Bidding wars are relatively rare in Westchester County except in those cases where the house is very special. Multiple offers are not uncommon, but having more than one offer does not mean the price necessarily gets bid up. Sometimes, when we ask buyers for their best and highest, it can backfire and the competing offer walks, not desiring to go higher in price when there are so many other options out there. Sometimes, a buyer will get caught in the heat of competition and make an offer far higher than they are truly comfortable with. They later get buyer’s remorse, and that’s when things get messy.
September 10, 2011
Keep Your Word or Lose the Deal
So here’s one of the difficult things some people are pulling in New York real estate transactions, in large part because we don’t go under contract right away.
We recently had an accepted offer on one of my listings and contracts were sent out. Then, in the 11th hour, another offer came in considerably higher. All cash, and it blew us away. I gave the first offer a chance to match, and they couldn’t. I have to act in the best interests of my client, the seller’s attorney concurred with the seller, and we switched to the higher offer. Inspections were done, and contracts went out to the new buyer.
That was 2 weeks ago. No signed contracts were sent back. No deposit. When I asked our attorney what the delay was, she told me that the buyers were trying to change a term on the contract that I specifically told their agent was not negotiable. Two weeks later our backup offer could have been long gone had I not remained in touch with them. Whether the new folks did this maliciously or not is secondary- good faith is good faith, and if a term has to be changed, it jeopardizes the deal. I have a seller to protect.
So here’s the thing to watch out for: In a multiple bid situation, a high bidder gets caught in the competition and “wins” the acceptance of the seller to proceed with contracts. Then, they delay. Inspections take longer. Issues arise. Timelines get pushed back. Eventually, the back up bids go elsewhere, and when the winning bid knows they no longer have competition, they go back on their word on price or terms (sometimes both). Without the leverage of another offer, the seller sometimes settles for less or worse. I see it too often, and it is not a good thing.
The takeaway for my colleagues is that you keep the lines of communication open with backup offers until contracts are signed (or longer).
For consumers, they should kow that when you are the winner in a multiple bid situation and then you delay or obstruct longer than normal, you risk losing the deal.
Good faith is good faith. A deal is a deal. We may take longer to put everything in writing in Westchester and the surrounding areas, but if you say one thing and do another, you risk losing the house.