer.
18 hours after my offer was submitted the seller's agent called to say they took another offer. I had NO opportunity to counter or negotiate with the other client. Apparently my offer was way under the other offer. Condos in this area tend to move FAST - regardless of their condition. But I never imagined I would have no opportunity to offer more. Any thoughts on what happened? Should I have submitted a pre approval letter that stated I could afford more? Not the highest amount I can go but at least the amount I'd be eventually willing to pay for the place???

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Melissa Goss’ answer
Well the 2 other offers finally presented themselves in writing... is likely what happened here. Sadly the agent who represented you probably was not offered the invitation to counter, as they likely settled on the higher offer and just left it at that.
0 votes Thank Flag Link Mon Aug 19, 2013
Actually they did not present in writing. I was the first to present in writing. Listing agent said one offer was verbal and another was verbal with the owner. I was to return 2 days later to see the place again and the listing agent said I had plenty of time to submit my offer in writing, however I chose to play it safe and submit immediately. My realtor said that was fine. It's impossible to say what happened for sure but it will be interesting to see what it finally sold for! :)
Flag Mon Aug 19, 2013
You took a chance and it didn't pay off! Knowing there were other offers (or the potential of other offers) your bid should have been the highest price you were willing to pay. Then if you didn't get it, you'd have no regrets. You write condos in your area tend to move fast. Since you know the market, why 10% under "ask?" Yes, I know the property needed renovation - but 10% worth? In my opinion, the Seller may not have negotiated (with you) even if yours was the only offer received - feeling the two of you were "too far apart." The Seller knows what you know - the market tends to move fast. They really don't like to negotiate when all they have to do is wait.
0 votes Thank Flag Link Mon Aug 19, 2013
Thanks - yes, i now realize this. Had no idea this would be he case. I"m a first time buyer - so wasn't aware. My realtor told me my offer was 'excellent' but now i realize it was not. thks again
Flag Mon Aug 19, 2013
"Condos in this area tend to move FAST!"
That's an important piece of reality must be recognized.
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What is missing from your equation is, "What does a SELLER value MOST?"
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I will provide the answer...."THE ASSURANCE OF CLOSING!"
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The prospect of haggling over price, the haggling over repairs, the haggling over the appraisal, all protend a arduous path to closing. Your 10% below list in a 'fast" moving market, promised each and every one of those obstacles to the selller. The 'assurance of closing' was but a vapor as it appeared to the seller.
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When you find the next condo to buy, consider removing as many obstacles as possible. If you are using a big bank lender your REALLY , REALLY, REALLY need to consider a local lender. BIG BANK LENDER spellls trouble to a seller. I always advise kicking such offers to the curb.
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Assurance of closing means EVERYONE saves money. Big bank lender don't share that outlook.
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Seller WILL accept a resonable lower price if the assurance is easily seen.
0 votes Thank Flag Link Mon Aug 19, 2013
"If you are using a big bank lender your REALLY , REALLY, REALLY need to consider a local lender. BIG BANK LENDER spellls trouble to a seller. I always advise kicking such offers to the curb. "

That's a new one to me - a seller cares who lends me my money? Truth is I could borrow money from any lender. I've got my 20% and then some, and stellar credit. But I thought who I chose to go with was my choice. No one has ever advised me otherwise - but I'll have to look into that statement furhter. Thanks! :)
Flag Mon Aug 19, 2013
melgreeneyes68,

The seller is never required to negotiate any offer.. Whenever you want a property and think there is competition you should always submit your " Highest and Best" offer right from the start. That way if you don't get the property you know you gave it your best shot. Also it's always best to submit your pre approval letter with the offer. The red flags should have been 1. Possible multiple offers on the table and 2. Condos in this area tend to move FAST. Talk to your agent on being successful in a multiple offer situation. Hope all works out for you next time. All the best.
0 votes Thank Flag Link Mon Aug 19, 2013
Thanks for the response. Yes - I did submit a preapproval letter. And yes the issue was I should have submitted my highest and best offer - but I was not advised to do so from my realtor (I should have indicated that in my initial post but I have clarified in replies to other folks who have indicated the same as you do). I'm a first time buyer - but not a 'kid' either. I'm divorced and in my early 40s. I'm ready to buy - but was not guided properly, in my opinion. Live and learn - certainly will know for the future. Thanks! :)
Flag Mon Aug 19, 2013
Unfortunately, in a multiple offer situation you cannot afford to go 10% off ask. There were other buyers that were more than willing to secure the home that they wanted. (so it was not necessary to negotiate with you.) Best advice, use this experience for the next home buying opportunity. And, secure a buyer's agent with multiple offer experience. The agent can help you be prepared with a strategy --- to help you get the home you want at a price that everyone is happy with.
0 votes Thank Flag Link Mon Aug 19, 2013
"And, secure a buyer's agent with multiple offer experience." Thanks! They certainly seem to be everywhere. As my family and friend have mentioned to me - any realtor would be thrilled to work with me based on my background/credit/money available etc. I just made a poor choice in the person I am working with - based on some circumstances when i met her. And she has no experience in being a buyer's agent or multiple offers. Just her own experience buying her own homes. Live and learn - time to move on! :) Thanks for the advice, much appreciated!
Flag Mon Aug 19, 2013
Knowing that there were other offers you should not be looking to negotiate. You should be coming in with your best offer. 10% can be a big difference. The Seller would see you are far off.

