As a side note, I would say the good faith is questionable. If you tell someone that your price is firm, and they respond by offering you less than your price, they are basically calling you a liar.
I don’t know what the scam is but as a buyer I had the bank or so and so entity add a lot of fees at the closing, I and my wife at the time said this is not what we agreed to and unless they can prove otherwise we are walking out the door. They quickly removed the fees.
Occasionally in real estate someone is listing something at a price they are 100% unwilling to negotiate on at all. That’s fine, it’s not the most common thing but it does happen. It’s the job of the seller in such a situation to convey to their agent that they are 100% serious, that this is a firm offer and they are not entertaining alternatives. The agent then needs to convey to any prospective buyers, “hey, I know most sellers their listing price is a negotiating point, but this seller is unwilling to accept anything other than their listing price. It’s a firm price for them, they are in no hurry to sell, and have indicated they will not accept even one cent less.” At that point if the buyer still makes a lower offer I’d say they probably aren’t acting in good faith.
When I put my house on the market years ago in DC I got an offer substantially above the asking price. Some days later the offer was withdrawn without explanation. I told my agent that at least we had the “earnest money” but the agent said no and returned the money to the guy who made the offer and then withdrew it. It seems the deposit is meaningless and worthless. I have no idea what was the purpose of the high offer which was later withdrawn.
I agree with most of what you say, but given that negotiating is so common in this situation, even if Kayaker’s agent told the buyer that the price was firm (which we don’t know from what he posted), I don’t think it’s *bad faith *to offer a lower price, just to test the waters. It strikes me that raising the asking price in response to such an offer is a lot closer to bad faith. A simple, “No, our price is firm,” would have been less of a jerk move, IMO. And could have gotten him the sale that much sooner.
I basically agree. If the buyer really wants to bid less than the asking price, he should first ask the seller if he will entertain such a bid. i.e. “I know you said your price is firm, but would you consider entertaining a lower offer?”
The whole business of offer, acceptance. contracts etc. can be short circuited by selling at auction. Here the rules are totally different.
At the auction, as a buyer, you have to register with the auctioneer and be sure to have 10% of however much you plan to bid. If you make the winning bid, you pay the 10% straight away, and the balance within 28 days. Once you pay the balance the house is yours.
As a seller, if the buyer fails to come up with the cash, you get to keep the 10% and, if you subsequently sell at a lower price, it is possible to pursue them for your loss.
How many people are bidding? What is the minimum price? How many other houses are being auctioned at the same time? How long does it last?
Might be good in a hot market - and when there are multiple offers you get into an auction situation anyway, but it would be awful in a slow market.
“Firm” can be a negotiating tactic also. Offering 20% less or something would be obnoxious, but 5% is usually quite reasonable. And it depends on other factors. If DOM was getting into the triple digits the offerer might think it was possible that the firm stand could be reconsidered. Ditto if the market was very cold.
A nice lady down the street from us put her house on the market with a firm price, which she meant since she didn’t want to move all that much. She’s still there two years later.
Why turn it into a two step process? First ask permission to make a lower bid and then make the lower bid?
You can say “no” to “I offer you 5% less” just as easily as you can say no to “May I have your permission to offer you 5% less?”
I assume it does happen on an ad hoc basis, in times and areas where the market is favouring the seller. Solicitors don’t tend to get involved in the process that early on, though, so I wonder if there would be some confusion or reluctance to do something with any deposit.
Yep, they’re real - Citizens Advice are a genuine free/low cost legal resource. They do say ‘may’ be asked for a deposit, it’s true. On that same page they also talk about a formal deposit, but you’ll notice that’s associated with the transfer of contracts as I described. Until that stage happens there is nothing tying either party to the transaction. (I’m almost at the stage myself, currently wondering if it is possible to hold your breath for 4 weeks. My house is under offer, finally, but I can’t assume it is actually sold until contracts are exchanged. Apart from anything else, accepting an offer means effectively I can no longer market my house to other potental buyers, but my buyers are free to see if anything else takes their fancy while we wait. I have to hope they’re committed enough not to do so, but I have no influence to stop them. My nerves are shredded right now).
Because if you just make the lower bid, you are basically calling the seller a liar.
Whereas if you ask permission, you are basically asking the seller “are you serious?” Which is a bit cheeky, but not like calling someone a liar.
Well also you would be losing the buyers who want to make an offer which is contingent on inspection, financing, etc.
Yes, which is why the polite thing to do is ask if the seller will entertain a lower offer.
Sounds like there is hope in hell of getting a deposit 
Teeny hope, biiiiig hell. 
Well, the way it would probably work is that the buyer’s realtor would ask the seller’s realtor what’s up.
In my specific case I was as clear as possible. The price asked was stated as “firm” and my agent was told not to contact me with offers less than asking price. I wasn’t being “scammy”, I was just a bit pissed at getting a voicemail that got my hopes up but was unnecessary.
My agent was a tad embarrassed, but I wasn’t contacted by her again for a month, and then it was with an acceptable offer that went quickly to closing.
So that was on your agent, then, not the guy who made the offer.
Well, to me all that mattered was the end result. I wasn’t there when the offer was made so I don’t know how strenuously she presented my stand.
As an aside, she was a complete idiot overall. I signed papers giving her power of attorney to represent me at closing since I couldn’t be there and the buyer was in a huge rush. She had a big check for me (I owned the house outright) plus the ability to cash the check. When I stopped to pick up the check she was gone and couldn’t be found. The secretary kept telling me how odd it was that she wasn’t even answering her cell. Turned out to be car trouble, all reasonably explained though nerve wracking.