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Liar, liar pants on fire. Not me!!

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.

Now just in case you don’t believe this, here are the articles from our Code of Ethics that state what I have to disclose:

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.

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.

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.

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.

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 your 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".

Liar, liar pant’s on fire. Not me!!

Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 10/19/2006 03:46 PM

Comments (39)

multiple offers, negotiations, educational, ethics

39 Comments on Liar, liar pants on fire. Not me!!

OCT

2006

Good commentary on multiple offers. I have never understood why some Realtors are afraid of multiple offers, or why some believe that we must disclose confidential information during negotiation such as the price or number of other offers. We can disclose this information if we want and it helps in negotiation, but we certainly don't have to.

Hmm, I'd have to agree with all the possibilities. The only problem now is that we aren't getting multi offers now. Most times sellers are looking to maximize their profit, so the first or last items have worked best assuming qualified buyers. The last is an auction mentality, while the first is a sealed bid auction mentality. It further motivates an already motivated buyer

Good information on Multiple Offers. I miss those days...not too long ago but not happening here. My very first deal was representing a Seller who received 3 multiple offers...I remember how nervous I was and that set the stage for the rest of the year. It was one hell of a way to break-in to Real Estate. What an adrenalin rush!

From the "Lovely Gina or Gena" just make sure that it is "Lovely"

"Hubby=Broker Bryant"

A Mutiple What...Sorry I couldn't resist!

Never mind the pants on fire.

And I will skip the hubba hubba!

LOL See :>

"The Lovely Gena"

I left you a gift in one of your posts. Go have a smile on me!

TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!

I think it's a good negotiating tool, if the seller gives permission, to disclose the other offers. It causes a frenzy.

I have submitted buyer's offers and the other agent has them accept another before they even get back to us. Hey, it might have been higher but how do you know that my buyer wouldn't have came back even higher had we known what else was on the table?

I agree that you don't have to & may not want to, disclose particulars of an offer but if it's for $X & you tell me when I submitted $x-$y then I can go back to my buyer & get an offer of $x + $y instead....

more $$ for your sellers.

Bryant,

I actually got fired from my first gig with Watson realty for disclosing the amount of an offer......

I had just gotten my license...... BTW is it OK to disclose the amounts of the offers? I had heard that you are breaching your sellers confidentiality..... or was this just a bunch of crap they gave to me...the seller did not have ANY problem with the fact that I had told the other buyer the amount of the offer that was going to be presented....

I have a feeling I got royally screwed...I lost half of my commission on that deal...to an agent they said had to "get me out of the situation".....my first real estate transaction as an agent...oh so many many years ago.....

Alex, you can't disclose anything about an offer without your Seller's permission including the existence of other offers. And I would recommend getting their permission in writing.

What I love about your posts is you remind us of what is important. I really never thought of it that way!

Bryant, my borrowers that are making offers on lower priced properties and on multi-family houses, are still running into multiple offers. Two of my recent borrowers have each made three offers on properties, and each time run into a multiple off, talk about bad luck. Each time it was disclosed to them that there were multiple offers, which caused them to go in with higher offer than they originally intended to. But I can also see where it could work to someone’s advantage to keep them guessing, especially in a slow market. I hope my borrowers start running into better luck, I could use the loan because I also like those multiple "0".

BB..... good topic. Even though I am not a realtor, my opinion is that it could go either way. And just leave it up to the seller.

Now what I think fueled Bryant's fire here is that the buyers agent told him that he had to disclose multiple offers. I love it when someone trys to man handle per se.....making you do something that you shouldn't. Making you, as the agent, thinking that you are wrong. lol But in this case, BB knowing what is correct and legal. I love it.... It happens in the mortgage business. I can't think of my most recent example. But I do remember a client being told by another lender that they HAD to do x,y, & z. I said call your lawyer, they are so wrong. Scare the lender.....

Anyhow....again, good topic.

