When the real estate market is as hot as it is here in Boise, Idaho- having multiple offers on the table is a situation agents have come to expect when representing buyers and sellers in the Treasure Valley. We do our best, as agents, to educate and prepare our clients for the best and worst case scenario with the various ways they can decide what course of action is best for them. After all, our duty as REALTORS® is to protect and promote our client's best interest. But what is fair? What can we expect from the other representing agent? And what can be done?
Although there is not a single, standard approach to dealing with multiple offers, there are fundamental principles to guide REALTORS®. While these guidelines focus on negotiation of purchase offers, the following general principles are equally applicable to negotiation across the board.
Working with Sellers
When taking listings, explain to sellers that receiving multiple, competing offers is a possibility. Explain the various ways they may be dealt with:
- Acceptance of the “best” offer
- Informing all potential purchasers that other offers are on the table and inviting them to make their best offer
- Countering one offer while putting the others to the side
- Countering one offer while rejecting the other offers
Next, explain the pluses and minuses of each approach. Patience may result in an even better offer. Inviting each buyer to make their “best” offer may produce a better offer[s] than what is currently on the table. And inviting each buyer to make their best offer may discourage buyers and result in them pursuing other properties.
- Explain that your advice is just that and that your past experience cannot guarantee what a particular buyer may do.
- Remember—and remind the seller—that the decisions are theirs to make—not yours, and that you are bound by their lawful and ethical instructions.
- Present all offers objectively in a timely fashion.
Working with Buyers
Working with buyers can be as wonderful as you set the expectations out to be. It's our duty to inform our clients on what to expect, possible situations, possible outcomes and then allow them to choose their desired course of action from there.
Explain the various negotiating strategies and how they can play out
in a multiple offer negotiation:
- A “low” initial offer may result in the buyer purchasing the desired property at less than the listed price, but a higher offer from another buyer might be accepted.
- Negotiating a full price offer in exchange for small upgrades or repairs, though a seller could receive a close to full price offer with no out of pocket expenses requested and accept that offer instead.
- A full price offer may result in the buyer purchasing the desired property, but a seller might have taken less.
- And more...
In a hot market, inform and prepare your buyers to make their first offer as passionately as they would make their best and final- if they find the home of their dreams. Due to low inventory, and high demand- it's competitive, and seller's agents know this. But of course, it's your duty to express the interests of your buyers and what they ultimately decide to offer is their decision to make.
4 Ways to Win a Multiple Offer Negotiation
"REALTORS® shall submit offers and counter-offers objectively and as quickly as possible."
During the peak season, I once had a seller's agent notify me (upon submitting my client's purchase offer on Saturday morning at 8am) that he would present all 8 offers he had received thus far to his clients on Monday because the weekend was his time to spend with his family.
As a listing agent, you should present an offer to your clients within 24 hours. While there is a safe guard in place within a purchase and sale agreement that details an expiration time and date (which is commonly 24-48 hours), a buyer's agent and their client shouldn't have to wait until that time. Agents should show urgency and responsibility through open and honest communication with each party, even if it may not be convenient.
Both Buyer and Seller Agents...
Prepare your clients by reminding them that in a multiple offer situation only one offer will result in a sale and one (or more) potential purchasers will be disappointed that their offer was not accepted. Make a promise that you'll do everything within your power to get their offer accepted.
While little can be done to avoid their disappointment, fair and honest treatment throughout the process; coupled with prompt, ongoing and open communication, will enhance the likelihood they will feel they were treated fairly and honestly and improve the overall experience for each party.
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