26 October 2018
Best offers - the buyer's nightmare
It may seem strange, in this lacklustre market, to be writing about that ultimate nightmare for buyers of being asked for a 'best offer', a favourite tool of selling agents where they ask all interested parties to submit in writing by a closing date their best and final bid.
It is not entirely surprising that buyers feel they can be selective at present so any property that is best-in-class is the focus of attention, so talking of 'best bids' is not as mad as it may seem.
Sellers, of course, love having the luxury of multiple offers and the prospect of someone bidding way more than they expect is very tempting. But buyers wilt at the prospect and it is not unknown for people to talk themselves out of bidding or just stick in a moderate bid in the hope they might get it. I have known occasions where these same people find out after the event what the house sold for saying 'I would have paid more than that'. All very understandable, nobody likes bidding blind nor the idea of massively overpaying.
These same people would happily bid strongly at an auction, taking comfort that their offer is only one higher than the next. So, I would say to any selling agent think carefully before setting a closing date for best offers. Consider instead a private auction, which can easily be done by telephone and is over in a matter of minutes with everyone not necessarily happy but at least knowing that they have been treated fairly. I also think they will be surprised by the results; openness encourages confidence.
So, what do you do if you have to submit a best bid? The difficult question is how much is enough? The answer is bid only what you can afford and at a level above which you are happy to lose the house. There is nothing wrong in overpaying, the important thing is to know you are and be comfortable with that. But bidding high with the idea of renegotiating the price after the event is to invite disaster; the seller is quite likely to take umbrage and give the contract to another party. A good selling agent will ensure that all bidders have access to legal searches, know about any possible anomalies in the title, and have a survey available before bidding begins in order to minimise wriggle room.
A buyer that is represented will always stand a better chance so even if you haven't retained someone to search, consider appointing a good buying agent to advise and bid for you. Remember that the highest bid doesn't always win, once the seller gets into a comfort zone of price confidence that their buyer will perform is worth a lot. And good luck.