From you perspective, so when you put in a bid which doesn't "win" is it now customary for the selling agent to invite higher bids with [or without?] an idea of the price to beat, or is the custom to just have one round of offers and the best offer wins...
From you perspective, so when you put in a bid which doesn't "win" is it now customary for the selling agent to invite higher bids with [or without?] an idea of the price to beat, or is the custom to just have one round of offers and the best offer wins...
A lot of things can happen however, usually in a multiple offer situation, there is one-round of offers at a given Offer Review Date. Brokers operating under the Northwest Multiple Listing Service (NWMLS, which covers most of WA St) will submit with an Escalator Addendum, NWMLS Form 35E, with the Buyer's offer. Basically what that form says - if you are the buyer - is you are willing to pay x-amount over any competing offer up to y-price.
For example: Say the List Price is $1M for a property. You might offer $1,000,000; up to $1,200,000; in $10,000 increments. So if someone else made an offer of $1,132,000, you would then be compelled to purchase the property for $1,142,000 - $10k more than that competing offer.
Let's say a competing offer was for $1,193,500. You would only have to pay $1,200,000 because you said that was your max, you DON'T have to go to 1,203,500.
If a competing off was $1,215,000; well you're OUT because you max was $1,200,000. So when articulating that top end of your range, you really need to know your walk-away price where you will have no regrets if you don't get the property.
Another scenario that can happen lets say its the same home but 10 offers came in. 3 of those offers were at $1.193M, $1.197M, and $1.196M. The seller might go back to the top 3 offers and ask them to resubmit with their "highest and best".
One important caveat to the Escalation Addendum is that the Competing Offer that drove up Buyer's price MUST be produced in it's entirety. The Listing Broker can't just call Buyer's Broker and say, "you won't believe it, we got a competing offer to infinity. You now owe infinity + $10k"
The business end of the NWMLS 35E states:
1. PURCHASE PRICE. If Seller receives a Competing Offer for the Property prior to accepting this offer, with a Net Price equal to or greater than the Net Price of this offer, then the Net Price of this offer shall be increased to $______ more than the Net Price of the Competing Offer. In no event, however, shall the new Purchase Price of this offer exceed $________.
The term "Net Price" means the state Purchase Price (or the maximum price if the Competing Offer contains a price escalation clause) including any price adjustments such as credits to Buyer for closing costs or credits to Seller.
Getting ready to sell a house and am wondering which is the best strategy.
Honestly, it depends.
First, where are you located roughly?
If you have two-story or day-light rambler that is in like-new condition on the greater Eastside with some view, you should come on the market and wait for the Offer Review Date.
If you have a run-down split-level that fronts HWY 2 in Goldbar, I wouldn't get greedy. With that said and such little inventory, now is the time to sell a "trouble" property.
Generally speaking in this market place, it is best to bring any home to the broadest exposure of the market place to ensure you get the best price and terms.
The corollary is to understand that we live in a very tech-centric market. Everyone shopping for homes is looking online long before they get in the car to come look. Therefor its imperative the market perceives a "value". That is when you will have the best results.
As always, happy to advise off-line on any specifics you would rather not have broadcast in a public forum.
When we sold last May our realtor held offers until Sunday and then we had 4 offers. One walked away when they found out about the other offers and one was outbid, early on. The other two has escalators that capped at the same amount. The realtor went back to both and explained the deal. Both adjusted their escalators and removed some contingencies. In the end the highest bidder was only $5k under his adjusted cap. Zillow now prices the old house at $90k over what we sold it for; it’s definitely a seller’s market.
From you perspective, so when you put in a bid which doesn't "win" is it now customary for the selling agent to invite higher bids with [or without?] an idea of the price to beat, or is the custom to just have one round of offers and the best offer wins...
