Many buyers are under the erroneous perception that their offer is “a secret” and that in a multiple offer situation, their offer cannot be revealed to other participants.
While many agents may say “I would never…”, reality is that they DO in one form or another in some cases. The real question is CAN they do it…and not WILL they do it. Often the seller will counter the most qualified buyer with the higher price of another offer from a less qualified buyer. Technically they didn’t “reveal” your “offer”, but they used your price as the counter price to a different buyer. Same difference really, isn’t it?
“Hey, No Fair!” is something we hear often from the buyers caught in multiple offers. Reality is that the seller does NOT have to be “fair” to all of the buyers, nor does the agent for the seller. P.S. If you are thinking that this post is not relevant as we are “in a buyer’s market”…think again. At least half of my recent dealings in the last 60 days have been multiple offer situations. The good houses are getting multiple offers, “good” often translates into best floorplan, best condition, turnkey, move-in ready, needs little or no work…and not best “value” or a “bargain” in need of repairs or updates.
Here are a couple of ways that your offer is “revealed” in a multiple offer situation. Often it’s more like a guessing game. Buyer Agent says “If I bring you an offer of less than asking price, does it have a chance.” Agent for Seller laughs and says, “Hey, I have FOUR OFFERS!, what do you think?”. Even if all four offers WERE under the asking price (not likely), the agent may still respond in this manner. Buyer Agent says, “If I cap at $950,000 will that put us “in the running?” Agent answers “Yes, but more offers may come in, so no guarantees.” Well at least you found it it was likely more than the ones in hand…maybe. No guarantees.
The reason agents don’t reveal the other offers before the seller picks one is because they WANT you to go AS HIGH AS YOU WILL GO, and that is their job as the agent for the seller. NOT because they CAN’T tell you.
When an agent reveals that there are multiple offers, that is also called a “Notice of FINAL and BEST”. You bring your Final and Best Offer. NO the seller does NOT have to counter you and rarely do multiple offer situations give you a “counter” or “second try at it”. YES, the seller’s agent can pick up the phone while considering the multiple offers, call the Buyer Agent who has the buyer with the best credentials and give them a price at which their offer would be accepted and tell them to re-write, right now, and bring a new offer at a better price to the house.
Can the agent for the seller by-pass an offer merely because the buyer does not have an agent? Yes. The seller can take the offer price from an unrepresented buyer and counter a represented buyer with the same offer price. If the seller and the seller’s agent prefer that the best and most competent agent be on the other side of the table during escrow, that is a considerable factor. Often the seller and the seller’s agent will choose based on the competence of the Buyer’s Agent. So everything the Buyer’s Agent has said to the Listing Agent WILL be part of the consideration, and having NO agent will also be a factor in determining which offer to select.
OK, now everyone say “NO FAIR!” in unison. Quite right. When the seller and seller’s agent are looking out for the seller’s best interest, they are often NOT fair to all or even any of the buyers who are submitting offers. Don’t be lulled into the idea that you will get a second chance to make an offer. Don’t be lulled into the idea that other buyers “CAN’T” be told what your offer is. Don’t expect a seller to “be fair” to you while he is doing his best not to “leave any money on the table”.
Best offer wins. Often the best offer is cultivated by “shopping” the offers on the table until the best offer is formed…and not the best offer “as submitted”. If anyone thinks it is “illegal” for an agent for the seller to reveal your offer to another potential buyer…quote me the law that prevents that from happening.
Rarely, if ever, do agents reveal another offer by physically showing it to another agent BEFORE the seller makes a decision. Rarely do they reveal another offer in writing. Rarely do they reveal it in a voice mail message. Most often these things happen verbally and “off record”…like a whisper in an ear as most secrets are revealed. So your agent being available by phone during the time the offers are being presented, could mean the difference between your getting the house and your not getting the house. Often what we do to earn our commission is be available…at the right time…with little or no notice…just in case we are needed.
So when you decide not to have an agent, know that may hurt you in a multiple offer situation. And when you are choosing an agent, understand that how your agent conducts themselves with and in front of the agent for the seller…can make or break your deal…and your heart. So pick an agent that is trustworthy. One that YOU trust…and one that the other agent will trust to help you close, rather than to “get out” of, the transaction. If an agent makes it very clear to you “that they can help you get out of this”…they may be sending that signal to the other agent as well. No seller wants a buyer who is looking for “an out”.
I have had agents bring offers, in mulitple offer situations, tell me “I hope this one works. I’ve submitted 7 offers for these buyers and they cancelled on home inspection EVERY time!”. When the Buyer Agent “vents” to the Agent for the Seller…what are they thinking?…but that’s another post. For now, know that your offer CAN be revealed, used, shopped and utilized to the seller’s best advantage.
Is there any kind of standard for knowing there are any actual offers on a property, and multiple bids are not just BS? As a buyer I would be weary of being told there are multiple offers on a property unless it was something really special. Anyone seen situations where you thought the bidding was bogus?
Can a sellers agent accept an offer because it is from a buyer’s agent working in the same office as the seller?
If so then that practice, and along with it similar practices, seem ripe for regulation from the government.
Alan,
Since the seller “accepts” and not the agent, the government cannot regulate the owner’s actions. I have not seen that happen though, if anything it works the other way around. The agent bends over backwards NOT to favor their own buyer or a buyer from an agent in their office…in these parts anyway. Most offices are risk reduction driven, for better or for worse.
