Making your purchase offer stick

Q: The house we want to buy was listed for $110,000. We offered $108,000, but asked that the sellers pay our closing costs. Our Realtor said that the sellers might respond by saying they have other offers, and she needs to know whether that's our final offer. Should we say that's our final offer or offer more?

A: Probably the toughest conundrum in the real estate universe is the question of how much to offer for any given home. Probably the reason it's so tough is that there are a dozen different ways to approach the question. In a multiple-offer situation, the uncertainty about what you're up against, the desire not to overpay and the auction-style atmosphere of competitiveness only up the ante -- and the puzzlement. So you've really got two questions going there: (1) Should you stick at your current offer or offer more, and (2) What should you tell your Realtor?

Mindset Management

Let's review your actual options -- there are more than you recognize. You could tell your Realtor that the $108,000 (including closing costs) is your final offer. You could tell her you're willing to go up to X dollars with Y closing costs. But you have another option -- you could tell her that you might be open to a counteroffer, but that you'd like to wait for a response from the sellers to decide how high you will actually go.

Generally speaking, before I submit or present an offer on a property, I communicate with the listing agent via phone or e-mail -- in part, to determine whether there are other offers on the table. If so, we make our offer keeping that in mind, and make our best offer on our first offer, knowing that if we're competing against another, better offer, we might not receive a counteroffer or get the chance to offer more later.

If no other offers are on the table at the time we submit ours, we might not offer quite as much. If there's much lag time between our offer and the time we get a response from the sellers, it's my job (and your Realtor's) to stay in contact with the listing agent and let you know ASAP if and when more offers are received.

My point is that while you shouldn't necessarily start throwing money at a property to try to beat out hypothetical competing offers, you should start considering whether and how much more you'd be willing to offer if those hypothetical offers materialize.

Buyers often ask me whether or how I can know if the listing agent is being honest when they claim to have multiple offers. Sometimes you can tell they're not, or they have a reputation for being dishonest. Nine times out of 10, though, in my experience, if the listing agent says there are multiple offers, there probably are. Do the math -- at a 3 percent per side commission, a $10,000 above-asking offer results in an increased commission of $300 for the listing agent, which she still probably has to split with her broker. Considering that some buyers refuse to compete at all, listing agents know that if they totally fabricate multiple offers, they run a very real risk of not selling the home at all. In this market, every agent would rather sell a place -- even below the asking price -- than risk not selling it at all on the chance they might earn an extra couple hundred bucks. ...CONTINUED

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