Do you submit your best and final on SS?

[Sam Leon]

I am not sure if this is a continuation of my other thread "Keep being undercut in SS or Foreclosures" but I thought this may be a good topic to discuss and debate.

Personally, when I see a property of interest to me, I do my homework, I would visit the property once, to do a quick look over, and get a general idea. Then I go to my research, which often involve going to the city to get plans, or online permit searches, I would also do some digging on the public records, find out about liens, open permits, violations, possible HOA back dues...then I would do a second visit which might take an hour or more, during which time I do my punch list of repair or update costs.

This whole process would take me 1-3 days, and I don't care if they have 20 offers on the table and need the offer by next morning, I do my due diligence and if I am not given enough time to cross my "T"s and dot my "I"s, I move on, nor do I let how many people are bidding on it to affect my numbers. Now once I do my homework I take everything into considerations then submit my offer which is typically my best bottom line number.

Often times I also let them know what I found, and let them know that my price already reflected what I found, and yes even though it's an all cash offer with an inspection clause, I thought by letting them know what I already know - and hence they know that there isn't a game that I am looking to play farther down the road. In my opinion this is fair and straight forward, I thought it would stop the time wasting and game playing.

Well, it seems to be a two edge sword.

First, it seems - I am not sure - it puts me at a disadvantage if all they care about is the highest bid when the highest bid may be $5000 higher than my offer but 3 months later, the buyer uses a new inspection report to renegotiate the price down say $7000, they end up getting less. An agent told me the initial price of the SS is not that important, get a bid in to "tie up the property" and worry about everything later.

Second, the fact that I did my homework and dug up details seem to scare some sellers away. My thinking is it would make them feel more comfortable and secure with my offer, knowing what I knew, but it seems others don't think that way. I had one SS where they had two offers (including mine) and they were very enthusiastic at first. However, I noticed they had an open permit for an illegal shed (which is not a big deal), but also there is a strip of land they have in their yard that doesn't belong to them. I did some digging. The city shows a 12' wide paved road through the northern end of their property. However, they have an electric fence that fenced off that section of the road such that the road dead ends on their property. This is highly unusual and I consulted my attorney and I was able to get an old survey and long story short, I decided it is still worthy of pursuing even if I have to modify the fence and yield the strip of land back to the city. I finally submitted my offer and also let them know there is an encroachment issue and I am aware of it so not to worry. They accepted the other offer, and my agent told me the listing broker said the seller decided to accept another offer because they were worried that I might back out of the deal after the SS approval due to the encroachment issue. OK, so help me out here. I am already aware of this, I told them it's not a problem, that this will not be a factor later on. The other buyer is clueless, but guess what if they do a survey this WILL come up a few months later then what?

I guess my question to the pros here are:

(1) Should I submit a bid that is my best and final? Or should I put in a bid without considering the repair cost, knowing this will put my bid higher, but count on the inspection process to yield a report that I know I will use to knock the price lower?

(2) Should I keep quiet about problems and issues I found and not tell the seller? I was assuming letting them know that I am aware of issues and also let them know these issues are already reflected in my numbers will give them the assurance I will not play games down the road, but seems some sellers would rather deal with buyers who don't do their homework?