This may sound like a weird recommendation from your agent, However to the Banks who lend/finance you the money to buy will always take the lower of your agreed offer or the appraised value. I just had a customer who won on their multiple Bid war the home was originally offered for 90k the bids got all the way up to 125k but when the appraisal came back in it arrived at 90k. The Banks will now only lend on the 90k.
You as the customer have 3 choices then.
1. walk away as it's not worth what you thought it was. (this may also happen with the seller backing out)
2. you can bring in the 35k over the price the bank will finance(plus you still have to bring your Down payment and Closing costs)
3. you renegotiate your contract with the seller on the appraised value as the new contract price. Hence you get a great price.
The reason your agent suggested this to you was once a Bid war is done most others drop their Bids and Move on to the next home on their list (they are selling like hotcakes, get 'em while they're hot). If the winner gets disheartened by the low value, they may pull out as well and your still there ready pick up a steal!
I hope this helps you understand what they were trying to accomplish for you.
If you need any assistance, or have any questions, please feel free to call.
Senior Mortgage Consultant
Cornerstone Mortgage Group
6151 Powers Ferry Road NW
Suite 610 Atlanta GA 30339
That is until it failed. Then, you disagree. It's easy to second-guess yourself after the fact... but I think, had your bid worked, you would have been extolling the virtues of this psychic Realtor.
Your agent could still be right. The property still needs to appraise, if the buyer is getting a loan. And if your agent was right, it may not appraise for the value that was agreed-upon, and if so... the property may become available to you.
Your agents analysis was faulty because they were trying to predict what an appraiser might say. Even if they were correct in their assessment that the appraisal would not support the price, they should not hve been concerned about this, if the appraisal came in low the problem would have been the Sellers and not yours, you could have walked from the deal at that point, if the Seller refused to accept the fact that the property wasn't worth what they thought it was.
Given that the property was only on the market for four days and already had an offer the advice you received was extremely poor and in my mind shows a lack of undertanding and/or perspective. Not sure I'd continue to work with that agent were I you. You need someone with more experience in negotiating.
Buying a house should be a rational decision, but it is also an emotional one. Your Realtor is obliged to council you in the rational world, but if you really like a home for what ever reason, and you can bring extra cash to the table, then make your best offer the first time and hope it is enough to guarantee your offer is accepted.
Keep in mind the "other offer" could have had less contingencies, lower buyer incentives, or was a cash deal so don't always assume it was based on price.
If your agent is indeed knowledgeable about local real estate values and was correct about the subject property's value, he was trying to provide you with sound advice on which to base your position.
If the buyers that had their offer accepted are financing their purchase and your agent is correct about the home's value, it's possible that you may once again see this property on the RE market because lenders will not finance property that goesn't appraise for the contract price.
We would recommend that you ask your agent to monitor the status of the property to see if it returns to an "active" status.
It would be irresponsible for anyone here to make an assessment based on the facts provided, but a judgment call on the right offer amount is often a challenge. The most desirable, well-priced properties often get multiple offers well above the listed price regardless of the selling prices of comparable homes. Conversely, sellers often will accept lower, faster closing cash offers over those involving financing and/or those with contingencies. There's just no way of knowing if a higher offer would have made the difference in the seller's choice of offers. When the disappointment subsides, accept that this is how the Metro Atlanta market is right now and take comfort in the likelihood that your agent placed a higher priority on helping you avoid over paying for a property than on the potential income that would have been earned on a higher offer.
REALTORÂ® Keller Williams Realty Atlanta Partners
I'm only guessing here, but if your agent was sure (or reasonably confident, at least) that the house wouldn't appraise for more than he suggested, then he was assuming that the first offer (presumably for more) would fall through once the house didn't appraise for enough. Either that, or your agent thought (incorrectly) that the competing offer was even lower than yours.
Overall, it does sound unusual. But a good agent will advise his/her clients if they might be making an offer that's higher than the appraisal will be. Still--and I don't know all the details--the agent could have let you make your higher offer, cautioning you that if you were successful you might not be able to get financing for the full amount.
And it's possible that your agent was correct--that the house won't appraise for the higher amount offered by the other buyers. In that case, the sale could fall through and the property could come back on the market. So keep alert to that possibility.
However, next time, listen to your agent but remember that you're the decisionmaker.
Hope that helps.