Should You Tell Your Buyer's Agent the Highest Price You Will Pay?
The Case for Not Sharing the Amount With Your Agent
You might be tempted to tell your agent everything, including the highest price you will pay for a home. After all, your buyer's agent is supposed to be on your side and keep your information confidential, right? I've had lots of buyers take me aside and say, "OK, this is the highest price I will pay, but let's offer a little bit less."
The fact is, once you share any secret with another person, it may no longer be a secret.
It isn't that the agent would intentionally reveal what you've told them, but an agent can't reveal what they don't know.
It's Not That You Can't Trust Your Agent; It's That They Can Slip Up
When my clients write an offer, I often advise them to keep their top sales price private. I truly do not want to know how high they will go. My job, when I am a buyer's agent, is to present and negotiate the offer I have in my hand-- with blinders on.
If I know the buyer will pay more, that knowledge could possibly weaken my conviction. Not that I would willingly violate a fiduciary relationship with a buyer, but I am human, just like anybody else.
When the shoe is on the other foot and I am the listing agent, I am generally able to wrangle out of buyers' agents how much higher their buyers will go. It could be a slip of tongue over a single word or a shift in the tone of voice that I'll pick up on. Sometimes they just blurt it out.
Although I am confident that I would never break a client's trust and accidentally spill the beans to the listing agent, it's possible that the listing agent may also be sensitive to subtle clues. If I make myself believe that I am presenting my buyer's highest and best offer, my case for offer acceptance rings through loudly.
Why You Should Not Tell Your Agent Your Top Price
Right after writing an offer, it's common for first-time homebuyers to play through scenarios in their heads. They can drive themselves crazy by this process, but they can't seem to help it. Here are some of their thoughts:
- What will we do if the seller outright rejects our offer?
- Should we tell the seller we will consider a counter offer?
- If the seller accepts our offer, maybe we offered too much.
- Maybe the seller will be insulted because we offered too little.
- If the seller counters at full price, should we accept that price or should we make a counter offer?
- If the seller writes a counter for $10,000 more than our offer, should we split the difference and increase the sales price by $5,000?
All of this may result in an urge to tell your buyer's agent exactly how much you will pay. That's understandable. As a buyer, you want and need strategic advice.
My advice is not to cross the bridge twice. Deal with a known quantity. Apart from the examples above, there are dozens of ways a seller can react to an offer. Much depends on factors such as the temperature of the marketplace, competition for the home, available financing, and the seller's motivation.
Offers should be structured from the beginning with those conditions in mind.
My practice as an agent is straightforward: should we receive a counter offer, we can develop a strategy based on that counter offer. To do otherwise wastes mental energy because every situation is different.
The best outcome, of course, is the seller will accept the buyers' offer upon presentation. And that, believe it or not, happens all the time.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.