There is a rule of the mls that would force an agent to consider the offers of agents before ones from buyers without agents to some extent. The system exists to give the agents a level playing field, so a buyer who alters that level playing field by playing “the commission game” often has to be disregarded or downplayed under the system’s purpose and logic.
b,
No, there’s no standard way of knowing about other offers. Bogus multiple offer boasts happen all the time. People fall for it like you wouldn’t believe and by people I mean both buyers and agents. The agents are so hot to get a deal signed around that they are probably more likely to believe it or, at least, to use it to motivate their clients to act immediately.
For buyers it a real shame because they may make an offer stronger than really needed or make a buying decision much too hastily. For sellers a converse problem I see is that the seller’s agent is extremely reluctant to give bidders a second bite at the apple. I agree with Ardell that it is very often in the seller’s best interest to call the low bidders and encourage them to give it another go.
I do that and not just to get a higher price. Sometimes the difference between two offers isn’t price. For example, one offer may have a pre-approval but the other doesn’t, often only because that buyer didn’t think to include it. I’ve called and asked them to get me a pre-approval because they’re neck and neck with another offer. I also mention that they’re welcome to sweeten their offer while they’re at it. Sweetening can take the form of a higher price, a shorter contingency period, eliminating some or all of the contingencies or whatever. If they indicate that they can get the pre-approval letter and want to sweeten their offer I’ll call the other buyer’s agent and tell them the absolute truth, the two offers are neck and neck and we’re giving the other buyer a little time to send over their pre-approval letter. I then mention that the other buyer also indicated they may sweeten their offer. I ask if they’d like me to let them know if that sweetening actually occurs. They usually say yes, but if they say no then I know where we’re at with that buyer.
Many people get beside themselves with the offer expiration date but that’s a different story and I’ve got to get back to work.
Ardell said:
There is a rule of the mls that would force an agent to consider the offers of agents before ones from buyers without agents to some extent. The system exists to give the agents a level playing field, so a buyer who alters that level playing field by playing “the commission game
b,
As with most of my posts, this one was written with recent events in mind, so I’ll change the dollar amount, but give you the rundown on the events as they played out.
For the most part it is your reliance on your agents savvy that counts most in these things. An agent talks a whole lot more to agents without conveying every word spoken, and unspoken, to their buyer client. I can tell 99% of the time. Some agents are clueless. I have had agents say to me A LOT “but the Listing Agent told me…” when in fact the Listing Agent made it clear…in their own way…that it was a completely different situation. You have to listen between what is said quite often in this business. A Buyer’s Agent who does what the Listing Agent tells them to do is dangerous, and one who doesn’t probe well (when they get the opportunity to do so) is worthless.
We submit our offer. Another agent is “writing an offer”. So we can’t know if there really is going to be one or not. 50/50 chance really. No you can’t wait to find out as the Listing Agent won’t be available until they present offers after picking them up at their office. Maybe they ARE available…but they are saying they won’t be. Either way you can’t always get to know what’s going on AND it is the agent for the seller’s job to keep you on the edge of your seat. No fair play here…remember that.
Offers are being presented at 5:00 according to listing agent.
We hear nothing and it is 7:10. I’m standing at the phone from 5:00 just in case. I’m going to call at 7:30 if I don’t hear. Buyer calls me…and we agree to wait until 7:30.
Asking price is $923,000 (Zillow value) which is likely underpriced since this is a recent and full remodel. Zillow doesn’t look in the house, so likely this asking price is low.
We jump the asking price by $5,000 to $928,000 with a $1,500 increment escalation clause.
At 7:20 I get a call from the listing agent. “Can your buyer go up to $935,000 or $945,000?
I probe: Why is it one or the other? Doesn’t one get them the house and the other one not get them the house? If $935,000 would get them the house, then why would they go to $945,000.
Listing Agent answers: Oh, this is my first time doing this. Can’t I do it this way?
I probe: Well it depends on what the other offer is. I’ve done a lot of these. Give me the particulars.
Listng Agent answers: OK, but don’t tell anyone, this is just between you and me, OK? The other offer is $928,000 up to $948,000.
I answer: You may have a problem, it sounds like you told the other buyer my buyer’s cap.
Listing Agent answers: Oh no, it’s just a coincidence. In fact the…blah, blah, blah…right.
Oops…late for an appointment…to be continued…
the listings agent can reveal the terms of offers to other buyer agents. there is no law or NWMLS rule that makes the offer confidential.
Unless there is a confidentiality clause in the contract, it isn’t confidential.
In Silicon Valley many of the Brokerages have tried to use confidentiality agreements that are submitted to the listing agent prior to any offer presentation. The document basically states that all parties agree that the offer is not to be discussed with anyone other than the listing agent and his/her sellers.
It’s a joke! As a buyer’s agent, if you present one of these documents to a listing agent and his/her seller prior to any offer presentation, you are considered “difficult” to work with. You’re dead in the water. If the seller signs it, who is there to enforce the terms of the non-disclosure document? No-one.
As Ardell has stated, for a buyer’s agent to get the home for his/her client, they must ask lots of questions and listen to the answers as well as what is not being said. Unfortunately, a skilled and unethical listing agent can cover their tracks and get away with most anything. However, in my experience this behavior eventually catches up with them.
Marc, agents have a duty of honesty, to treat everyone honestly, not just their own client. And, while some outright lie and say there are multiple offers, most don’t and would not.
