Multiple offers in the 600k range!?

[digita6]

Hi All,

I bid on a house in the 600k range, and heard that the following morning the seller received a second bid. I submitted an escalation clause, and the seller has not responded yet. The "sellers" are the builder and the agent for the property (both owners). This situation feels a bit fishy to me for several reasons: 1) the property has been on the market for about half a year and has dropped its price a couple of times (strange that there are 2 bids within 24 hours of each other); 2) one of the sellers is also the sellers' agent, so there is inherent self interest in getting a higher price. I am worried that there may be a schill bidder, and that our escalation cap will suddenly become a counter-offer.

Does anyone have experience with this type of situation, or insight as to whether this might be a common practice. I know at least it may be unethical, at worst illegal to "bid up" a house in this manner (not saying that this is what is happening, just that the situation makes me uneasy about the whole transaction).

I appreciate your time and comments.

Best,

digita6

[ira s]

Digita6,
I was involved is something similar as the buyer's agent a few months ago. The seller was the builder and the listing agent, and the house had languished on the market for 18 months, with a few price drops. After we submitted an offer, we received notice that there was another offer, and did we want to escalate our offer? I advised against it, but my clients were awed by the house and we did submit the escalation clause with a higher amount, up to a certain amount.
They chose another offer, but a month later the "deal didn't close" and the listing agent called back asking if my clients were still interested. By then the magic had worn off and they'd found other homes which were nicer and less expensive.
My advice: If it feels fishy or slimy, it probably is. Walk away.

[jon]

The months of supply is so high in the $600K range that I think you can safely call their bluff, knowing that if it falls through you still have plenty to choose from, especially heading into the fall.

I bought my current house with an escalator clause but this was back when inventory was tight and prices were rising. The other deal fell through quickly, and the seller just said they were raising the price to my max. I was still fine with the higher price and bought it because it was the still first day the house was on the market. I'm still very pleased with that purchase. Current circumstances call for a completely different approach.

Having a second offer the same day is not that strange. There was probably another buyer who had expressed an interest but was still looking. The listing agent would spread the word that it was about to sell, so the other buyer decided to commit.

[digita6]

Thanks, this information is very helpful. I really like the place, but have decided to not "fall in love" with any particular house, since I've had things fall apart fairly late in the game in the recent past. Although I did add an escalator, I remain averse to any kind of bidding war for any particular property right now.

digita6

[AmazedRenter]

We had the exact same thing happen to us more than once. It's statistically impossible that 2 offers would be submitted after the house has been on the market for 6+ months.

My recommended response is to lower your offer price by $10k, then run away as fast as we can. They'll call you back if they're interested.

[perfectfire]

[rose-colored-coolaid]

[digita6]

By way of update, the home actually sold to the other buyer at a lower price, but for 100% cash. Wasn't expecting that one. Thanks for all of your insight!

Digita6

[gameboy]

Here is my experience. We made an offer on a house that had be on the market for 3 or 4 months. We haggled on the price and made a good offer. As soon as we send in the offer, the seller's agent notified us they had a better offer.

We didn't believe it. So we made an escalation offer, but it included a provision that they had to tell us the identity of the "other buyer".

We never received the identity of the other buyer and I was so PO'ed, I backed out of the deal.

I ended up buying a house that was much much nicer and a better deal to boot.

[biliruben]

Our experience shopping for a house in-city in this price range over the last year:

A year ago, we were preparing on offer in this range on a house that had been on the market a year, only to have buyer make an offer, which was accepted, at exactly the price we were preparing (about 5% below the already marked down list). Talk about coincidence.

We made another offer on a house in this range in January, that had been on the market a week, that I thought was about 20% overpriced. About 7% below list. We were outbid with a near-full offer.

We made another offer on a house fresh on the market. This house was more than we had dreamed we could get in-city (both yard and view), so we made a full price offer. It was declined (apparently for personal reasons). We heard it through the grape vine there was a lot of interest, and we had to insist they take it off the market or accept our offer. They took it off the market, and a few weeks later accepted our offer.

[jon]

[biliruben]

I think that's right.

[Roger]

We seemingly have finally sold our vacant land, and we had a similar situation...after three price drops, we dropped under the ceiling of a "natural" price range and immediately rec'd a full-price offer, and even have a back-up offer. This is after about five months on the market. So while I would be suspicious, if the final drop in price broke through a barrier, it's not inconceivable a couple of offers may have come in.