Negotiating multiple offers.

I don’t know about you but I love things in multiple. Multiple zeros on my bank balance, multiple listings, multiple closings and of course, multiple offers. Multiple offers, are one of my favorite things. It really places my Seller in the driver’s seat when it comes to negotiating and normally means we will be able to get a higher price for the house. What I don’t like, is a common misconception, from Realtors, that I have to disclose multiple offers to them. Or, that I have to disclose the existence of any offers to them, whether received or not. Sometimes they expect this before they even show the property. I have even been accused of being “unethical” for not disclosing an offer. So first, let me make something perfectly clear, offers, whether one, or multiple, are nobody’s business but my Seller’s and mine. How we choose to handle the negotiations or disclosure is 100% my Seller’s choice.

Standard of Practice 1-15

REALTORS^®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker.

(Adopted 1/03, Amended 1/06))

Standard of Practice 3-6

REALTORS^® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation. (Adopted 5/86, Amended

1/04)

Accepted offer, means, a pending contract. Florida law is quiet on this issue, as it should be. Negotiations are not dictated by State laws. And I’m sure you State’s laws are quiet on this as well.

So that leaves us with, how do we handle multiple offers? Well, I am sure there are many ways, but here are a few examples of the way I do it and that seem to be quite common in my area. I will be curious to hear how they are handled in your area.

1. Notify all Realtors/Buyers of multiple offers and request “highest and best” by a certain day and time. This technique is used quite a bit in my area, especially on bank owned properties. It is a pretty good way to weed out the lookers and concentrate on the serious buyers. Works best when you have numerous offers. Once they have submitted “highest and best”, the Seller can pick one that is acceptable, choose one or more to continue negotiating with or set another day and time and ask for “highest and best” again. Repeat until there is an acceptable offer. I’ve been the Buyer, on several foreclosures, where this technique was used and frankly, I ended up paying more than I wanted for the property. It turns into a competition and I hate losing. So this method definitely works.

2. Don’t disclose the existence of other offers, pick one and try to negotiate it. If you can’t, pick another one and do the same. The problem with this technique is it may take a few days to negotiate on one contract and while you are doing this the other one may withdraw their offer. Not one of my favorites but can work if you are already negotiating when the second offer comes in.

3. Don’t disclose and negotiate all offers at the same time. I actually have done this many times. The key though is to make sure the Seller does not sign the counters. If they do, and the Buyer accepts it and signs, then you have an accepted offer and the game is over. This can be a good technique if all the offers are pretty close in price and all the Buyers are equally qualified. Then it is just a matter of who responds the fastest(motivation). You don’t disclose, because then they would all respond quickly. You want their motivation to be, that they are anxious to purchase, not that they are anxious to beat out the others.

4. Disclose the existence of other offers and the amount of the offers. Play them against each other. Let them know they are competing and if you want this property you will have to beat the offer, or offers, I have on the table. Continue until only one is left. Hopefully it will be way over list price by this time. I used this technique during the boom time, so many times I can’t count them. Very successful way to negotiate.

It is very important, that how ever you want to negotiate multiple offers, it is the Seller’s choice, not yours. Do not disclose multiple offers to another Realtor with out the permission of the Seller. After all, it is his deal not yours. So there you have it. I hope this helps. I am by no means an expert on this but I really do love multiple offers.

So next time a Realtor ask you this, “Do you have any offers on this property” try this “I’m sorry, that’s confidential information but as we speak, this property is still actively on the market."

http://www.brokerbryant.com/0004E4

Posted on February 26, 2007 18:33:11 by Broker Bryant

Posted in Broker Bryants opinion, Info for Sellers

Comment from: Jonathan Greene [Visitor]

· http://realopinionated.com

I love your style man. You're my freakin hero. Of course, I don't get as many offers as you because the MLS won't let me do range pricing correctly (but you know all about that).

Hey, go check out the new site.

Permalink February 26, 2007 19:58:21

Comment from: Broker Bryant [Visitor]

Jonathan, thanks for visiting. Your day will come. Mulltiple offers is a great position to be in. I will be by to check out your new site.

Permalink March 01, 2007 14:42:10

Comment from: sandra davidson [Visitor]

· http://www.davidsonrespec.com

I am so glad I found your article. I list a lot of foreclosure properties for banks. Just had one to come up with extensive damage from winter freezing and the bank put property on market at a very low price to get it sold. Immediately on the MALS next morning, was getting calls, text msgs to show my listing (while i was in continuing ed class). Bank has requirement must be in mls 3 days before look at any offers on the property. so I told each one that condition and with the numerous calls I was receiving expected multiple offers and that do their highest and best and gave the qualifications they would need such as preapproval letter etc. and i would submit all offers by noon the fourth day.

Fourth day comes and have 9 offers, one being verbal at the deadline for submission. they ranged from 35000 to 75000 for a 50000 listing. prepared a spreadsheet of the main points to present to the bank: broker, purchase price, em, terms, loan date, close date. bank rep immediate emailed back acceptance of the higher bid. conveyed acceptance with faxing of docs to bank for signatures. contacted and was called by other agents later in the evening of the acceptance of a higher bid and like HUD and VA revealed the high bid but not the name or the terms. This falls sour and I contact the agents to let them know its back for lack of proof of funds timely. but we have to revise or resubmit same bids let me know if they want to be considered in the new round and bank will review the new revised bids at same time submission in 2 days.

the first winner first round decides to get back in and submit a lower bid. He says my revealing his winning bid first round was confidential info but he withdrew because he did not want to provide proof of funds. This was my first time for multiple offers and i got no guidance from the bank after i presented options to them. some thought we should have awarded the offer second time to the next high bid, but some offers earlier had come in after the dead line and wanted to know if it didn't go through.

so where did i do right and what all did i do wrong and where am i liable???? This is difficult and i especially bent over backwards to keep the offers unopened till day of submission and to give thesmae instructions to each agent when showing and presenting his offer. Confused and concerned. I work with va and HUD and their bids are posted after there is a winning bid. this is what i have been accustomed to in working with their properties.

Permalink March 05, 2008 22:14:11

Comment from: sandra davidson [Visitor]

· http://www.davidsonrespec.com

I could not print your article and i wanted to keep it to give me support in case i go before grievance etc. i hope i am making a mountain out of a mole hill on my previous dilemma. Thanks for any help or information that you have that I may research

Permalink March 05, 2008 22:28:51

Comment from: Broker Bryant [Member]

· http://buypoinciana.com

Hi David, From the info you provided I don't think you did any thing wrong. Maybe you got caught up too much in trying to not step on any toes. On a bank deal like this with so many offers the first thing I would do is have all communications in writing so there are no misunderstandings. It's always up to the seller with how to handle multiple offers. In this case with the seller being a lender really all they are going to do is ask for highest and best.

I would have just sent out a highest and best request to all agents in writing. Then just submit their offers to the lender at one time and see which one the sellers accept. This sounds like exactly what you did. I would never disclose what the highest and best offer is even after it is accepted unless the lender asked me to. But whether you give out this information or not has nothing to do with the buyer unless the buyer is your client.

I don't think you have any thing to worry about.

Permalink March 06, 2008 09:27:28

Comment from: Robin [Visitor]

· http://www.robinashley.com

Great information. Going back and reading all of your old stuff here and at AR is very informative to say the least

Permalink May 19, 2008 18:19:52

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