A lot of things can happen however, usually in a multiple offer situation, there is one-round of offers at a given Offer Review Date. Brokers operating under the Northwest Multiple Listing Service (NWMLS, which covers most of WA St) will submit with an Escalator Addendum, NWMLS Form 35E, with the Buyer's offer. Basically what that form says - if you are the buyer - is you are willing to pay x-amount over any competing offer up to y-price.
For example: Say the List Price is $1M for a property. You might offer $1,000,000; up to $1,200,000; in $10,000 increments. So if someone else made an offer of $1,132,000, you would then be compelled to purchase the property for $1,142,000 - $10k more than that competing offer.
Let's say a competing offer was for $1,193,500. You would only have to pay $1,200,000 because you said that was your max, you DON'T have to go to 1,203,500.
If a competing off was $1,215,000; well you're OUT because you max was $1,200,000. So when articulating that top end of your range, you really need to know your walk-away price where you will have no regrets if you don't get the property.
Another scenario that can happen lets say its the same home but 10 offers came in. 3 of those offers were at $1.193M, $1.197M, and $1.196M. The seller might go back to the top 3 offers and ask them to resubmit with their "highest and best".
One important caveat to the Escalation Addendum is that the Competing Offer that drove up Buyer's price MUST be produced in it's entirety. The Listing Broker can't just call Buyer's Broker and say, "you won't believe it, we got a competing offer to infinity. You now owe infinity + $10k"
The business end of the NWMLS 35E states:
1. PURCHASE PRICE. If Seller receives a Competing Offer for the Property prior to accepting this offer, with a Net Price equal to or greater than the Net Price of this offer, then the Net Price of this offer shall be increased to $______ more than the Net Price of the Competing Offer. In no event, however, shall the new Purchase Price of this offer exceed $________.
The term "Net Price" means the state Purchase Price (or the maximum price if the Competing Offer contains a price escalation clause) including any price adjustments such as credits to Buyer for closing costs or credits to Seller.
Very good intel. @paws . I knew none of that. Of particular importance is the requirement that the competing offer be "produced". That's a good industry convention. So, if, say, someone was caught manufacturing a competing offer with bullshit, you could arguably rescind the contract, or sue for breach and damages would be easy to prove: you paid more than you would have w/o the phantom competing offer.
From you perspective, so when you put in a bid which doesn't "win" is it now customary for the selling agent to invite higher bids with [or without?] an idea of the price to beat, or is the custom to just have one round of offers and the best offer wins...
A lot of things can happen however, usually in a multiple offer situation, there is one-round of offers at a given Offer Review Date. Brokers operating under the Northwest Multiple Listing Service (NWMLS, which covers most of WA St) will submit with an Escalator Addendum, NWMLS Form 35E, with the Buyer's offer. Basically what that form says - if you are the buyer - is you are willing to pay x-amount over any competing offer up to y-price.
For example: Say the List Price is $1M for a property. You might offer $1,000,000; up to $1,200,000; in $10,000 increments. So if someone else made an offer of $1,132,000, you would then be compelled to purchase the property for $1,142,000 - $10k more than that competing offer.
Let's say a competing offer was for $1,193,500. You would only have to pay $1,200,000 because you said that was your max, you DON'T have to go to 1,203,500.
If a competing off was $1,215,000; well you're OUT because you max was $1,200,000. So when articulating that top end of your range, you really need to know your walk-away price where you will have no regrets if you don't get the property.
Another scenario that can happen lets say its the same home but 10 offers came in. 3 of those offers were at $1.193M, $1.197M, and $1.196M. The seller might go back to the top 3 offers and ask them to resubmit with their "highest and best".
One important caveat to the Escalation Addendum is that the Competing Offer that drove up Buyer's price MUST be produced in it's entirety. The Listing Broker can't just call Buyer's Broker and say, "you won't believe it, we got a competing offer to infinity. You now owe infinity + $10k"
The business end of the NWMLS 35E states:
1. PURCHASE PRICE. If Seller receives a Competing Offer for the Property prior to accepting this offer, with a Net Price equal to or greater than the Net Price of this offer, then the Net Price of this offer shall be increased to $______ more than the Net Price of the Competing Offer. In no event, however, shall the new Purchase Price of this offer exceed $________.
