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

[Scott Pigman]

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.

[Gregory Tran]

@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 price

Offer 1:  $200k, 10% down, $100 option for 7 days, $2000 earnest

Offer 2:  $195k, 50% down, $500 option for 10 days, $4000 earnest

Offer 1 wins on price, but is it clearly the better offer?