Facts, myths, and rules surrounding bidding on a house

Facts, myths, and rules surrounding bidding on a house

Are you going to buy a house in the Randstad? Then you can't ignore the housing frenzy. We find that many houses sell above the asking price. So it would be best if you prepared yourself for some stiff competition. To strengthen your negotiating position, you need to be well prepared. Will you be bidding on a house soon? Learn all the facts, myths, and rules here.

Facts and myths when bidding on a home

If you are planning to bid on a house, you will likely be bombarded with all kinds of information, making it difficult to determine if it applies to you or is true. That's why we explain below what is fact and fiction, so you know what to look for when buying a house.

If you do not receive a counteroffer, there is no negotiation.

When I made an offer on the house, I started negotiating.

Myth: this is not true. The negotiation only starts when you receive a counteroffer. Therefore, even if your offer is rejected and you are asked to make a new offer, you are not in a negotiation. In fact, for an actual negotiation, both parties must reach out to each other.

These are the ways the seller can respond:

  • The offer is received, and the seller makes a counteroffer. The negotiation is starts
  • The seller starts the negotiation with a different bidder than you. If you do not receive a counteroffer, there is no negotiation.
  • The seller starts the negotiation with multiple bidders. In this case, this must be specifically reported to all parties.
  • The seller asks the bidder(s) to make an ultimate proposal. This is called bidding by subscription.
Putting a house up for sale should not be seen as an offer but as an invitation to negotiate.

Bidding the asking price or higher will guarantee the sale

Myth: You would think that the sale is guaranteed to go through if the only bid is the asking price. This is not the case. The Hofland/Hennis ruling determined that putting a house up for sale should not be seen as an offer but as an invitation to negotiate.

A deal is a deal

Fact. But only after the purchase agreement has been signed. Verbal agreements do not apply when buying a house. The buyer has three days for reflection after signing the purchase agreement. After that, the seller may decide whether or not to proceed with the purchase until the sales contract is signed.

Yes, I am the first bidder! That house is mine.

Nope, a myth. The seller does not have to negotiate with you at all. Even if you are the first or last bidder, if someone else makes a better offer, they can start negotiations with that.

Unless there is talk of bidding on subscriptions, the order in which bids are handled is unimportant.

The order of bids is not essential.

Fact. The selling agent can negotiate with the highest bidder, even if others have previously made bids. The order in which offers are to be handled is optional; only the amount of the bid matters. The sequence of bids does matter when we speak of bidding by subscription.

Only when a house is put up for sale again is there a new asking price.

During the negotiation, the asking price can only increase.

Again myth. The asking price remains the same and functions as the benchmark of the negotiation. Only when a house is put up for sale again will there be a new asking price. When we talk about a buyer's market - and underbidding - the buying price is lower than the selling price. Therefore, you will likely pay more than your initial offer if you start negotiating.

The asking price says something about the home value

Fact. Although some argue otherwise, the asking price is always the benchmark for the purchase price and, therefore the home value.

As a seller, you can put your home on the market at any price, that's up to you, but it's not always a good idea. A price that is too high can cause the house not to sell, and with a price that is too low, you get too little. It's best to rely on facts, and the most significant predictor of the purchase price is the asking price. There are two reasons for this: the asking price is a realistic reflection of the home value, and many buyers set their bids against the asking price. Bids are inextricably linked to the broker's initial asking price.

Want to know the actual value of a home? Then, check out Walter Living and make an accurate opening offer based on numbers.

Money does not take precedence over willingness.

Correct, fact. Many sellers have an emotional attachment to their home and want to leave it in good hands. As a result, the seller may not choose the highest price for the house but the party they feel better about. This is called the 'right of attribution'; the seller may decide whether the combination of price and (resolutive) conditions is sufficient to sell. So the seller is not obliged to sell the house to the highest bidder but can also choose a lower offer with better conditions.

The real estate agent may set parties against each other.

Myth. Although it may happen sometimes, it is not allowed. A real estate agent may not play the various parties against each other. Especially in the case of a popular home with multiple bidders, the real estate agent must keep all parties informed if there are multiple bids. Although the real estate agent may not tell you how high the bids were, they may ask you to make a final offer.

The negotiation system, also called the bidding system, is a set of agreements regarding openings, replies, and rebids.

The negotiation system can change during the negotiation.

Fact. The selling agent may contact you to tell you that the negotiation system is changing. The negotiation system, also known as the bidding system, is a set of agreements regarding openings, answers, and rebids. The broker may change it to a bidding procedure, for example. This may be because many interested parties are bidding on the asking price, making it difficult for the seller to determine the best party.

You have to be quick to bid.

Fact, especially in today's seller's market. When selling by subscription, for example, it is vital to be quick. This is an ideally suited method for the seller if there is a lot of interest in the house. Due to the current market, this is often the case in the suburbs, as many people are looking for a home there. All bidders get the chance to make their ultimate offer, and the amount is never communicated.

Be in a stronger position knowing the rules regarding negotiating a house.

So you see: while there are many rules regarding buying a home, there are no rules about the strategy of putting a home on the market or the final winning bid. That's why it's wise to do proper research, so you know what to do and strengthen your negotiating position. Please read our bidding and negotiating blog to see how to do this.

Ultimately, you decide what to offer, but Walter will help you get started.

Know what to offer

Walter Living provides a clear overview of the opportunity associated with a specific bid. With Walter (your digital buying agent), you get personal bidding strategies for every house you want to bid on. No cure, no pay. Walter is determined to help you get started. Good luck!

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