The term "Net Price" means the state Purchase Price (or the maximum price if the Competing Offer contains a price escalation clause) including any price adjustments such as credits to Buyer for closing costs or credits to Seller.
Very good intel. @paws . I knew none of that. Of particular importance is the requirement that the competing offer be "produced". That's a good industry convention. So, if, say, someone was caught manufacturing a competing offer with bullshit, you could arguably rescind the contract, or sue for breach and damages would be easy to prove: you paid more than you would have w/o the phantom competing offer.
From you perspective, so when you put in a bid which doesn't "win" is it now customary for the selling agent to invite higher bids with [or without?] an idea of the price to beat, or is the custom to just have one round of offers and the best offer wins...
A lot of things can happen however, usually in a multiple offer situation, there is one-round of offers at a given Offer Review Date. Brokers operating under the Northwest Multiple Listing Service (NWMLS, which covers most of WA St) will submit with an Escalator Addendum, NWMLS Form 35E, with the Buyer's offer. Basically what that form says - if you are the buyer - is you are willing to pay x-amount over any competing offer up to y-price.
For example: Say the List Price is $1M for a property. You might offer $1,000,000; up to $1,200,000; in $10,000 increments. So if someone else made an offer of $1,132,000, you would then be compelled to purchase the property for $1,142,000 - $10k more than that competing offer.
Let's say a competing offer was for $1,193,500. You would only have to pay $1,200,000 because you said that was your max, you DON'T have to go to 1,203,500.
If a competing off was $1,215,000; well you're OUT because you max was $1,200,000. So when articulating that top end of your range, you really need to know your walk-away price where you will have no regrets if you don't get the property.
Another scenario that can happen lets say its the same home but 10 offers came in. 3 of those offers were at $1.193M, $1.197M, and $1.196M. The seller might go back to the top 3 offers and ask them to resubmit with their "highest and best".
One important caveat to the Escalation Addendum is that the Competing Offer that drove up Buyer's price MUST be produced in it's entirety. The Listing Broker can't just call Buyer's Broker and say, "you won't believe it, we got a competing offer to infinity. You now owe infinity + $10k"
The business end of the NWMLS 35E states:
1. PURCHASE PRICE. If Seller receives a Competing Offer for the Property prior to accepting this offer, with a Net Price equal to or greater than the Net Price of this offer, then the Net Price of this offer shall be increased to $______ more than the Net Price of the Competing Offer. In no event, however, shall the new Purchase Price of this offer exceed $________.
The term "Net Price" means the state Purchase Price (or the maximum price if the Competing Offer contains a price escalation clause) including any price adjustments such as credits to Buyer for closing costs or credits to Seller.
Very good intel. @paws . I knew none of that. Of particular importance is the requirement that the competing offer be "produced". That's a good industry convention. So, if, say, someone was caught manufacturing a competing offer with bullshit, you could arguably rescind the contract, or sue for breach and damages would be easy to prove: you paid more than you would have w/o the phantom competing offer.
Thanks for this. Very good info.
Hi there? How may I help the swarthy Cuban?
Damn it. Sorry dude. You may help by joining the Finance Club. Hang out for a while. You don't even need to PM @IrishDawg22 to get yourself dialed-in. This is a relatively friendly, "abuse-free" zone on HCH.
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Oh I can see that it is fair, ethical and above board fully disclosed... didn’t mean to characterize it as otherwise.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Oh I can see that it is fair, ethical and above board fully disclosed... didn’t mean to characterize it as otherwise.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
I think the realities of the market - ie no supply - have more to do with the position of power the Seller wields than any perceived nefarious intent of a broker.
