Bidding process

Could anyone explain a little to me how this bidding process works? DH and I saw a house last week that we like a lot (we think, gotta see it again but seems like it could be a winner.)
So, once we decide we would like to place a bid, do you usually offer below the asking price first? What if they don't accept it - can you up it? In this market, is it possible that a lower bid will be accepted?
Also, what if they do accept it, but then you realize you don't want it after all? What happens then?
Thanks for any help anyone can give me!

I really think it is tough to say and decide what you will bid on a house and to predict what they would accept. We had a rough time with that. We got our house for a lot less than the asking price. We asked around to many of our friends and some said they went with asking price, some went over and some went under. It depends on the market in the area, the house price, the owner's need to move, etc.

We truly felt our house as over priced (even in this inflated market) and were pretty realistic about that (not just saying all of LI is over priced - lol). We also went to domaina.com (sp?) and typed in addresses in the neighborhood and the block to see when and what they sold for to help us make the decision. We went in a lot less than what they were asking - 20K lower than the max we were willing to pay for the house...they came back to us and we went up maybe 15K and we got the house. We were happy. But we also convinced ourselves that this is what we are willing to pay, even though we could have afforded more - we felt it wouldn't be worth it - adapted 'the meant to be' attitude. We clearly stated our reasons for going in lower to the realtor - house needs new roof and windows, we are on a lease, our research, etc.

We also had a few things in our favor...The owners wanted to move quickly (moving to Florida and wanted to get the kids in summer camp), there was only one other bid and they could move quickly, DH works for a major fin. inst. and they had an idea we would have no mortgage problems and by working there it could move the bank process quicker. We went from bid to close in 6 weeks.

Good Luck! And I do believe in if it is meant to be!!!

An offering bid can be determined by a few factors:

Condition of the house - if it needs a lot of work that is probably factored into the listing price, but it's also a negotiating point for offering less money.

How long is it on the market - if it's a great house and newly listed it will probably go fast for closer to the asking price. Some people will even bid over if they know others are interested and they really want the house. For Sale by Owners will often say they are accepting bids for a certain time period and will then make a decsion so you'll see people upbidding then, to be sure they get accepted. If it's been available for a few months then bid less because it's probably overpriced or has some other less-desirable quality that makes it a harder sell.

The real estate agent will give you some guidelines on what the seller might accept, but they technically work for the seller, so take it with a grain of salt. If you've been working with them for awhile you'll get a feel for how straightforward they are. Our agent pointed out one house that she wouldn't even show us because it had water problems in the basement.

When you've decided what to offer as a starting bid, and how much you're willing to go up to, tell your real estate agent you're ready to bid. Make it attractive by being pre-qualified for a mortgage, or better yet, pre-approved (qualified means you could get a mortgage, approved means a bank or mortgage company has already approved you and will give you one upon application)

The RE agent will fill out the offering (bid) paperwork and present the offer to the seller. They will either accept, decline, or counter offer with an amount higher than yours but lower than the asking price. It can go back and forth for a few days or more.

Standard practice is for an offer to be based on an acceptable engineers report. You should absolutely have an engineer check the property after your bid is accepted. It's worth the money. They'll tell you what structural problems there are, ie: roof needing repair, plumbing problems, etc. If the report is really bad, but not so bad to prohibit purchasing ie: roof and furnace need replacing, then you can report that info to the seller and say you'll withdraw your bid unless they drop the price by an amount calculated to cover those repairs. That might start the negotiations again, or kill the deal.

Once everyone is in agreement it goes to contract. Prior to that you can always back out, though it's best to have a good reason other than 'we changed our minds'. It's not fair to the seller to take their house off the market for several weeks if you're not really serious. Once it's in contract there are penalties for not going through with the sale.

I hope this helps! Good luck!