Negotiations for buyers and for sellers by their agents is extremely important. A non-represented buyer has no one working on his behalf, and no real ‘voice’ other than his offer. That offer better be darned good if there are multiple offers.
And, yes, the agents definitely have to play the question and answer card playing routine, and be good at it.
Back to my comment #6
I’ll pick it up from here:
Listng Agent answers: OK, but don’t tell anyone, this is just between you and me, OK? The other offer is $928,000 up to $948,000.
I answer: You may have a problem, it sounds like you told the other buyer my buyer’s cap.
Listing Agent answers: Oh no, it’s just a coincidence. In fact the…(blah, blah, blah…right). I’m not believing her, but if my client’s won’t go to or over the $948,000, the point is moot. So I tell her I’ll call her right back and I get my client’s on the phone.
I tell my clients to think about it as quickly as possible and call me with their answer, and I call back the Listing Agent.
Me: How will my client offering $938,000 help them? Are you saying the other offer is weak as to something other than price? Do they really have a shot at the house by coming up to $10,000 LESS than the other offer’s cap?
Listing Agent: Well…maybe…
I said it sounds more like you want to get our offer up so that you can get more from the other buyer.
Listing Agent: Is that OK?
I said, well if my buyer is willing to go to $949,500, will they be able to come over, right now, and get the house? She says yes.
My buyers are still thinking about it. Kim and I jump in the car and drive to the Listing Agent’s office. I jump out and Kim drives over to our client’s house and gets the $1,500 over the other buyer’s cap signed.
Listing Agent is not at the office. I call and say we are here, you said you were here at your office with the seller. Where are you?
Listing Agent: We went to dinner.
(who the heck goes to dinner in the middle of multiple offers with expiration times of 9 p.m.?)
They finally show up after 10:00. We are still in the parking lot. I ask to see the other offer before giving them our client’s offer. They refuse to show it. Then they say the seller decided to take the lower offer…right.
So if they had our offer and the other one at what they said, the seller will end up with $929,500 ($1,500 over our initial offer) instead of the $949,500 from us. A $20,000 loss to the seller. (I figure I’ll call Craig if that happens 🙂
They wouldn’t tell us the sale price and said “you can see it in a month when it closes”. Will be very interesting to see what happened. I’m wondering if they altered our contract to pump up the other offer.
Our clients found another and better house within 24 hours, so we are fine. But I’m wondering how these shenanigans impacted the other buyer and the seller.
That had to be the worst case of bungling multiple offers I have ever seen. We camped out for over two hours and called their bluff. They were not happy about that. I’m hoping MAYBE as a result of our following through and making their life difficult, they will at least learn not to try that crap again with another agent and buyer.
So even if you get to SEE the other offer, it could have been altered or pumped up to bounce off of. So make sure you see the contract AND check with the other agent on the contract to get the full story.
RARELY do you see this kind of crap. Most multiple offers are handled very professionally. But when it gets sour, cover your bases and probe exhaustively and camp out if you have to.
Bad ethics is a terrible thing…run from it. There’s always another house.
Marc,
If I see the above situation fall to the seller’s detriment, I’ll give you a heads up. But your comment above made no sense.
If the seller disregards the unrepresented buyer by countering that buyer’s number to a different buyer, the buyer has no recourse and the seller is not damaged.
Often a seller wants the buyer to have an agent unless that buyer agrees to work closely with their listing agent. A buyer with an attorney in tow might be feared, and seen as someone with an “out card” in tow.
Not talking about how real life plays out, keeps consumers in the dark. Talking about how it really works in real life, helps them make decisions regarding how to proceed in these situations.
Not buying houses that have mulitple offers often leaves a buyer with the runt instead of the pick of the litter. So more posts on real life situations, though a bit unpleasant, help many.
What’s your feeling about one buyer being able to see or know another buyer’s offer? Most buyers think this is confidential info. What’s your view?
ARDELL
You remind me of the Carrie Bradshaw of real estate. Why?
You come up with all these “isms,” just like Carrie. For example “out card,”
Have u seen the movie?
Hi Kev,
NYC and Philly have some things in common. Like making up our own phrases that cut to the chase and say big things in few words. I don’t think Carrie or I are unique in that regard in the Northeast of this Country. Fast past environments breed short cuts in communication.
Speaking of which, I wonder if I can remember how to do shorthand?
No, I haven’t seen the movie yet. Been too busy with three offers back to back. My daughter gets back into town tomorrow, I think. If she’s up to it (has had morning sickness all day long) I’ll see if she wants to go. Unlike you who wants to see it alone, I’d prefer to see it with some girls. If Jacquie wants to go I’ll do a “Girls Night Out” post and see if anyone wants to join us.
There are big outings at the Downtown Theater that serves drinks while viewing the movie. I can’t remember the name of the place, but it sounds very festive and I’d love to see this movie in that environment.
Ardell, bad ethics and a greedy listing agent or seller are terrible things – run. There definitely are other houses.
And, you’re right. Most muliple offer situations are handled ethically and professionally. It’s nice to know even when your buyer doesn’t get the house, what the other offer was that ‘won’.
Leanne,
I think what happened here was there were only two offers and the seller saw the “potential” in the cap price, and then had trouble with not getting it. I think the house was underpriced to begin with, but with no “all offers will be looked at” provision. That forced the seller to respond to the offers over list price without enough buyers in the picture for it to play out properly.
