Losing Out to Better Offers? Who’s to Blame?

There are many multiple-offer situations these days, especially in Brookline, Newton and Brighton.  I heard of a buyer who put bids on four properties before giving-up and renting.  For a real estate agent, this is a sad story.

I will receive a few phone calls from my fellow brokers scolding me for faulting the buyer’s agent for all these losing offers.  A pattern of losing offers are often blamed on an unmotivated or unrealistic buyer.   But it’s time buyer’s agent’s take responsibility for the offers we present instead of wishing for good luck.

What went wrong?  There are a few places where mistakes are often made.

First, the offers were poorly constructed.  Writing offers in a multiple offer situation is an art in-it-of-itself.  An offer is not only about price, so if you meet the timing needs of the seller, you may have a better offer without bidding more money.

A serious look at contingencies is another way to sweeten an offer.  Can you waive any contingencies?  If not, can you increase the floor on the inspection contingency?  In the inspection contingency you can specify that you will only exercise the contingency if repairs needed exceed a specific amount.  For example, if the floor is $10,000, you will only consider walking away from the property if the cost of repairs exceeds $10,000.

My second guess as to how the buyer‘s agent failed is poor pricing.  If the buyer lost one property, I wouldn’t think much of it.  But FOUR?!?  There is a pattern of mis-estimating the value of properties.

The buyer broker’s job is to come up with an accurate range of value, which she should be able to do easily if she goes to showings with her client and they’ve seen what the market has to offer.  Add to the mix the recent sales, a bit of foreclosure research, some statistics on inventory, absorption rates, and days on market and you’ve got yourself a decent picture of the market.

Third, the buyer’s broker should have asked the listing agent how many offers they have and when the seller will be presented with offers.  With one competing offer, the buyer will offer less money than if there are five others.  Another consideration is the seller’s strategy in accepting offers: will there be a “best and final” round, or are they just accepting an offer upon presentation?

That being said, you don’t want to outbid by much.  Ideally your offer will be for the same amount of money as others but stronger for other reasons.  One of my buying clients in the boom market of 2005 had a winning offer for LESS money because of their personal note to the seller.  This is not a game of checkers.

Fourth, the buyer was in the wrong market.  There may be an affordability issue, so a strong offer can’t be made.  Does she keep bidding on two bedroom condos when she can only afford a large one bedroom?  Maybe.  Does she keep making offers in Brighton when she should look in Allston?  Maybe.

One of the broker’s job to figure out alternatives and look for different options for the buyer.  Our job is to take your needs and wants and find a way to make it happen.  We are agents, not observers.

Here’s the point.  We’re in a seller’s market, that’s the reality of it.  More than ever buyers need an agent who will be a guide and a resource, and use knowledge and expertise to navigate a buyer through a tough market.  If you are writing offers which are not getting accepted, don’t give up on buying.

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