I bid 701k on my house, whose asking price of 645k seemed on the low side. After winning the bid, I asked what the next-highest bid was. Turned out to be 699k. I'm so happy they took this unrounding advice in the other direction :-)
Often bond dealers will put out “bid lists” to customers or other banks of relatively illiquid bonds and ask for competitive bids for a handful of bonds. Invariably the buyer with the winning bid on a bond would ask “What’s my cover?”, that is “How much more did I pay than the next best bid.”
Importantly, there is no legal obligation to tell the them or especially to tell them the truth, and invariably the response would be “a tick” (1/32). The only time I’ve heard someone say someone tell the truth with bad news for the customer was “No cover - you were the only bid.”
But to be honest I'm not sure what they were attempting to signal with 699, that's a sales strategy to make the price appear lower, surely you want it to appear the opposite. I guess some people copy strategies without understanding them.
Other bidders aren't making the decision to sell. The seller is. $701k might deter a seller countering a $700k bid with $735k (5% more).
1. Set a bid due date 2. Ask three best offers for their "Best Final Offer" 3. We increased our offer (50k 1st case which was generous, 150k second case) 4. Lost, move on to the next showing. In the second case our BFO was 400k over asking, ultimate winner offered 600k over asking. Insanity.
When I sold my house in TX I also did the same: got two offers almost immediately after putting it on the market, so we went back to the buyers and asked for BFO. Both increased their offers.
Funny enough for our third winning offer we saw it the day before the Open House (which just started being allowed again) and put in our offer the day of the Open House. Won for around 50k over asking. I'm not 100% sure but from what I gathered an investor who wanted to rent it as an upstairs/downstairs duplex offered more but they wanted to sell to another family so they took our offer without asking for more money. I was very thankful for that - if they had come back asking for better offers we'd have walked.
If sellers got more money by listing their homes for $1, they'd be listing their homes for $1.
It could also be that the buyer couldn't stomach paying 700 for the home, so they used the sales strategy on themselves to justify the price.
Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy...
To be honest, the immediate issue that is already there in this very moment is that more and more people no longer sell their stuff as regular auctions on ebay, but as completely overpriced fixed-priced offers. This is the main distinguishing factor for me between using ebay ten years ago and now. If everyone starts doing that, the best bidding strategies become useless.
It's just a weird thing to say to the BUYER, "ah, but did the SELLER look into your finances before they took your bid"
It's a losing strategy.
I found I was much better off if I could give the other side real wins.
Especially in repeated games.
Single-round best strategy is squeeze and defect.
Good negotiators find trades that are valuable for both sides of the table. That's how you negotiate well.
That does not sound realistic for a normal-homeowner U.S. real estate sale. There are generally two Realtors and a title company as professional intermediates in the transaction. The seller may only know the buyer's name if the seller spends time reading routine paperwork - which those intermediates create and handle. Why would the XYZ agents visit the seller - when the buyer's Realtor, buyer's bank, and title company have so much more information, insight, and experience on the matter?
I can see it as buyer (you want a house, not a title insurance claim). But as seller...even having your own atty. involved seems pretty odd. It's the job of the Realtors, title company, and bank(s) to judge the buyer's money, and call it good or bad.
(Or did someone offer to buy your acquaintance's house, with no intermediaries, for a briefcase full of cash? That raises enough red flags that you could host a birthday party for Karl Marx.)
Another tidbit: in NYC, most people use an agent when they rent an apartment. They charge one month’s rent.
It also helped the owner had been moved by his job, and was looking to get out of the house ASAP.
That's assuming the $699k bid isn't entirely fictitious, which it probably is. Both agents have an incentive to make the buyer feel good about the transaction and not like they overpaid when they did.
but of course, Nash equilibria don't always line up well with human behaviour. for the 2/3 game there's empirical work showing that the best strategy against inexperienced players is betting somewhere around 20 iirc. would be interesting if there are papers that would give a similar rule of thumb how much of a "premium" you should offer over the nearest sensible round number
> I'm so happy they took this unrounding advice in the other direction :-)
they went up, the others went down.