A little while ago I had the same situation, but the seller wasn’t at all motivated or in greed of “the cap” price he didn’t get and we “won” the multiple offer situation for much less than cap price.
Any agent underpricing to get multiple offers in this market is playing a very dangerous game…and that is what I think happened here. I’m not sure if it was intentional though, as it looks like they just listed it at the Zillow price. I think they were too green to price it properly and looked to the wrong source for this particular house.
In any event, I’m sure the listing agents learned a lot…but hopefully not at the seller’s expense or the buyer’s expense. We got a differnt house, but I’ll look back and see what happened after the dust settles.
Hey Ardell —
I’m drawing a blank. What’s the rule of the MLS that would force an agent to consider the offers of agents before ones from direct buyers?
It’s my experience that when a multiple offer situation gets down to the wire, listing agents pull very few punches and tell the truth about the existance of other offers.
Our standard Multiple Offer and Escalator form requires that the listing agent submit the counter-offer with a bona fide copy of the other competing Buyer’s Purchase and Sale Agreement. The other competing offer must be comparable not only in price, but other terms (contingencies, time frames and the like.) There isn’t much room for fudging facts using that form, and I’ve found that other agents are pretty honest.
As long as you’ve got a clear idea of what their goals are (usually getting the highest price for their seller, on the best terms possible) and what your goals are (getting your buyer the house), it’s pretty easy to negotiate through the process.
I would like to say that I’ve never heard of such a scam, but sadly, I can’t. I so wish there were a way to purge these agents from the business.
ARDELL, I think I must be missing something. It looks to me like the LA for the deal you outlined may have been playing you and your buyer to get a higher offer esleswhere. If this is true….then how can that be a bad thing? Isn’t that what your post is about?
Maybe I just need more coffee:)
Someone wrote: “Unless there is a confidentiality clause in the contract, it isn’t confidential.”
And until accepted, it wouldn’t be a contract.
Ardell said:
“If I see the above situation fall to the seller’s detriment, I’ll give you a heads up. But your comment above made no sense. If the seller disregards the unrepresented buyer by countering that buyer’s number to a different buyer, the buyer has no recourse and the seller is not damaged.”
Ardell, what I’m getting at are situations where a listing agent “disregards” the unrepresented buyer’s offer by doing something more than merely using its price to counter a different buyer. The most egregious act would be to not present the unrepresented buyer’s offer to the seller at all. A slightly less but still egregious act arises in deals where the unrepresented offer is in some way superior (e.g., higher price, greater earnest money, more qualified buyer, etc.) to other offers but the listing agent disparages it because they don’t want to do “all the work” to get the deal closed. The reality is that sellers routinely turn over the decision making to their listing agent and if that agent unreasonably says the unrepresented offer is no good or won’t close and should be discarded that can result in harm to the seller.
Marlow,
The situation can get complicated and contrary to the rule that variable rate commissions must be disclosed in the mls, if one or more of the buyers is using the buyer agent fee to sweeten the offer. If the buyer without an agent is taking a credit equivolent to the BA fee, then there is no issue. But if some buyers are throwing in the BA fee to have their lower offer be more competitive as to the seller’s net on that lower offer, that opens a can of worms.
Say you have an offer in of $950,000, and Redfin has an offer in of $940,000. If the buyer chooses to throw in the 2% rebate, that means their $940,000 is higher than your $950,000 due to commission issues.
The form doesn’t calculate net to seller, but a seller and the agent for the seller are looking at the highest net return, regardless of what “the forms” say.
If an offer wins due to commission issues, and the mls did not alert agents regarding variable rate commissions, the mls member has an issue. The buyer and seller don’t, but the mls member is stuck with a variable rate offer when they did not allow for variable rate commissions in the mls when they listed the property.
This is especially true if the buyer is coming to the listing agent direct with a no agent offer forfeiting the entire BA fee into the seller’s net.
Broker Bryant 18. The problem was they didn’t want the buyer they were calling to get the house. They only wanted to increase the price by an amount where the buyer they called couldn’t get the house to pump up the other offer. They didn’t want the second buyer to go OVER the cap of the other buyer because they thought it would fall apart on appraisal.
If they told BOTH buyers to submit their final and best offer without an escalation clause, they could have gotten a higher number that way. But to artificially pump up the second highest offer ONLY to increase the first offer…well, I think “artificially” says it all.
Ardell, nice post, and by the way – it’s The Big Picture you are thinking of downtown for the movie. I saw SATC the night it premiered with a bunch of girlfriends and it was a blast at that venue.
For all those reading this post with regard to the requirement of offers being submitted we are, as agents, required by law to submit ALL offers regardless of whether there is an unrepresented buyer in the picture. Marlow, I don’t think there is any MLS rule that would say otherwise and go against state agency law. Perhaps you are thinking of other rules that have to do with listing agreements and SOCs?
I agree with Ardell that there are a few agents out there that can really bungle up multiple offers and I’ve had more agents than I want to remember share information with me about terms that probably weren’t in their client’s best interests but they worked out great for my client. But that happens even outside of multiple offer situations.
To the public, if you’re out interviewing agents to hire – you should ask them what they’ll do in the event a multiple offer situation arises. It will be very telling for you to sort out if you want to work with that agent. Considering that a large majority of the public hires the very first agent they speak to, it’s worth learning as much as possible about how they’ll provide (or not provide) services to you. It’s a great question even when you are interviewing agents either as a buyer or seller.
