I would say that buying a house is half financial, and half psychological. Often times when you love a house in a competitive market buyers will actually pay more than the asking or list price of a house to get it. While all offers should be treated well, and respectfully, over asking price offers are a unique situation that may require different tactics.
Making an over asking price offer
I have a great client, who has bought multiple homes with me over the years. He is young, smart, and has a great professional tech job that pays him what he is worth. With that money he likes to buy houses.
This guy is serious. To get where he is today, he has to know his stuff, and while he likes to have fun, he also doesn’t really mess around. While I’m sure he is on my site all the time looking at houses, he doesn’t call me unless there is a candidate he seriously wants to see.
We actually met a the first house we ever saw together. He knew it was the one, and we went forward, quickly and aggressively and he has been there for a number of years.
But now he wants a place with more land but in a similar style.
Something modern, with big picture windows, and room to start an urban garden. Not too far from downtown, and his job, so he won’t be in the call all the time if he has to go into the office.
Finding the house
The house we found was just perfect. A couple of acres, in a little pocket neighborhood. There are 2 or 3 streets of older homes on larger lots, surrounded by a larger subdivision of new homes. The computer sent him the listing based on the very basic search criteria we entered, and after looking at the photos he decided that he wanted to see it.
So he called me and we made an appointment.
Most of the yard was in the front of the house, but thet was OK because there was no HOA for this little, older subdivision. Inside the house had been completely remodeled – in the white farmhouse style. High ceilings, clean lines. Lots of white. It was just what he was looking for.
He loved it, and told me to make an above asking price offer.
I’ll be honest. I was a bit confused by this. Normally I only suggest to make an over ask offer when I know there is someone else bidding on the house.
Making the Offer
I never want my clients to over pay for a house. I want to get them a deal, every time. But that takes a back seat to getting the house.
I always tell my clients to let the numbers bring them into a house, but then to follow their heart when they are inside.
What this means is let technology do the heavy lifting for you. Set up searches with your basic must have criteria. Number of bedrooms, location, and an upper bound on price. Add in any of the extras like pool. or garage spaces, or no HOA. Make at least one automatic search super specific, because when it hits, you know this is a legitimate house that you will need to see.
Then when you are inside, see how it feels – if you like it, this is one that you should make an offer on.
This particular buyer told me to make an over asking price offer because he knew it was going to get multiples. He knew that if he loved it than other people would as well, and since we were the first ones in, he wanted to be the offer that all other offers were compared to.
Of course I advised him that we should write a very clean full price offer, and see what happens.
“No”, he told me, go over, and with a few terms that are favorable to the seller. “I want this house, and don’t want to mess around” he said.
We wrote it up, I sent him the Docusign, and then I submitted it. The listing agent quickly acknowledged receipt and said that he had just gotten another offer a few minutes before and would be calling his seller in a bit to discuss them. By now it was getting late in the evening, so I didn’t really expect an answer until the morning. Of course I relayed this to my client, and we decided that the next morning we would get our answer.
Waiting for a response
So the next day was a Sunday, which in the Real Estate world is a busy day. Lots of showings, and contracts to be written. As I was preparing for my showings, I got a text from my buyer asking if I had any updates for him, which I did not. I told him that if I didn’t hear anything by noon, I’d call the agent and get more info.
Well, noon came and I called. I asked how it was going in the process and he told me that our offer was better and that he was talking to his guy this afternoon in person this time to go over the specific details of the contract. I said great, that’s good news. Of course it wasn’t a signed contract, but it was a verbal (there are no verbal contracts in Texas by the way) agreement, and I texted my client that they liked our offer and were talking about the details this afternoon. I didn’t tell him that we were accepted, but that things were looking good, just in case the deal went south.
So the afternoon came and went, and as the day shifted to evening, I got another text from my buyer asking the status. Before I responded to him, I texted the agent who said they were meeting at 5. OK. 5 is sort of afternoon, sort of evening, so no big deal. This info got shared with my buyer.
It was at this time that my buyer told me he was concerned that the seller was fishing and stalling for time. My buyer believed that since the house was still getting showings the seller might be stalling trying to get another offer.
Personally, I’ve seen this tactic before, but I wasn’t getting that vibe from the seller.
No matter. I called him and was told that they were now meeting at 7, and we would have something in the evening.
The deal begins to fall apart
By 9 we hadn’t heard anything and my buyer was wondering what the hold up was. At the same time I wasn’t getting any updates from the seller.
Things went south pretty quickly over the next hour. By 10 Sunday night my buyer decided that he wasn’t being treated fairly with his very generous offer, and that if we didn’t hear anything by 8 in the morning he was going to pull his offer. Since nothing was signed, there would be no financial repercussions.
I sent an email and texted the listing agent before going to bed.
Of course when I woke up there. was no response.
And at 8:00 on the button I got an email from my buyer saying he wanted to withdraw his offer. I knew better than to argue with him and prepared an email to the seller’s agent saying this, and copied my client on it.
Being treated fairly
When, as a seller, you get a very generous offer for your home, don’t blow it.
The lesson here is to be professional, and do what you say you are going to do. Don’t drag things along, and try to get something better. The number of times it doesn’t work out is much greater than trying to play everyone to get more.
In this particular case, you might recall there was one other offer. Since so much time had passed for their offer, they went on to find another house, and the seller was left with nothing. They had no deal, and had to wait another 3 weeks before one came.
Treat all parties fairly, and respectfully, and everyone gets what they want. Don’t and there can be significant delays.