Hi,
We made an offer for a property today. The agent got back saying that he will submit it but said that the vendors have received a higher offer. Is it OK to ask the agent what this offer is for ? Can I trust the agent to give me the correct $ amount or can he give me a fictitious value?
Any suggestions greatly appreciated. First timers so could use all the help we get !!
cheers
salilHi Salil
You can ask the agent whatever you want. However, I doubt that the agent will answer!
In theory RE agents act for the vendor, that is, that their job is to get the best possible sale price for the vendor. In my experience, most agents act for themselves. They get the highest price they can for the vendor while ensuring the least work for themselves.
If I have a house for sale for $350,000, on a 2% commission the agent receives about $7,500 (including GST). If an immediate offer comes in for $320,000 and I accept it, the agent gets about $7000. If the agent thinks that it will be hard to get a purchaser at $350,000 the agent will try to get me to accept the lesser offer. The agent will receive about $500 less but may have to work for 2 months to get the higher price. When I buy a property I always bear this in mind.
There may be a higher offer or there may not. If the agent does tell you, he or she may be honest or they may not. If you ask straight out, that is an open invitation for the agent to make up any figure they want.
There are however, other questions you can ask to try to get more information, such as:
– whether the vendors are likely to accept the other offer
– what can you do to make your offer more competitive
– whether the vendors are more interested in the price or terms, ie, will the vendors accept a lower offer if you are not subject to any conditions, including finance
– how long the property has been on the market
– why the vendors are sellingIn my experience, I can often get the exact information I want from agents by asking a whole bunch of questions and then sitting down later and joining the dots, in a manner of speaking.
Cheers
K
I'd go along pretty much with Linar's comments – depending upon how the agent operates will depend upon how much information he will be willing to give you regarding the current offer.
I have recently been working on a deal for a couple of months – purchasing a very difficult site with a DA in place. I have now been left with 2 options with the DA – either use it or go for another scheme (both approaches have merit).
I worked closely with the agent who gave me ample time to undertake due diligence, perform a review of the market/sales, local development etc. They agent kept me abreast of any interest shown by other parties, including when other offers had come to the table (through other agencies). They were open enough to advise the value of the current offers and the state of the vendor's position.
In the end, we were able to submit an unconditional offer at a price which we felt was within a comfort zone (still having some scope if required). We flushed out the vendor's true position, made some minor adjustments to our offer and the deal was accepted.
Dealing with this agent made the process a relaxed transaction even though there were countless 'interested parties', the final purchaser needed a particular skill set to analyse the site and the deal to achieve the desired outcome ie acceptance or elimation of all quantifiable risks.
(Probably too technical a deal for most investors though).
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