I always encourage another offer if asked. But I NEVER hold up one offer waiting on another. Now, it can get a bit touchy when you get into accepted and binding times when another offer comes inbetween. But hold up an offer because I am told another is on the way.. no way.... The decision is in the Sellers lap. If I know of another offer that might be coming I do advise of that, but if there is a time stipulation that requires an action on the sellers part that is where the seller must rely on his own decision.

B - I like 3. I am also a big fan of negotiating the deal and then inking it. This might not be viewed as the best way by many as it has risks, but it saves time and a lot of.....

Boy, I sure do a lot of "traditional" for an auctioneer...

The husband of the OTLW, aka Delicate Rich

Here what our listing aggrement states and we need to get initialed at the time of the listing.

"Seller hereby directs Broker: If inquiry is made by another Broker,Agent, or prospective buyer as to whether other written offers have been received by seller:( Seller to initial only one line)

---------Broker is is authorized to disclose existence of other written offers.

----------Broker is not authorized to disclose such information.

----------Seller shall consider said options to disclose on a case-by-case basis basis and so inform Broker

(Note: Unless Seller authorizes Broker to disclose existence of other offers, Broker may not disclose said information)"

www.Homerome.com

Baltimore,Md

Bryant,

I tried to email TLW but the email bounced. Please tell her to email me. mrome@homerome.com

Margaret

Candi, You can ask all you want. The other Realtor cannot answer that question unless the seller has instructed him to. That's the point of this post. It is the Sellers decision to make not the Realtors.

Margaret, I like the way you address that right in the listing agreement. I prefer to handle it as the situation arises. Even though the seller may give me permission in advance, I really want to make sure they understand their options. All negotiations are different.

Bryant,

Does Florida have a multiple counter offer form? It's really a beautiful thing. The buyers are on notice that there is more than one offer on the table, but they don't know any of the details. Also, each multiple counter offer can be written with different conditions, so in essence the seller is able to negotiate either individually with different terms or collectively with identical terms, depending on circumstance.

And lastly, unlike a standard counter offer which takes effect once it's signed and delivered back to the seller, none of the multiple counters take effect until the seller affirmatively elects to select one of the counters. It's not a matter of first come, first served.

Nice article on multiple offers. In a hot market, it was the norm. In today's market, buyers hold most of the cards so I'm putting together my own "multiple offer"; only it's in reverse....notifying the seller I've placed offers on multiple houses and reserve the right to withdraw the offer on their house should another seller accept first. The whole point of negotiations is to build as much stress as possible to gain the greatest advantage. Maybe it reduces the number of Christmas Cards; but business is business.

My logic is, if it's good enough for sellers, it should be good enough for buyers.

I love multiple offers especaily ones that have accelerator clauses in them.

Great topic Bryant

Live by the Code, Love the Code, Spread the Code....

Multiple zeros are okay as long as another number preceeds them!

Our law states that the Seller has a choice to disclose that or not. Clear and simple. Slightly nerve wracking but still clear. Great discussion on this.

Bryant you did everything by the book , people always try and find something negative out of something.

OCT

2006

Bryant is the man! Go Bryant! Gotta love the picture too! Where do you find these funny pictures?

This is broker-specific in Minnesota. My Broker's policy is to disclose multiple offers. I discuss this with the seller, the pros and cons, and if they prefer NOT to disclose, or want to reserve that right, we simply put it in writing at the time of listing. Not a bad thing to talk about in a listing presentation....because your comptetiion isn't!

Tony: Need the code...Baby...Need the code!

Definitely it's the seller's option. Nonetheless, the sellers need to know the pros and cons of each approach - which is part of the services we provide.

Bryant

As always, great post. I fully support the notion of, whenever possible, keeping the seller in the driver's seat. Sometimes it's necessary to clarify the purchaser's motivation before making the decision to accept his/her offer. No point accepting the highest offer if you sense or otherwise determine a particular purchaser is less likely to close. I have had bid/auction situations over the years where well-intentioned, excited purchasers bid up the price, were designated primary offeror, ratified the contract and then spent the next two weeks trying to get out from the contract.

