Dealing with Multiple Offers
In this current market which has record low inventory sellers & buyers may have to deal with multiple offers. Perhaps no situation routinely faced by REALTORS® can be more frustrating, fraught with potential for misunderstanding and missed opportunity, and elusive of a formulaic solution than presenting and negotiating multiple purchase offers.
What is fair? What is honest? What is to be done? Who decides? And why is there not a simple way to deal with these situations?
I know, there are never simple answers to complex situations. And multiple offer presentations and negotiations are nothing if not complex. But, although there is not a single, standard approach to dealing with multiple offers, there are fundamental principles to guide REALTORS®.
- I am aware of my duties to my client—seller or buyer—both as established in the Code of Ethics and in state law and regulations that I am obligated to follow.
- The Code requires me to protect and promote my client’s interests along with state law & regulations. The Code requires that I am honest with all parties.
- The decisions about how offers will be presented, how offers will be negotiated, whether counter-offers will be made and ultimately which offer, if any, will be accepted, are made by the seller—not by the listing broker.
- Decisions about how counter-offers will be presented, how counter-offers will be negotiated, and whether a counter-offer will be accepted, are made by the buyer—not by the buyer’s broker.
- When taking listings, I explain to sellers that receiving multiple, competing offers is a possibility. Explaining the various ways they may be dealt with (e.g., 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, etc.).Explain the pluses and minuses of each approach (patience may result in an even better offer; inviting each offeror to make their “best” offer may produce a better offer[s] than what is currently on the table—or may discourage offerors and result in their purchasing other properties).
- My advice is based on my past 20 years of experience, but I can’t guarantee what a particular buyer may do.
- I remind the seller—that the decisions are theirs to make—not mine.
- When representing a buyer, I explain the pluses and minuses of various negotiating strategies (that a “low” initial offer may result in the buyer purchasing the desired property at less than the listed price—or in another, higher offer from another buyer being accepted; that a full price offer may result in the buyer purchasing the desired property while paying more than the seller might have taken for the property, etc.).
- I explain to the buyer that sellers are not bound by the Code of Ethics. Sellers, in multiple offer situations, are not prohibited from “shopping” offers. I advise those purchasers it is possible that the existence, terms, and conditions of any offer they make may be disclosed to other purchasers by sellers or by sellers’ representatives except where such disclosure is prohibited by law or regulation.
- I remind the buyer—that the decisions are theirs to make not mine.
- In multiple offer situations only one offer will result in a sale and one (or more) potential purchasers will be disappointed that their offer was not accepted. While little can be done to assuage their disappointment, I am prompt, & keep open communication to enhance the likelihood others will feel they were treated fairly and honestly.
National Association of Realtors, Article-Presenting & Negotiating Multiple Offers-Jan 1st,2020