Marc,
“Ardell, what I’m getting at are situations where a listing agent “disregards
Reba,
I know several people who ONLY want to see SATC at The Big Picture. I think there is one in Seattle and one on the Eastside.
Marc,
A seller and a seller’s agent DO take into consideration who the agent for the buyer is, and how competent they are, when looking at offers of similar price and terms. You may not like that, but it is clearly the right of the seller to consider which buyer is more likely to close.
A great offer is not a great offer if there is ANY question as to it not closing at all. Often the relationship of the buyer to the agent is considered. “How long have you know the buyer’ could be a relevant question. I remember a case in Seattle where there were 24 offers. Clearly they narrowed it down to 21 by “disregarding” the others for one reason or another.
A larger part of considering multiple offers is choosing the ones to work with and the ones not to work with. Often the words said by the agent when they submitted the offer, is what caused it to go to the bottom of the pile. “I have been working with this buyer for a year and I have written 7 offers for them and they keep cancelling after in contract” is one that come to mind. Who wants an offer from that person unless there are no other offers to work with?
When we represent the seller, it is not all about what is in black and white on the paper. Far from it.
“Say a buyer goes to the listing agent to write an offer and there are 5 offers and the listing agent already has 1 in the mix. The Listing Agent could clearly say NO. Getting the unrepresented buyer’s offer from verbal to in writing could be the issue there, and if offers are being presented at 5 with an Open House until 4, the listing agent can clearly refuse to write an offer for a buyer from the Open House and tell them to try to find someone to write it in short order.
Ardell, I agree that I would not be inclined to accept an offer from a buyer whose agent said something like:
“I have been working with this buyer for a year and I have written 7 offers for them and they keep cancelling after in contract
“It seems unlikely to me that a buyer would act so bizarrely.”
Think again. Do It Yourself real estate includes buyers who don’t go to Redfin, but want to write their own offer. They find the forms.
True enough. One should never doubt man’s ability to act bizarrely.
“What is reasonable depends on the circumstances but pushing into the next day seems pretty reasonable given the deadline is usually late in the day.”
Doesn’t work that way. Time is of the essence. The other offers expire at 9:00 p.m. Why turn 7 offers into “dead offers” that have expired in order to get one more? I think it would be negligence to cause the other offers to expire, if all of them are good and at least one or two more than just acceptable. It’s not an auction and one more buyer is not always a good thing, if waiting for them causes all the ones in hand to expire.
That has nothing to do with “all offers will be presented on.” ALL offers HAVE an end time, whether the listing agent imposes that or not. There IS an appointment set with the seller to review so the agent can get the response back before 9 p.m. under the terms of the contract.
If a seller has 7 offers and you call him and say do you want to wait until tomorrow for an 8th offer, and oh BTW, all of the 7 we have in hand will be expired by then…what do you think the answer will be?
I think that’s where “A bird in the hand is worth two in the bush” comes from.
Marc,
“Eventually, even a flighty person is likely to commit and I, for one, will not flatly reject them.”
If you were my seller client, I would take that into consideration. But most sellers don’t want to look at flighty when they have more than enough offers to ignore the flighty. Actually…we call them “squirrelly”.
Answer me this, Marc. If you had a buyer client with NO contingencies, what are the odds you couldn’t get their Earnest Money back if they decide to cancel? I bet you wouldn’t just be handing it over to the seller, if you had the buyer client with “no contingencies”.
The first thing a buyer asks when they want to cancel is “how do I get my Earnest Money back”. I’ll bet you could claim some kind of coercion if the seller countered at “remove all contingencies NOW!” in order to have accepted the offer in the first place. No..flighty doesn’t get to play when there are multiple offers.
“Ardell, I agree that I would not be inclined to accept an offer from a buyer whose agent said something like:”
Marc,
By agreeing that there is some standard for discretion to be applied, you agree that when we don’t agree…your standard becomes less relevant if I am the Listing Agent and you are not. Every agent and their client will view these offers differently, in the moment, and given all info at our disposal. No agent, bad agent, good agent…are often part of the criteria, as most times the offers themselves are quite similar and often even identical. It’s the gray areas that often come into play and create the win-lose outcome.
Ardell,
This is where you and I disagree. If a multiple offer situation is handled tactfully, the offer expirations become of minimal concern. In my experience buyers and agents treat the offer expiration date as a do or die deadline when they don’t really need to. The reality is that most buyers in a multiple offer situation will still be interested the next day. If I have reason to believe that is not the case I will certainly advise my client of that belief, but more often than not, that is not the case. Otherwise, I keep all of the parties informed of what’s going on, why a decision has been delayed and when they can expect a firm answer. If they want to withdraw their offer or let it lapse in the meantime, so be it. In my experience, much more often than not, I have been able keep all the deals on the table.
Another example of why offer expiration isn’t often not crucial is the fact that an offer (even in a multiple offer situation) is almost never without something that I want to change. For instance, the highest priced offer may have the default 30 day loan commitment letter deadline in the 22A. I would absolutely want the buyer to shorten that deadline in a multiple offer situation and by doing so I will likely counter their offer which effectively terminates the offer and replaces it with the counter. At that point, the seller cannot accept the offer even if they later wanted to and the buyer is given time to consider whether or not to accept my client’s counter. That’s a risk that is often worth taking to get the best overall contract.
