Buying in Competition

Listings
levels are down about 12 per cent on this time last year and as demand increases,
home buyers will often find themselves making an offer to purchase in
competition with others.

Agents
have differing approaches as to how to deal with multiple offers but normally
will inform buyers that their offer is one amongst others. When a property is
offered for sale by private treaty, details of competing buyers’ offers are not
normally revealed so as a buyer offering in competition with others, it is
difficult to know what price and conditions will ensure purchasing success
without paying significantly more than the next highest offer.

Buyers should
remember that agents have a legal responsibility to act in the best interests
of the seller unless it is unlawful or unethical to do so. They are paid to
ensure the buyer pays the highest possible price on the best possible terms.

One of the
most effective ways to achieve this and discharge their fiduciary
responsibility is to have multiple purchasers competing to buy. Naturally, buyers don’t like having to
compete as it is much harder to gain a negotiable advantage in such
circumstances.

My advice
to buyers is to always ask the agent if there are any other current offers on
the property before submitting your own offer. Agents are not obliged to state
that there are and this knowledge might influence your initial offer.

Also, consider
removing some of the conditions of your offer such as a Building Inspection
Report clause especially for more modern homes and consider aligning the
settlement date to suit the seller.

Believe
the agent when they tell you there are other offers in play. Buyers are prone
to thinking the agent is telling fibs in a bid to encourage an offer but that’s
not typically the case.

The notion
that agents should assume the buyer’s first offer is not their “best offer” is
nonsense. A buyer who tells the agent that this is their best offer should not
assume the agent thinks it a lie and remember that the seller is under no
obligation to provide you an opportunity to negotiate further. And being told
your offer was one of many, choosing not to submit your best offer and missing
out ought not to give rise to blaming the agent.