Agent telling me to increase buy offer. Is this normal?

Buying & Selling Real Estate
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Agent telling me to increase buy offer. Is this normal?

Kyle Danielson
Member since 2021 · 1 post · 2 votes

First time home buyer here. I'm trying to understand the world of real estate but the longer I deal with this the more I get the feeling real estate agents are like used car salesmen... shady. I told my agent to put in a buy offer for me for $5,000 over asking price, instead she says she will check what the highest offer is, then tells me to offer at least $50,000 over asking because that's the highest offer. I know agents get a commission based on sale price so she has an interest on me bidding a higher price. The whole thing seems shady, especially when I Google this and people say it's illegal for seller agents to disclose offers and their amounts. Should I replace the agent or am I being paranoid? 

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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
5y

@Kyle Danielson  It depends entirely on your local market.  In some places, $50,000 over asking (assuming the house is priced correctly) is the norm, due to a severely restricted supply.  In others, it's absurd.

Rather than jump straight to "sleazy Realtor" accusations (something I see all too often here on BP), think about this:

$50,000 in additional sales price at an estimated 2% buyer-side commission = $1,000.  That is most likely split with the broker 60/40.  That means that the Realtor would make an additional $600. 

That's not nothing, but it's not exactly jackpot money either.  Most likely your Realtor is telling you what she thinks it will take to get the deal done. 

You can limit the risk of over paying by use of an escalation clause.  Ask your agent about making that part of your offer.

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  • Account Closed
    Valencia, CA · Member since 2021 · 42 posts · 21 votes
    5y

    @Kyle Danielson From what I hear in the news…the Nation Association of Realtors has a few lawsuits against them for this very thing. Commission issues.. Literally just heard an update on the situation this morning. Then I read this.. Hmm..

    Disclaimer: This is just something I heard and I’m not claiming it as fact. My opinion.

    Disclaimer out of the way, I’d say follow your gut/hunch. No one can tell you what you already feel is right…or wrong. Sounds like you feel something is up. What would a second opinion (aka another realtor) hurt?

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  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    5y
    Originally posted by @Kyle Danielson:

    First time home buyer here. I'm trying to understand the world of real estate but the longer I deal with this the more I get the feeling real estate agents are like used car salesmen... shady. I told my agent to put in a buy offer for me for $5,000 over asking price, instead she says she will check what the highest offer is, then tells me to offer at least $50,000 over asking because that's the highest offer. I know agents get a commission based on sale price so she has an interest on me bidding a higher price. The whole thing seems shady, especially when I Google this and people say it's illegal for seller agents to disclose offers and their amounts. Should I replace the agent or am I being paranoid? 

    Your agent is trying to prevent everyone from wasting time on offers that won't get accepted. 

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  • Grace Wang
    Realtor · Denver, CO · Member since 2018 · 227 posts · 241 votes
    5y

    @Kyle Danielson

    The agent representing you has the fiduciary duty to keep your best interest in mind. If your agent knows you would be competitive at at least $50k over asking on this particular property, he/she would NOT be doing you a favor to have you submit an offer only at $5k over list price. It wouldn't be worth the emotional headache, time, and effort to build you up and to submit an offer if he/she KNOWS you probably won't win the contract. 

    Here in the Denver market, it has been pretty typical to go significantly over asking price. OBVIOUSLY  use your intuition, but if you interviewed your agent well and know they have a good track record,I don't think you have anything to worry about.

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  • Damon Bodine
    Real Estate Agent · New York City · Member since 2014 · 359 posts · 195 votes
    5y

    the Denver market is insanely hot and evolving quickly. You should ask your agent to provide you an ask vs closed spreadsheet of recently closed transactions in your zip code and adjacent zips. They should be able to build this for you relatively quickly using MLS closed sale exports.

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  • Abel CurielBusiness Member
    Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
    5y

    @Kyle Danielson

    If you are unsure about whether this increased offer makes sense, you may need to take a good look at recently sold comps with an emphasis on 1. Days on Market AND 2. Sold Price vs. last asking price - essentially, the % above/below asking price that the property sold for.

    If you want to look deeper into things, check out the area's active inventory & absorption rate. Your Realtor should be able to pull this info for you. This will help you determine what is a realistic asking price and what is an asking price that will be a waste of your time based on market activity. 

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