The Big Picture does have 2 locations but they aren’t showing SATC in Redmond.
With respect to MLS forms in the hands of non-MLS members, those are copyrighted forms and are for members only. If a person is gaining access to them and writing up their own offer on them then there is a definite issue at hand the NWMLS wants to know of these instances. I’ve had this occur with a couple of listings where offers were submitted by non-MLS members and my clients did reject them, partly due to unacceptable terms and also because I had researched and found that it (the offer) may be unenforceable because of the copyright infringement. The MLS takes it very seriously, and even more so when they hear that the non-MLS member purchased the forms from an outside source, as was the case in this instance. Each scenario is different and must be decided on its own merit.
Marc, there is also a concern regarding extending deadlines in that the MLS tells agents that if we impose a date/time for offer review we must be certain to tell ALL agents that submit offers, and possibly all agents that showed or previewed the property, if the offer review period changes. That is a lot of work, phone calls, and emails which could still land a listing agent in hot water if he/she can’t reach all parties. I’d be reluctant to delay unless there was a compelling reason that worked in my client’s best interests. The promise of an offer isn’t as good as an offer in hand so I agree with Ardell (#31).
“Answer me this, Marc. If you had a buyer client with NO contingencies, what are the odds you couldn’t get their Earnest Money back if they decide to cancel? I bet you wouldn’t just be handing it over to the seller, if you had the buyer client with “no contingencies
Marc,
I can point you to several homes on market for less or that sold for much less than the offer that was given the seller who didn’t “get the deal done” and who didn’t apply the correct amount of urgency. The buyer bought something else. The seller lost out on a full price or close to full price offer, and the home is now and still or sale at much less than the first offer or closed at a price less than that first offer.
That is the first sign of a changing market. Sellers looking back and wishing they had that first offer back.
Market conditions change, and if an agent isn’t changing their perspective based on the changing market…they are doing their clients a grave disservice.
We don’t sit behind a desk 9-5 doing things “in due course”. The last sale I put into escrow happened at 11 P.M., as we “cut out” the buyer who was waiting until tomorrow to respond. That buyer was cut out by a rescission to the counter offer and my buyer slipped into escrow while many were literally sleeping.
That’s how it goes. It’s not as you imagine at all.
We made an offer…the seller had a counter out with response time of the next night. We squeezed into that little crack that the other buyer left open. This is the most recent sale, Marc, not some obscure story from ten years ago. An everyday event in our business.
Time is of the essence, and buyers who wait to the last minute to respond leave other buyers an opening. Sellers who wait too long to respond risk the offer being rescinded as a new and better home comes on market while they are dragging their feet to respond.
It’s “high season” in real estate. Not a time to be acting like there is no sense of urgency.
Ardell,
You’re disregarding the setting of the discussion, i.e., a multiple offer situation. In today’s market multiple offer situations are not the norm, so almost by definition, the buyers are extremely motivated to get the house. If they’re not already motivated they can easily be made so by simply informing them that there are other offers in hand and that they are in the running. Even the most timid have some competitive juices and want to “win” in such a situation.
This is what I was talking about when I said multiple offer situations must be handled tactfully. I try to keep people informed of what’s going on, encouraged by their progress, and suggest ways they could improve further still.
I do not handle single offer situations in the same way. Every transaction is unique and should be handled as such. There are no hard rules that always work best. My clients benefit from my experience in handling these situations and my ability to predict the other side’s response to a proposed course of action. I consider it a lot like chess and I try to consider the other side’s objectives and motivation (or lack thereof). If we’ve got bargaining power I try to use it to my client’s benefit. If we don’t, I try to mitigate the imbalance and obtain the best possible result under the circumstances. A great advantage I have is I’m willing, when the circumstances permit, to not be bound by a sense of urgency while recognizing that the other side usually can’t help but be bound by it.
Marc,
Virtually all of my recent transactions that got into escrow were multiple offers. So don’t discount them in today’s market. They are clearly still a factor for the best homes in the best locations that are “positioned to sell”. Virtually all of the properties being sold withing a few days of being listed are still short sales, and that will increase over the next 30 days.
The seriousness of the buyer in today’s market is not about the house or the buyer or the seller. It’s about the market. Fear abounds. Fear of making the wrong decision is higher now than it has been in years!
The best decisions have to be made very quickly, and the agent who is at the ready and understands they can’t have “regular hours” or let their calls go to “access lines” or voice mail and who won’t handle so many clients that they can’t drop everything at a moments notice…are the real players in this market.
“I do not handle single offer situations in the same way.”
Marc,
The “single offer situation” of the other day turned into my buyer getting the house without the first buyer even being notified that another buyer entered the room. It was all over within hours and all the first buyer got was a notice of rescission on the counter offer.
Every single offer can turn into “mutiple offers” without the Buyer Agent or the Buyer being aware of it. So treating them differently may not be a good practice. The seller is not obligated to notify you when another offer hits the table, and our offer had a very short fuse by design and was ONLY valid if the seller responded by 11 p.m. in a manner that would cause the contract to be fully executed by that time.
They tried to change a small item that would have left the contract “open” until the next day in minor counter crap. We said No Way Jose! This has to be STI before we all go to bed tonight.
