Why Don't TX Realtors Try to Get Buyers to Pay More?

Question

So today I got a lesson in how realtors work in Texas, or at least in the Austin market. I was more than a little surprised at how they do things and I'm trying to figure out if it's because of some silly regulation, some silly local custom, or if there really is an explanation out there that actually does make sense.

First, some background on my previous experience with a realtor here in Maryland. When we put our house up for sale we received two offers on the same day. My realtor contacted the buyer with the lessor offer and let them know their offer was low so they had a chance to raise it. He never told them what the other offer was exactly, just that it was higher. To me that seems like the selling agents duty; to try to get the most they can out of the buyer while not being deceitful.

This weekend we signed an offer on a house we were looking at to the north of Austin. The asking price was acceptable and we were willing to pay it, but just the same we figured we'd see if they wouldn't take a lower offer. Doesn't hurt to ask for a discount, does it? Or so we thought.

Sunday our realtor told us that their was another offer on the property and that their realtor was telling us to accept our "best and highest" offer. I heard that and thought, sure, of course he's going to say to submit our best and highest offer, but certainly if we're low they'll come back to us to see if we are willing to go higher.

Well, today we found out that they're selling to the other buyer. No counter offer, no notice that our offer wasn't as good.

My realtor tried to explain this practice to me. I tried to explain why I didn't understand it. I'm not sure that either of us really understood the other. A couple of times it almost sounded like she was trying to tell me that "submit your highest and best" is a de facto code for "YOU aren't the highest and best", but then she'd say no, the may say that to the other seller too.

Anyways, it ain't like they're going to change their procedures on my account, but I'd like to at least understand it better.

Richard C. · Answer

Scott, no one is trying to be unkind, but all this whole thing means is that you don't have experience putting in an offer where the seller has multiple potential buyers to chose from. This is just how it works, and I would bet a whole lot of money this is how it works in Maryland too. Highest and best means no more games, this is your last chance to improve your offer.

Wayne Brooks · Answer

Well, how many rounds would you expect? Best and Final, means just that. Now you know.

Gregory Tran · Answer

@Scott Pigman They do.Highest and best means just that - put in the best offer you think you can make and that's that. If your highest wasn't good enough, you wouldn't win anyways right? And yes, that phrase is pretty common here in multiple offer situations.Keep in mind that by asking the listing agent enough questions coupled with some experience in these situations, a buyer's agent can typically get a pretty good sense of where the offers will be.Also, price isn't the only factor in offers. You have to look at the entire contract as a whole. Take for example the following 2 offers:$190k asking priceOffer 1: $200k, 10% down, $100 option for 7 days, $2000 earnestOffer 2: $195k, 50% down, $500 option for 10 days, $4000 earnestOffer 1 wins on price, but is it clearly the better offer?

Hattie Dizmond · Answer

For the record, the seller's agent acts at the behest and in the best interest of the seller. If I. As the seller am told there are multiple offers, and I tell the agent to go get everyone's last best offer, that's what he's going to do. I may not want to screw around with a bidding scenario. I may simply want to sell the house fast, and am looking for the best offer...price and terms. The realtor is obligated to present every offer to me, unless I've instructed them not to present offers that don't meet my min asking price, aren't pre-approved, etc. As the seller, what we do in a situation with multiple offers is my decision, not the agent's.

Mark Gallagher · Answer

If the seller's realtor kept going from person to person, they would likely alienate bidders in the process. The other offer must have been plenty good for the seller to accept. If you went to a highest and best and the offers were lousy, then I would expect the back and forth that you were looking for.

Scott Pigman · Answer

@Richard C. I never meant to imply I thought anyone was being unkind.Now I know that it ain't an auction.I feel like Grandpa Simpson yelling at a cloud.

Richard C. · Answer

And while I hate to disagree with Joseph, I am going to do so. It isn't just about price.If a realtor or seller let's you bid up in increments until all but one buyer backs out, they have lost much of their opportunity to sell to the lower bidders if something happens with the high bid.

Joseph Weisenbloom · Answer

Its just a method that the realtor uses to sell the property at the highest price. They can do that because there are a lot of buyers bidding on the same peoperty. If they didnt have lots of bidders they wouldnt be able to use the competing bids against each to jack up the price. This is common in overheated markets like Austin. I had the same issue with properties up in Dallas.

Lisa P. · Answer

If everyone understands that you only have one chance to put in your final and best offer, they are more likely to bid high if they really want the house. It is what I did for our personal residence. The house was perfect and I figured I would bid high enough to feel confident we would get the house, but not so high I would get buyer's remorse. If I knew it was going to be an auction, I would have bid in increments of $1000 and would have probably gotten the house a lot cheaper. But again, knowing I only had one chance to put in my bid, I offered a lot higher than I would have otherwise and the seller and I both walked away very happy.

Scott Pigman · Answer

Oh, and by the way. This particular house was listed on Saturday. So I'm not buying (Ha! no kidding!) that they didn't have any more time and had to "move ahead" already.