It can happen to anyone, no matter what number you offer or what terms you're willing to agree to. It even happens to folks here in Silicon Valley who make above-asking offers --- actually, it happens more than you'd expect for the most in-demand homes. So, there's nothing more risky than falling in love with a home before escrow closes.
It's okay to show how much you want that home in your reservation price, and even in your offer if you choose to, but once that offer is made there are so many factors beyond your control.
While you're mentally moving your furniture into the home, the owners are evaluating what's best for them, and even after a good informational interview, you still might not be aware of all the factors that go into their decision to accept, counter, or reject.
"I'd rather look at the letters than the offer sheets right now," he said. I do my fair share of number-crunching, but as a person who tries to pay attention to people's emotions, I understood why he'd feel that way. Their family didn't really need the money --- there'd been so much appreciation in their Silicon Valley home that they were well past the number they'd hoped for. And since this was "back in the day", all of their incoming offers were non-contingent.
It wasn't a matter of real estate anymore. Remember the college admissions process? For this family, it wasn't only about SAT scores or GPAs: who their home should go to was about the story behind the paper. So if you've given it your best effort, in terms of both your number and non-monetary factors owners consider, and your offer wasn't accepted, what are your options?
Did You Receive a Counter-Offer?
"Why wouldn't we get a counter?" she asked a little incredulously. She'd purchased a few homes around the country and this was the first time she'd anyone has talked about the possibility of not receiving a counter-offer. After all, she was my client and I'd already run the comparables: the number was perfectly reasonable.
Once the offer is presented, though, the response is isn't under your control, and there are reasons why you might not get a response. Here are a few.
Lower Number Than Expected
Sometimes owners don't know that they've set the bar for their homes too high. It happens a lot in for-sale-by-owner situations, but also happens when they either go against the advice of a real estate agent or choose an agent solely based on the promise of a certain target number.
After a while, the market will usually find a way to inform them, whether it's when traffic gets slower at open houses, offers don't come in, or they come in lower than expected.
"Not worth responding," some will think, especially with a truly lowball offer. They might even choose not to respond to future offers from the same person. That doesn't mean a lowballing is a bad thing, it's just that the probability of it being accepted is going to be appropriate to the situation of the owner. Walking in the shoes of the seller helps my clients gauge what the response might be.
A listing agent isn't required to present frivolous offers to their clients. If they were, you could imagine a cartoonish scenario where someone who didn't like a listing agent could waste a lot of their time by sending offers of $5 and $10.
The line for "frivolous" is a judgment call, however, and some agents will try and take the decision out of their clients' hands and say, "I'm not even going to present that offer to my client." There are ways around this. Better agents, though, will communicate the probable reaction and what they will recommend to their clients.
If you want this property, communicate your willingness to check-in again later and possibly submit another offer.
A property may get multiple offers "simultaneously" (i.e. more than one non-expired offer), or, it's also possible to list a property and imply to real estate agents that there's going to be a blind auction. This explicitly sets up a multiple offer scenario.
It isn't an eBay-style ascending-value auction where you see the other bids and compete directly against them until time expires. What happens is the listing agent will mention on the MLS that offers will be accepted on a certain date. When I call for more information, she'll tell me that the home is priced below what they expect to receive or that they expect multiple offers.
In this blind auction, all the bids are sealed and are submitted at the same time, the date the listing agent specified. If there are indeed multiple offers, you might not get a counter because they'll choose one finalist to complete the negotiations with, and relegate the others to rejection or backup position. This is generally considered the cleanest way to handle a multiple offer situation.
Yes, it is possible that the listing agent might play ping-pong with multiple offers --- negotiating with everyone who made an offer --- but this is frowned upon, particularly if it violates the sealed-bid nature of real estate offers.
If you aren't one of the parties, or the party, in negotiations, communicate your willingness to act as a backup offer should the accepted offer fall through.
This scenario would usually happen before my clients present an offer, but might happen when there are multiple offers. "We're currently countering another party, but if you hit this number, we'll sign the paperwork today."
I've heard this several times, and many times it's true that a strong offer can help my clients get the deal if they move quickly. This period is an inflection point, though, and during this time, it's also possible that the listing agent is using any evidence of your interest to get leverage on the other buyer.
Another form of implied counter-offer, which my clients are usually very happy to hear, happens when the two parties are close and the listing agent wants a "couple inches" on the number or terms in order to seal the deal.
It might be a fractional percentage above the offer, a couple of days on the contingencies, or exclusion of certain fixtures. A response of "write it up and we'll sign it" would indicate a verbal agreement. This is non-binding but it signals to the seller that they should take action.