The other day I was in a Macomb County MI real estate office
(I won't share which office) when I overheard a conversation
taking place by an agent and his buyers (paraphrasing below):
Let's just write the offer and get it accepted. We know it really doesn't stand a chance getting past the appraiser price wise, so at that point we'll just go back and tell the seller that they have to accept the appraised price.
It took all I could to not go into that adjoining conference room and give my 2 cents about this tactic.
In my opinion I would not be representing my clients interests if we took this tactic for several reasons: First, my clients will be paying out of pocket for a home inspection and an appraisal. Secondly, a seller never has to renegotiate a purchase price once it has been agreed upon. They can walk away if an appraisal comes in lower than the contract price.
Setting up buyer clients to fail with their purchase is never a good business practice. If a savvy investor wants to use this tactic then by all means, let it fly. For first time home buyers I would never advocate for this. Falling in love with a home and then losing it is too heartbreaking and frustrating for most home buyers.
My negotiating tactic? (For some reason I don't like that word..but it fits in this scenario) Education. I research the heck out of a home and the location prior to my clients writing an offer. We sit down and go over the recent sales of homes that are similar to the home that they wish to purchase. In doing so my clients are able to make an educated decision about how much to offer for the home and be reasonably certain of being successful in their purchase.
No guess work. No delay tactics (using an appraisal). Just good old fashioned hard work for clients.
EDIT: Please read the comment section and specifically, Lenn Harleys comment that deals with conventional mortgages and another concern with this type of pre-purchase offer tactic.
Photo courtesy of BiscuitsMLP via Flickr Creative Commons Licensing