That would be a good problem to have to wrestle with in our current market.....

Stan, I have actualy recieved offers like that before on my listings. I tell me Sellers to lets just negotiate it as we choose. I always concentrate on getting the stress out of a deal so the seller can make a sound decision. If the buyer withdraws their offer, them so be it. My thoughts on this are I would rather have a buyer withdraw at the beginning than 2 weeks into a deal. We are always trying to establish how motivated the buyer is.

We get permission (or not permission- but that's never happened) at time of listing contract to disclose "Well, we are looking at another offer, but would like to see what you have." should multiple interest appear at the same time.

I tend to take disclosing or not disclosing on an per offer basis. It really just depends on the offers and how close they are to what we are trying to get. As for buyers being upset, so be it, I don't work for the buyers I work for the sellers. The buyer's concerns do not concern me at all. Negotiations to me, are to get my seller the best price with the most qualified buyer. It's business. As you can tell from my post and comments, emotions do not play apart in my negotiating strategies.

This is one of the reasons I avoid being on both sides of the transaction. I do not want to know the buyers.

Ohh man.. late to the party.. I am sorry!!

In the State of NY You absolutly can not disclose the amount of the offers - even after the home closes in sales - you can not go back and say the other offers were.. x and xyz.

You can ask if there are offers on a property - but I never answer a yes or no.. Listen some agents say "there are offers on this home - you need to have your buyers come up to X amount of dollars to beat them out" are they telling the truth?? maybe - maybe not - but they should NOT be saying that. EVER.

I have agents ask me "whats the final price"? I always respond to that with "well we are asking LMNO So go from there. I did not put a price on it for no reason. DUH!"

Good topic Bryant..

When I am on the buying side. I ask the listing agent if there are other offers on the table. Usually they will say yea or na. Only once have I had bring your best offer and that was on a foreclosure. I have not discussed price.

Disclosure, in any State, is totally up to the Seller. The Realtor, in any State, cannot disclose without their permission. And for goodness sake don't ever tell anyone what price the house is pending at. What if the deal falls through? Try negotiating with a buyer that already knows what the previous contract price was for, you have already played your card and will have a hard time taking it back.

It is soooooooo important that Realtors understand these things. Do NOT, under any circumstances, divulge your Seller's or Buyer's info without their permission. So watch those interoffice deals.

I've been on both sides of the fence, having submitted an offer where others were present and having received multiple offers on behalf of my sellers. It can be tricky and intimidating at first but it's also a matter of organization and logic. Playing buyers against each other worked well in our hot market but right now with prices declining, I feel that it could backfire to disclose that other offers may exist (and the amount) because buyers get the feeling that they are being pushed and possibly pushed away. It might be better timing to disclose (with sellers permission) when the seller decides to counter.

DUH...That's my line! Geez.

OCT

2006

I have done all of these over the years. You have to judge the property, seller and the other agents. One thing I did find out from the FL legal hotline is that it is legal to tell the other agents. You are disclosing this to get your buyer the best price to get one to bid against the other and that is acting in the best interest of your customer.

Christine, Regardless of what the legal hot line says, it is against our code of ethics to disclose anything related to an offer or the fact that you have multiples without the sellers permission. There is nothing wrong with telling IF the seller says you can. If the legal hot line said you could disclose this without the sellers permission, then they are dead wrong and should not be giving our erroneous information.

BTW if you are working in an agency capacity and divulge this info without the sellers permission then you have just broken agency laws.

The easiest way to remember this is NEVER release information without your seller or buyer's permission

OCT

2006

I think some Realtors are afraid of multiple offers because if their clients offer isn't the one picked, They might blame the realtor. I've beem blamed for far less in my life.

AUG

2008

Glad we followed the playbook today. I co-listed a property with a top agent in my office and we ended up w/3 offers in 4 days! Not bad in a buyers market.

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