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Oh I can see that it is fair, ethical and above board fully disclosed... didn’t mean to characterize it as otherwise.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
I think the realities of the market - ie no supply - have more to do with the position of power the Seller wields than any perceived nefarious intent of a broker.
I was going to say, it seems you're not in the scenario of discussing escalator clauses without the right market dynamics.
I can't even believe the shit going on in real estate in Thurston county presently. Multiple cash offers with escalation clauses, no inspection, accelerated closing dates - it's a seller's dream market out there.
If you've considered selling your home, I'd say now would be a decent time to give the thought further consideration.
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Oh I can see that it is fair, ethical and above board fully disclosed... didn’t mean to characterize it as otherwise.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
I think the realities of the market - ie no supply - have more to do with the position of power the Seller wields than any perceived nefarious intent of a broker.
Yah, I believe that we are actually thinking the same things even if it doesn't sound like it. What I'm intending to say is that the seller's agent is hoping to establish an advantage for the seller if they can [of course the seller hopes for that, and the good agent is going to do that, and that is certainly not a nefarious intention] ~ and that the ability to create that environment on behalf of the seller totally depends on supply and demand. I have also been breathlessly stating that the dynamic when it works, it is an awesome tactical strategy on behalf of the seller because it puts a lot of pressure on the buyer, which for a lot of buyers is a new frontier dynamic to consider.
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Oh I can see that it is fair, ethical and above board fully disclosed... didn’t mean to characterize it as otherwise.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
I think the realities of the market - ie no supply - have more to do with the position of power the Seller wields than any perceived nefarious intent of a broker.
Yah, I believe that we are actually thinking the same things even if it doesn't sound like it. What I'm intending to say is that the seller's agent is hoping to establish an advantage for the seller if they can [of course the seller hopes for that, and the good agent is going to do that, and that is certainly not a nefarious intention] ~ and that the ability to create that environment on behalf of the seller totally depends on supply and demand. I have also been breathlessly stating that the dynamic when it works, it is an awesome tactical strategy on behalf of the seller because it puts a lot of pressure on the buyer, which for a lot of buyers is a new frontier dynamic to consider.
Agreed. But I also like the feature in the contract that requires validation of the last escalated price offer. Without that, the entire thing can be made up by the Seller. Also, by having it in the contract, you as the buyer have a basis upon which to sue for damages (clearly demonstrable) should you later discover that there was not competing bid.
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Oh I can see that it is fair, ethical and above board fully disclosed... didn’t mean to characterize it as otherwise.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
I think the realities of the market - ie no supply - have more to do with the position of power the Seller wields than any perceived nefarious intent of a broker.
Yah, I believe that we are actually thinking the same things even if it doesn't sound like it. What I'm intending to say is that the seller's agent is hoping to establish an advantage for the seller if they can [of course the seller hopes for that, and the good agent is going to do that, and that is certainly not a nefarious intention] ~ and that the ability to create that environment on behalf of the seller totally depends on supply and demand. I have also been breathlessly stating that the dynamic when it works, it is an awesome tactical strategy on behalf of the seller because it puts a lot of pressure on the buyer, which for a lot of buyers is a new frontier dynamic to consider.
The way our Seattle listing played out was kind of interesting. Our house went live on the MLS on a Sunday night. Offer review date of the following Friday. We had no offer in hand by the expiration of the review date. Then within a few hours we got 3 offers, all with escalators. The winners were $60K over asking, waived inspection and solid financing. Several of the prospective buyers said they had been burned too many times by doing pre-inspections before a review date and preferred to let the offer review date expire and go from there.
Thanks for the information, it’s very helpful... yow that is a seller based extraction system to get people to bid the maximum
I can see why it may appear that way, but actually not really. There are a number of nuanced layers I did not delve into.
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
Oh I can see that it is fair, ethical and above board fully disclosed... didn’t mean to characterize it as otherwise.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
I think the realities of the market - ie no supply - have more to do with the position of power the Seller wields than any perceived nefarious intent of a broker.
