As buyers agents we are often submitting offers prior to auction or within a private sale campaign and each agency has a different procedure for dealing with acceptable offers. It was only recently when we submitted an offer to a relatively new office in St Kilda who didn’t have a procedure for prior offers in place that we realised how confusing this process could be for the average buyer. In this particular instance we submitted our offer which was acceptable to the owner, as a consequence 1 other buyer came out of the wood work and in a rare situation we found ourselves involved in a phone auction – i am sure you can appreciate how long winded and utterly stupid this is…
So what are some methods commonly used when an acceptable offer is received:
- Highest & Best – this gives all the agents in the office who have an interested party on a property an opportunity to get their buyer to submit their highest & best offer above the acceptable price. This is clear and fair. Basically you submit your best offer and whoever comes in highest or with the most favourable terms will secure the sale.
- In house auction – this is where all interested parties are called into the real estate agents boardroom for a clean, transparent auction. This is a method commonly used in the Million Plus market.
- Last right of refusal – this is where the person who submitted the acceptable offer in the first instance has last right after all other offers are submitted.
- Phone auction – this is where the agent goes back and forth between (normally 2) parties much like an auction but with anonymity, this is not transparent and not commonly used.
The key is to find out what the agents procedure is before submitting your offer because once you do the wheels are then set in motion and your offer may be entirely different, more tactical if you are aware of what’s to follow.
You should ask the following questions of your agent:
- What is your company procedure should an acceptable offer come in?
- Will i get last right of refusal
Don’t forget that the agent is employed by the vendor to obtain “the highest & best offer” each agent within the company that you are dealing with gets paid commission for a sale, and a sale only occurs if they win – there are tactic’s involved and you should be wise to them so you can put your best foot forward.