It’s a very real fear when buying property. Many places, most noticeably private sales will go into a tender situation once an acceptable offer has been placed to buy the property.
Often these tenders are ‘blind tenders’ where it’s hard to determine what other bids are. A typical real estate office might have many different agents receiving ‘sealed offers’ for a tender closing at a certain time.
The hardest thing is that while I might have an instinct as to where other offers will be, there is no way to know for sure.
This is where the fear of leaving ‘money on the table’ comes into play.
I’ll explain how this comes about.
The first thing most purchasers will be inquisitive about when having won the tender is ‘what were the other offers?’. In fact, I could count on one hand the amount of times that someone HASN’T asked me this.
Now this is a perfectly inbuilt human tendency. Most of us will want to get the best deal possible and we like winning tenders by only a couple of thousand of dollars. We don’t want to hear that we won the tender process by $80,000 – that get’s us into a very uncomfortable situation.
So we have this problem. We want to buy this property, but we don’t want to leave ‘money on the table’ by paying too much more than anyone else. We have no problem with being in a competitive situation and paying our price but cringe at any other way.
Tenders are a little like ‘Russian Roulette’ in my opinion. Sometimes they produce some seriously spectacular (or scary) prices for real estate, other times they fail to bring out those ‘competitive juices’ so vital to pushing up the perceived value of an asset.
The best offers I’ve seen were from parties who have looked at this buying situation – have taken on board what data we could gather about amount of interest/ other parties potentially placing a bid – then looked at the asset for what it’s worth to them and haven’t been scared about ‘leaving some money on the table’.
It’s the situation when you miss out, realised that you perhaps should have gone with a stronger bid and have missed a vital opportunity that
this really hits home.
Money left on the table may not be what it seams. For example: the same property being auctioned may have gone well in excess of what you were prepared to pay anyway. A tender situation can cause confusion and this in turn can benefit you.
Don’t get stuck into thinking about how you can predict an offer $1000 more than another buyer unless you have some serious inside information or share the same DNA to Nostradamus.
Understand that you will be uncomfortable if you haven’t done this before. It’s normal, embrace it and just make sure that you are fully
aware of the rules of the tender. This issue is for another post altogether.
‘Money on the table’ can happen in many other situations. Think of an auction and an extremely high opening bid.