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Home seller accepted a lower-priced offer than ours in a bidding war. What happened?

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Dear Real Estate Adviser,
I submitted our best and final offer on a house that got multiple bids and never heard back, so I just assumed we lost. Several weeks down the road, the house pops up “Sold” for a lower price than our offer. Can this be done here in California? Do you think this was a slip-up or did the agent just want it this way? How can I protect myself in future bidding wars? I’m confused and mad.
— Mel C.

Dear Mel,
Sorry you lost out. Though I can’t say with full certainty, I surmise you weren’t represented by an agent in your offer. A good buyer’s agent would have almost certainly discovered where you stood and what you needed to do to prevail. While there are times when you don’t need an agent, the lack of one in a multiple-offer situation puts a buyer at a distinct disadvantage. Sadly, that may be why you’re not settling into your dream home right now.

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What happens in bidding wars

There’s a chance your offer just got lost in the shuffle, or didn’t get sent from your computer or the seller’s owner wanted someone else in there — perhaps a friend or relative — for whatever reason. But there are many other possibilities:

  • Some listing agents simply prioritize email offers from buyers’ agents over individuals.
  • Maybe the winning buyer paid in cash or was already pre-qualified to get a loan and you weren’t.
  • The earnest money you offered may have been so small (say, $500, for example) that you weren’t taken seriously.
  • Perhaps your offer had an expiration date; an expired offer would then have to be re-activated and the sellers may have needed to move fast at a certain point and took the path of least resistance.
  • Or maybe you asked for concessions that the winning bidder didn’t.
  • The buyer may have even waived inspection, appraisal and other typical due-diligence measures to grease the deal.

In multiple-offer environments, good sellers’ agents will always advise their clients to choose the offer for the most money with the least risk.

No laws broken

By the way, there’s nothing illegal or unethical in California or any state about not responding to an offer. There is an ethical breach, however, if a listing agent doesn’t present all serious offers to the seller, but that involves the selling party, so there’s no recourse for you.

All that aside, it is rude and unprofessional for an agent not to respond to any legitimate offer. If it would make you feel better, call or email the sellers directly and inquire why your seemingly generous offer was rejected, if in fact it was seen at all. If there was something fishy going on and the listing agent was stacking the deck for a pal or favored buying agent, the sellers should know they didn’t receive all fair offers and that their agent acted unethically. First, check your computer to make sure your offer was even sent.

Next time, consider hiring a buyer’s agent, assuming you didn’t this time. Some homes in heated markets are getting as many as 20 offers, so you need to be better prepared and have a professional advocate to advise you on how to win a bidding war in this decidedly seller’s market.

Good luck!

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