Ardell,
I don’t discount your effectiveness in the late night transaction you described. In that instance you did what I described above: you presented a cause for urgency and used it to your client’s benefit. In so doing you were able to take advantage of the seller’s and his/her agent’s fear of losing a good offer. By the term “take advantage” I don’t mean you abused the seller or did anything unfair. To the contrary, you played within the rules and allowed the seller to decide that he or she was not willing to take the chance that your buyer would walk.
It’s called asymmetrical information and a good negotiator uses it to his or her advantage. An equally good negotiator on the other side recognizes when he or she believes it is being (or is not being) used against him or her and determines a course of action based on that belief. Sometimes the deal is too close to fuss over a trifling detail, other times calling a bluff can do wonders for your bargaining position.
Many agents are reluctant to call what might be a bluff because they’re so close to having a deal and getting paid. Their clients often have no idea what additional benefit they’re about to loose out on and go blindly with the agent’s advice. The result is they often sell for a sub-optimal price.
I’m typically risk neutral or risk seeking in my personal real estate negotiations so I try not to leave anything on the table when I negotiate my own deals. When I negotiate for a client I recognize that they are often risk-averse so my goal is only to make sure they make an informed decision with a healthy respect for but not an undue fear of urgency. Once that goal is achieved I respect whatever decision they make even if it is different than what I would have chosen.
Marc,
Sometimes, many times, I’m in the business of “getting people from here to there”. The urgency is created by the fact that I have just sold that buyer’s home, and they need to go somewhere in a certain timeframe.
Still, I don’t want them to get a bad house or the wrong house or overpay, etc… That’s an extemely intense period of time. How many really good houses in good locations are going to be coming up in that short time frame when they have to leave the house I just sold? More now than in November 🙂 Thank God!
I did work out a post occupancy, so they can have their sale closed, and still have an option to stay in their home and look at property. I work it on a per diem to stay, with sufficient notice to the buyer of actual possession date.
The last one with a post occupancy I did differently back in December. Can’t remember the terms exactly. The seller was buying a short sale in Bellevue, so I needed some stretch room. In that one the seller still had to stay with family temporarily, as we can’t stretch longer than 30 days normally at time of contract. If the post occumpancy is more than 30 days in the contract, the buyer then has to get “investor” financing. So the stretching is not unlimited and can backfire if you try to stretch too long.
Single transactions as in first time buyer or any buyer who is currently renting, are not as critical. If it is a single person or couple, not as critical, there’s always a short term rental.
In this case I had a family with two small children…so urgency is about juggling all of the factors and getting their home closed and them into their new home without doing anything stupid created by “urgency”.
I take this responsiblity very seriously, as I feel that I made them “homeless” when I sold the home they currently live in. I go into OCD mode and move that client to numero uno priority, drop everything at a moments notice, run, jump through hoops, etc… Luckily my other clients understand that.
In this market with fewer people being able to buy before they sell, this has become a critical skillset.
For those just joining in who may have missed the point of the original post, the answer is NO! Your offer is NOT a secret 🙂
I think this is why most investors first rule is: Never,ever get into a bidding war. I think it’s good advice for all buyers at least now when the market isn’t super tight.
tj,
That’s a good rule and one I personally follow whenever possible (which is almost always due to the Auction Winner’s Curse). Earlier today I commented on an approach I’ve employed personally and for clients with good success in trying to get a house in the opposite of a multiple offer situation, i.e., an over-priced house sitting on the market with little interest.
http://blog.seattlepi.nwsource.com/realestatenews/archives/140302.asp#comments
tj,
That might be true for investors. But not for people looking for the best home for their family. Family comes first, tj, and buying a crappy house in a crappy neighborhood because it’s a “good deal” is not as important as the safety and education of your children.
The multiple offers are happening in prime areas with low commute costs that are the safest areas as to crime and that have the best schools. One should not forego a high quality of life to save a few bucks. It ain’t worth it.
Ardell,
I’m still wondering what the rule of the MLS that would force an agent to consider the offers of agents before ones from direct buyers that you referred to in comment #3 is?. It may be obvious, but I’m drawing a blank as to which one it is.
Or is it something about variable commissions? If an unrepresented buyer comes in, are you thinking that they’re going to try to get the portion of the commission that would normally go to the buyer’s agent?
Just trying to follow what you’re thinking….
Ardell, I agree about what you are saying but I disagree that you need to get into a bidding war to get a good home in a good location for your family. With a little patient and by keeping your emotions in control I’m almost sure that you can don’t need to participate in a bidding war to get something good. I see the chance as fifty-fifty that you could get something slightly better or slightly worse by backing out and wait for the next suitable home. At least in a market that is not very tight. I think it’s worth it to not risk overpaying due to being caught up in a “must have it” “must win” race. There are many fish in the sea, just have some patience.
Sorry for the sloppy typing.
I encourage my buyers to stay away from multiple offer scenarios. We are better off finding another home with room to negotiate a fair deal than to get mixed up in what amounts to nothing more than a bidding war. A buyer’s agent that plays this game is not working in the best interests of the buyer, period.
That’s just crazy talk.
If your client is looking for a painted lady Victorian home in West Seattle with a view of Puget Sound for under $1.5 and there are only about 10 of them still in existance and one comes on the market, and there just happens to be another buyer who wants it too, it’s silly not to write an offer on it because it might go into a multiple-offer situation. It’s not as if another one will come on the market again any time soon. It might be 5-10 years before another house like that becomes available.