Yah, I believe that we are actually thinking the same things even if it doesn't sound like it. What I'm intending to say is that the seller's agent is hoping to establish an advantage for the seller if they can [of course the seller hopes for that, and the good agent is going to do that, and that is certainly not a nefarious intention] ~ and that the ability to create that environment on behalf of the seller totally depends on supply and demand. I have also been breathlessly stating that the dynamic when it works, it is an awesome tactical strategy on behalf of the seller because it puts a lot of pressure on the buyer, which for a lot of buyers is a new frontier dynamic to consider.
The way our Seattle listing played out was kind of interesting. Our house went live on the MLS on a Sunday night. Offer review date of the following Friday. We had no offer in hand by the expiration of the review date. Then within a few hours we got 3 offers, all with escalators. The winners were $60K over asking, waived inspection and solid financing. Several of the prospective buyers said they had been burned too many times by doing pre-inspections before a review date and preferred to let the offer review date expire and go from there.
pawz
Member, Swaye's Wigwam Posts: 18,758
Comments
For example: Say the List Price is $1M for a property. You might offer $1,000,000; up to $1,200,000; in $10,000 increments. So if someone else made an offer of $1,132,000, you would then be compelled to purchase the property for $1,142,000 - $10k more than that competing offer.
Let's say a competing offer was for $1,193,500. You would only have to pay $1,200,000 because you said that was your max, you DON'T have to go to 1,203,500.
If a competing off was $1,215,000; well you're OUT because you max was $1,200,000. So when articulating that top end of your range, you really need to know your walk-away price where you will have no regrets if you don't get the property.
Another scenario that can happen lets say its the same home but 10 offers came in. 3 of those offers were at $1.193M, $1.197M, and $1.196M. The seller might go back to the top 3 offers and ask them to resubmit with their "highest and best".
One important caveat to the Escalation Addendum is that the Competing Offer that drove up Buyer's price MUST be produced in it's entirety. The Listing Broker can't just call Buyer's Broker and say, "you won't believe it, we got a competing offer to infinity. You now owe infinity + $10k"
The business end of the NWMLS 35E states:
1. PURCHASE PRICE. If Seller receives a Competing Offer for the Property prior to accepting this offer, with a Net Price equal to or greater than the Net Price of this offer, then the Net Price of this offer shall be increased to $______ more than the Net Price of the Competing Offer. In no event, however, shall the new Purchase Price of this offer exceed $________.
The term "Net Price" means the state Purchase Price (or the maximum price if the Competing Offer contains a price escalation clause) including any price adjustments such as credits to Buyer for closing costs or credits to Seller.
First, where are you located roughly?
If you have two-story or day-light rambler that is in like-new condition on the greater Eastside with some view, you should come on the market and wait for the Offer Review Date.
If you have a run-down split-level that fronts HWY 2 in Goldbar, I wouldn't get greedy. With that said and such little inventory, now is the time to sell a "trouble" property.
Generally speaking in this market place, it is best to bring any home to the broadest exposure of the market place to ensure you get the best price and terms.
The corollary is to understand that we live in a very tech-centric market. Everyone shopping for homes is looking online long before they get in the car to come look. Therefor its imperative the market perceives a "value". That is when you will have the best results.
As always, happy to advise off-line on any specifics you would rather not have broadcast in a public forum.
Thanks for this. Very good info.
@pawz
When the NWMLS drafts their PSA forms, I can assure you their goal is to produce a document that is the most fair for all parties involved given the circumstances.
however, the implication of the maximum bid escalator clause is a seller biased built in price manufacturing mechanism that the selling agent hopes they can employ in the early phases of the sale cycle to create the fear of losing the property with in order to boost value to maximum levels.
the net effect is advantage seller under those circumstances, especially since the seller is not obligated to take the lower teaser offer that is introduced as an inducement to bid over the stated sale price
If you've considered selling your home, I'd say now would be a decent time to give the thought further consideration.