When the real estate market heats up, multiple offers on individual properties become more common. Learning how to handle multiple offers elegantly, easily and ethically isn’t that difficult if you make sure you know the ground rules where you are.
Most real estate brokerages have guidelines about handling multiple offers from both the seller and the buyers point of view. Get familiar with those procedures getting any questions you have answered before multiple offers start appearing.
Note that the law around multiple offers varies from state to state, particularly in the details. Your brokerage’s policy will undoubtedly reflect the state law where you practice. Just be prepared to explain the differences to a client who comes from another state and may be more familiar with the procedures there.
Talk about process
The chances are your client, whether they are buyer or seller, has not been through a multiple offer situation before. Even if they have been helps to remind them what the process actually will be. There are a lot of myths about multiple offer circulating around and it’s far better you help them know what’s real.
It never hurts to remind your client that it’s the seller who will make the decision on which offer to accept. Once the offer has been accepted the best the buyer can do is make a backup offer in case something false true. Sellers have been known to accept way less when there are few or no contingencies and sellers have been known to accept offers that absolutely made no sense to you or your client.
Only one offer can be accepted. This seems obvious, but buyer sometimes want to counter after offer has been accepted and that won’t work.
Let you buyer know that multiple offers are often presented together – all at one time. This is another reason the buyers should make their very best offer. Sometimes the seller will reject them all asking for new offers and better offers. It’s the seller that has the control, And there’s no requirement the seller ask for higher offers. The seller can pick the one just because it’s on pink paper if he wants.
Some are under the impression that the offers must be presented to the seller in the order in which they were made or come in. That’s not true. Generally the seller will receive all the offers through the his agent and will you either decide to ask for higher offers or will take one from the stack.
Urge buyer to make their best offer
When you know a home is likely to have multiple offers explained that to your buyer. Tell them that the offer that is the cleanest – with fewest contingencies – at the buyer’s best (highest) price is the most likely to be accepted. Prepare them to be disappointed if their offer isn’t chosen.
When you represent the seller
If you’re representing the seller of a home that’s likely to receive multiple offers help the seller get ready to make a good decision. This might include a review of the sellers financial situation, particularly in regard to the home and a reminder of what’s important to them. It may very well be that they would prefer all low offer with no contingencies and that can close in a short time rather than a higher offer that may take several months to complete.
You can your clients make these decisions by making sure all their questions are answered. Your ability to listen and understand what the seller is both saying and not saying can be a great health and multiple offer situations
Be upfront with everybody
The bottom line with multiple offers, as with all things in real estate, is to be absolutely upfront with your client – either buyer or seller. You’re there to guide them through the process and help them get the result that’s best for them. That doesn’t mean you make the decisions for them. Rather because you are professional and have information they don’t, you make it possible for them to make good decisions.
What’s been your experience with multiple offers?