Marlow, not to be offensive but what is kind of silly is to use a very special case to make a general point. Most buyers are just looking for a good home for their families and can’t really afford to pick specialized homes of which there are only a handful in the area. But yes if you are stuck on a very special type of home which is in very limited supply you have to expect to get competition but I refuse to believe that this is the case for most buyers.
Again, I said that I encourage my buyers to not get involved in a multiple offer situation. Ultimately, it is up to them whether or not they wish to proceed. If their heart is set on a particular house, then it is the route we take. However, in my experience, this is seldom the case.
I just had multiple offers here in Idaho. Good houses (floorplan, colors, finishes etc…) are getting multiple offers, while the “ugly stepsisters” are staying on the market forever!
It’s not doom and gloom for every house in every state like the National Media would have you believe.
Unethical agents are too plentiful if you ask me.
Marlow comment #48,
I answered that to you in my response #21. No, it is not when the buyer takes the BA fee. That is an even playing field as to net proceeds to the seller. All offers are on an even Keel if the buyer is taking the BA Fee.
It is when the buyer is kicking in the BA fee. I’ve had agents call me to write their offer thinking my getting the whole thing, or the seller getting a higher net offer would sweeten his deal.
If an unreprsented seller plays the commission card, then an offer from him of 2% less than yours is better for the seller. It’s a gray area as the variable rate commission is then proposed by a non-member of the mls. That is a sticky situation for a listing agent, and with many offers on the table, it may be a can of worms not worth opening unless necessary.
The Escalation Clause does not include the variance caused by different commission scenarios, only price. When someones net is higher and not their gross…it’s pretty darned sticky.
tj,
That logic will hold more true come October and November through March. Rarely is that the case in May, June and July. So I agree, “patience is a virtue” 🙂
So, it is the sellers net proceeds that counts the most in a multiple offer situation, along with the strength of the buyer — the highest net with the least qualified buyer is not likely to be the chosen offer.
And, for all of you who don’t want your buyer clients to get into a multiple offer, consider that the homes that get multiple offers may be the homes that will also get multiple offers in the future. We’ve had multiple offers here in Seattle since the late ’80s, certainly not every neighborhood, ever market cycle, but more consistently here than perhaps in Tacoma, the city to the south of us.
I have had many clients get a home in a multiple offer situation, and later sell that home, again with multiple offers. You’ve got to look at the situation itself, not the generalities.
Leanne is correct. The worst thing to buy if you are expecting a down cycle, is a house that won’t compete in a marketplace where only 3 of 10 homes sell.
As a seller agent’s job is in protecting, informing, and shielding the seller. It is the buyer agent’s job to shield, inform, and protect the buyer. My buyers seldom get themselves entangled in multiple offers because THEY make the decision not to engage based on the things a seller’s agent might do to influence a HIGHER purchase price, such as the those things mentioned by Ardell in her post.
Because I level with buyers upfront with what could happen in a multiple offer situation, from that point, I leave it up to them–not me–of whether or not they wish to proceed. Buyers have a right to know and, most of the time, they prefer not to because they just want to buy a nice home that will satisfy their living requirements without breaking the bank, regardless of whether they are buying a home in the winter, spring, summer, or fall.
Don’t get me wrong, a seller’s agent would not be doing his or her job if they were not trying to get the highest and best possible offer for their seller, but at the same time, a buyer’s agent would not be doing their job if they did not, at least, inform their buyer of what could happen in a situation that could potentially compromise the strength of their negotiating position. A buyer’s agent, after all, is not a sub-agent of the seller, therefore, should not act like one.
As far as future marketability, just because a home is not in a multiple offer situation does not mean that it will not be marketable in the future. Conversely, just because a home is in a multiple offer situation now does not guarantee absolutely that it will be in a multiple offer situation in the future. As we all should know well, there are no guarantees in real estate.
My comment #54 was in response to Marlow’s comment #52.
tj, regarding your comment #53…yes, I agree with you.
Suzette, while there are no guarantees, if the agent knows the area well, they can most certainly define how history has treated that area, and advise accordingly.
While no one can control the future, or even accurately predict it, an experienced agent can certainly advise a buyer whether a particular property is worth ‘pulling out all the stops’ for.
I experienced my first multiple offer in 1984 or 1985 … back then we didn’t call them multiple offers, we just called them ‘another offer’ :-)!
But, if a buyer isn’t comfortable competeing in a multiple offer situation, they should not. It is not for everyone, and you must be smart about every detail of the strategy for the buyer – or you don’t get the property, or worse, your buyer client pay far too much for it. You’ve got to know what you are doing as an agent!
Suzette as a potential buyer I can tell you that you got this part 100% right in my opinion.
Leanne, I understand your point of view, but an experienced agent or broker should also recognize that the advice they give is subjective and that it is ultimately up to the buyer to decide what is worth pursuing.
As we represent our clients, we should present the pros and cons of all the options, and then we should defer the decision of “worth” to our clients. They need to decide this for themselves because they are the ones who will have to pay the mortgage when all is said and done.
Suzette, of course our advice is subjective. Impossible to be otherwise. But, at least a good agents candor and advice carries more weight than a buyer trying to figure things out on their own.
Buyers today are not stupid people. They are highly educated, and like researching online. I think buyers like an agent with candor and smarts.
Leanne,
OK, but no matter how you look at it, it is still ultimately the buyer’s decision how they wish to proceed.
tj,
Thanks for understanding.