Bobbie's Corner
How to Handle Back Up Offers
by Bill Gassett (edited)
One of the best feelings as a Real Estate Agent is when you get multiple offers on a property. Chances are it was priced right and that you have done a great job for your seller! Many agents hate this situation because it may become contentious.
When there are multiple offers on a home from a couple of different buyers there will only be one winner. As a Realtor representing the seller your job is to get your seller the best terms and conditions period. It is not your job to worry about another Realtor or a buyer's disappointment.
All offers, regardless if they are verbal or written MUST be presented to the seller unless directed by seller to have all offers in WRITING.
The listing agent does not have the discretion to determine what is or isn’t worthy of the sellers consideration. It doesn’t matter how ludicrous an offer sounds, it is NOT up to the listing agent to determine the validity of an offer. It is a violation of the code of ethics to withhold any offers whether verbal or written.
Disclosure of the price and any other terms of an offer shall remain confidential until closing,
unless otherwise authorized by the seller in writing (email).
The words
authorized by the seller
is the key factor in determining what a Realtor can do with the information they have. In other words, if revealing terms of one offer to another party could help the seller achieve a better price for their property then the Realtor should absolutely do so unless an offer is from an agent from your agency. You can reveal the terms of all offers but NOT the price offered from an agent from your brokerage.
Remember the listing agent has a fiduciary responsibility to the seller to get the best terms and conditions by whatever legal means possible.
A Realtor who reveals the terms and conditions of a competing offer without the sellers authorization is a completely different story. This would give one party the upper hand over another and would breach a duty of fairness.
The Best Way To Handle Multiple Offers
There are quite a few considerations involved to not only maximize the best offer possible but to make sure you don’t alienate the parties and end up with no offer at all.
There are a couple of different scenario’s in which a multiple offer situation could arise. It is possible there could be multiple offers coming in around the same time in which case all of the offers should be presented to the seller at the same time.
The potential also exists that you could be in the middle of negotiations with a buyer and suddenly find out you are getting one or more additional offers. The vast majority of the time when you have multiple offers it will be in the seller’s best interest to go back to all bidders with what is referred to in the industry as a “best and final” offer. Each of the parties making an offer would be instructed to come back with the absolute best terms to the seller by a set date.
Once the seller has received all offers, it is up to them how they would like to proceed. It is possible that the seller could do one of the following:
- Reject all of the offers.
- Reject one of the offers and work with the others.
- Accept one of the offers and reject the others.
The code of ethics is very clear on this issue.
"When acting as listing brokers, Realtors shall continue to submit to the seller all offers and counter offers until closing or until execution of the contract unless the seller has waived this obligation in writing."
Multiple offers are always a seller’s best friend so to speak. In most circumstances, a seller is going to walk away with more than if the multiple offer situation did not exist. The seller will most likely be in the driver’s seat if minor issues come up with inspections as well. The buyer may fear the seller jumping to one of the other buyers who lost out if they raise too many issues.
Looking at the multiple offer situation from a buyer's agents point of view should be to find out exactly what the seller is expecting for terms and conditions
.
It should not be assumed that PRICE is going to be the only deciding factor. Maybe the closing date or the amount of money the buyer is financing is just as important to the seller.
Besides increasing the price below are a few examples of what the buyer could do to make their offer more attractive.
- Shorten the time to get inspections done.
- Shorten the mortgage contingency date or remove it all together if the buyer is 100% certain they will get approved or have enough cash to close.
- Increase the escrow deposit.
Make sure you document everything!
One last rule although I don't know why you would want to do this, but it is not required that you inform other agents of the fact there is more than one offer on a property.
