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Local Records Office

What To Do When You're Outbid On A Home by 'Local Records Office'

LOCAL RECORDS OFFICE, NORWALK, CA - It really depends on your local market and the particular house. It is difficult to make blanket suggestions. Ideally (and especially for an FTHB) you've spent a significant amount of time interviewing different agents, researching their experience (annual transaction volume), and choose one that can ably guide you in this process and your market specifics.

If you're in a hot market, the house is priced well, and it hasn't been on market long, you can't really try to lowball them and ask for seller credits. They will get a stronger clean offer and go with that. If the house has been on market awhile, needs significant repair, or is overpriced then you can try for price reductions and/or seller credits.

Remember the average sale to list price in most markets is 95-98%.

I'm fond of the phrase: Pigs get fat and hogs get slaughtered. Be satisfied with getting a good house at a decent price, don't be so greedy that you miss the opportunity.
came back with my parents Friday (they know houses well) Part of me thinks I listened to my parents a little too much and asked for too much

I see this frequently. Parents want to help their kids get a "deal". The worst is a single woman first time home buyer when daddy has to get his little girl a deal. It can make for a very frustrating situation. Remember your parents have probably only bought a handful of houses in their lifetime. Ideally, your agent who has done hundreds of transactions can guide you.

The point of the escalation clause is to prevent situations like OP experienced, where the buyer is outbid by an amount that they would be willing to pay. It isn't appropriate in every situation, but it can be very helpful when there are multiple offers.

Sellers don't often make multiple concurrent counteroffers, and even when they do the second one will be contingent on the first being rejected. An escalation clause removes the counteroffer step and puts the buyer at the front of the line as someone who is serious about the home and someone who is willing to negotiate.

OP already said that he thinks he should have offered more. An escalation clause means you don't have to offer more. You can start lower than you think you might need to go, and at the same time protect yourself from being outbid by a small number.

Just because you put a number to your ceiling doesn't mean that you're willing to pay that amount. Nor does that mean your ceiling is the highest amount that you'd be willing to pay.

The buyers in my example were willing to go to 315. Had they accepted a counteroffer of 310, they still would come out ahead. By your logic, that's $5,000 saved because of the escalation clause.

But because of the nature of the escalation clause, and the specifics of that particular situation, they only paid 306, and more importantly, it's their home now. They've moved in, and they are happy there. The sellers got their money and moved somewhere else.

Maybe they are happy, maybe they are cursing the buyers and their agent every night. I don't know, but I know that the deal went smoothly on terms acceptable to everyone involved.

I'm not talking about "overpaying" as in "not market rate" I'm talking about "overpaying" as in, paying above the seller's reserve price.

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