Did your agent show you all the comparable sales?
You must also take into consideration what else is available. With low inventory you can expect prices to go up.
0 votes Thank Flag Link Mon Aug 19, 2013
Thanks - yes, i now realize i should have made best offer. But was not advised to do so by my agent. There was only one comp that I know of if area - and i found it. But my agent did not provide me with a comparable market analysis of the area. Will learn from this experience for sure. Thanks very much for your feedback!
Flag Mon Aug 19, 2013
Melgreen,
I am so sorry that this has happened to you!
The market in this area has changed so much over the last year... What seemed like a good strategy just a few months ago is now hurting current buyers. The laws of supply and demand are making it necessary to make a higher bid to acquire the property or someone else will... especially if its a nice home at a decent price....
Again... Very sorry, but only one person to a home and if multiple parties are interested... someone is going to get burned.
Best of luck in the future... hope you find that perfect home!
0 votes Thank Flag Link Sun Aug 18, 2013
Thanks!
Flag Mon Aug 19, 2013
Hi Mel,

I'm sorry this didn't work out for you. Unfortunately it's the nature of the beast, especially in this market. When inventory is low and demand is high, it's almost pertinent to come in at best offer upfront if you know there is competition. This way, you know that you went in at your best, and there was no chance for you if the offer wasn't accepted. In other words, make them an offer they can't refuse but include your terms as well (without going crazy). If you have good terms (nothing to sell, excellent credit and pre-approval) it'll be worth it.

Better luck next time!

Warmly,

Karen Boyle
0 votes Thank Flag Link Sun Aug 18, 2013
Thanks very much Karen - I appreciate your response. You are absolutely right - it all makes sense to me now. I just wasn't aware of this when I put in my bid, as I mentioned to others - my Realtor thought it was an excellent offer. But looking back I know realize it was not. Thanks again!
Flag Mon Aug 19, 2013
Hello Mel,

Sorry things didn't go your way on this transaction. You were in a multiple offer situation with other offers on the table already. In a multiple offer situation, I tell my clients that they need to make their highest and best offer because anything below asking price is not going to be a winning bid and is a waste of time.

The bottom line is that your first offer should have been the highest amount you were willing to pay for the property. There is nothing wrong with making your highest offer first and not going up a penny more. It depends on the situation; and, in a multiple offer situation you often only get one shot.

Despite the large number of condos in Mahwah, the Mahwah condo market is always a seller's market.

Good luck on your next attempt.
0 votes Thank Flag Link Sun Aug 18, 2013
Thanks Brian - I'm sure you are right. I know that now. Interestingly enough my Realtor says we did EVERYTHING we could. But based on a lot of the responses on here from very seasoned professionals as well as the reaction from my family and friends - I believe my Realtor is incorrect. Live and learn right? Thanks again! All the best - Mel
Flag Sun Aug 18, 2013
Better offer, more solid possibly, cash offer?
0 votes Thank Flag Link Sun Aug 18, 2013
"I know the current market like the back of my hand and do the research"

:) Love that. So why is this discussion not about when you are closing?

"a place nearby just sold that was only $10K above my offer "

That being said.. why would the seller take less? Sounds like the other offer was probably much more than yours. That $10,000 to you is about $30 more a month on a 30 year mortgage.. it is $10,000 CASH more to the seller.

What would you do?
0 votes Thank Flag Link Sun Aug 18, 2013
When there are other offers you would want to put your best or close to your best offer on the table. 10% under.. hate to say it.. sounds like a lot below asking, especially in some developments. if you had no opportunity to counter, the other people probably slam dunked it. The pre-approval probably did not have much to do with it as much as the offer itself.

The market is up and down and all over the place. What people do not understand that although there is inventory out there.. the good ones go quick. Keep this in mind on your next offer. Amongst Realtors we always say that some clients need to lose one or two before truly gettng serious. Don't be insulted by that, it is just a fact.

What did your Realtor say to you about your offer? Did you base the offer on comps? Or what you felt you wanted to pay and the common misconception of offering 10% under asking price?
0 votes Thank Flag Link Sun Aug 18, 2013
You didn't come up in negotiations, Mel, because they had a better offer to start negotiations with.

I'm not saying it's right, but it's TYPICAL that in a multiple-offer situation, the seller elects to negotiate with the best offer on the table and leave the rest behind.

All the best,
0 votes Thank Flag Link Sun Aug 18, 2013
Sometimes the seller has not come to the realization of current market value. The perception is the market is improving quickly and the are pricing in anticipation.
0 votes Thank Flag Link Sun Aug 18, 2013
More info - We submitted offer in writing and detailed my excellent credit rating and that I had nothing to sell. (This home had previously been on market and was under contract but it fell through. Back on market for only one week, and I saw it 6 days after listing date.)

I know the current market like the back of my hand and do the research. I know the location of every place I look at ahead of time and my realtor follows me. I'm familiar with the comps in the area - and kept this in mind with my offer because a place nearby just sold that was only $10K above my offer and it appeared to be VERY similar, might have even been in better shape but I had not seen it.

Anything I could have done different?
0 votes Thank Flag Link Sun Aug 18, 2013
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