Multiple Offers – One Round or Two Rounds or More

By
Commercial Real Estate Agent with RE/MAX West Realty Inc., Brokerage (Toronto)

 

Multiple Offers – One Round or Two Rounds or More

 

An issue arising frequently is how to conduct a Multiple Offer “bidding war” by the Listing Agent.

There are essentially two choices:

One Round – Bring Your One and Only BEST Offer

Two Rounds – Once you are here, you will have a chance to IMPROVE

There are no set rules for Multiple Offers. So, you could make up your own. You would have to write them down and distribute them to all participants in order to ensure that absolutely everyone knows that you are just permitting “one round” and then you are going home.

The “real problem” is the communication of the rules. Then, in all fairness, you really can’t change them afterwards.

You would be wise to set the ground rules from the start and stick to it. If there is a possibility of improvement, give everyone a fair chance.

There is a risk of annoying the high bidder. Why force this individual to stay around all evening while other Offers are being considered? Sometimes, they just leave and choose not to participate in Round two and subsequent rounds. It becomes risky.

Invariably, it’s always “too close to call” and the Seller has decided to send everyone back.

This can deteriorate into a nightmare with Offers expiring over the evening while the Sellers reviews them all.

Many experienced Listing agents will indicate “one round”. That works as long as everyone knows the rules at the outset

The several rounds will often simply emerge by accident.

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Location:
Ontario

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Ambassador
3,577,260
Praful Thakkar
eXp Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Brian Madigan - one round is usually the best - however, I have seen some listing agent converting one round into two rounds with an excuse that the seller still wants the best!

Dec 08, 2016 12:17 PM #2
Rainmaker
517,191
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

It's nice to play fair and make sure everyone knows the expected rules upfront but as a buyer, don't expect the seller to adhere to his rules.  People change their mind.  They might say that they will wait for two days before deciding and then accept an offer that night.  You just never know.  It's not against the law to change your mind.  So as a buyer, just assume you have one chance and assume that time is of the essense.  Don't delay.

Dec 08, 2016 02:36 PM #3
Rainmaker
255,714
Jeanne Gregory
RE/MAX Southwest - Sugar Land, TX
The most important home I sell is YOURS!

I agree with Tim.  It's the seller's house and in the end, he or she can decide.  I always try to give everyone a chance to offer highest and best.  Other than that, it's the seller's call.

Dec 08, 2016 02:52 PM #4
Ambassador
3,615,219
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Brian, we usually go to round two when one has a great price with sloppy terms, and the others are lower but cleaner.  And it’s usually to encourage the clean buyers to up to price.  The whole thing is risky because buyers start to feel manipulated.

Dec 08, 2016 04:08 PM #5
Ambassador
3,367,657
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

It depends on the situation, and on a dicsussion wtih the seller about what they want to do. Having a chance for highest and best may be appreciated by agents and buyers, but sometimes the offers right up front make a clear decision easy

Dec 08, 2016 06:11 PM #6
Rainer
277,320
Thomas McCombs
Century 21 HomeStar - Akron, OH

It is the wild west with these kinds of situations. A Seller will do what she thinks is in her best interest, and buyers may or may not want to stay in the game. A poker game comes to mind. 

Transparency might not help as much as we might think since there are so many moving parts in the various offers. It might be hard for one buyer to evaluate another buyer's offer.

Dec 08, 2016 07:05 PM #7
Rainmaker
1,331,221
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

It seems like it would be wonderful to work in a market that's so hot, but you have problems to solve that agents in slower markets don't even have to think about.

Dec 08, 2016 08:49 PM #8
Rainer
379,823
Sham Reddy
H E R Realty, Dayton, OH - Dayton, OH
CRS

I really don't know how many of these so called multiple offers are truly multiple offer or manufactured situations!!!

Dec 09, 2016 04:33 AM #9
Ambassador
1,609,734
Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

I have gone three rounds during the hot market. I represented the seller get highest and best offer.

Dec 09, 2016 05:04 AM #10
Rainmaker
1,155,974
FN LN
Toronto, ON

Brian Madigan - Congrats on your home page feature on this very high profile topic!

Dec 09, 2016 06:32 AM #11
Rainmaker
2,191,138
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Beware of cookie jar syndrome where we reach in for a cookie and try to grab many cookies when in there thus delaying the first bite...Grab one & enjoy!

Dec 09, 2016 06:49 AM #12
Rainmaker
339,165
Steven Beam
RE/MAX Alliance - Parker Colorado Real Estate. - Parker, CO
Parker Colorado Real Estate

In our market we had about 20% of deals falling out of contract last year. Sellers and Realtors were getting greedy and trying to play too many hands. Buyers would get whipped into a frenzy and make supid offers and get cold feet in a day or two when they realized they made a huge mistake and kill the deal. Or, their lender killed the deal beacuse the offer was stupid.

I don't play games with my sellers or their potential buyers.  When you get a good offer..take it.  

Some of the Relators in my market have earned a NASTY reputation for the way they have treated some buyers and Realtors when they receive offers. I'm 100% confident it has come back to haunt them when they in turn are on the other side of the table submitting offers to the Realtors they just screwed over...

 

It's always an interesting conversation when the Realtor that just rejected your buyer's strong offer calls you back 3-4 days later to tell you that their cash buyer that offred $30k over asking price backed out of the deal.  

Dec 09, 2016 08:10 AM #13
Rainmaker
1,294,658
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

I'm sure this will increase the fall through rate as Steven says. In my area we do the final & best at 'xx' time.  Then after that, a buyer invariably comes back & says we could have done 'x'. Yeah, but ya didn't.

Dec 09, 2016 09:09 AM #14
Ambassador
2,228,666
Debe Maxwell, CRS
www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

We do ours like Lyn Sims and I totally agree with Steven Beam - those agents who play dirty have Karma to deal with when they're on the other side of the transaction!

Dec 09, 2016 09:50 PM #15
Rainmaker
339,165
Steven Beam
RE/MAX Alliance - Parker Colorado Real Estate. - Parker, CO
Parker Colorado Real Estate

I agree. If you are going to go after multiple offers set a date/time and make a decision. Eliminates a lot of BS. I'm not sure about you guys but getting 15-20 offers on a property can be a rather large process of elimination but typically there are always 1-2 that are standouts...

Dec 10, 2016 12:17 PM #16
Rainer
277,320
Thomas McCombs
Century 21 HomeStar - Akron, OH

I have heard it said that the most common reason for a multiple offer situation is that the listing price is too low. 

Maybe that is the intention, and if so, the listing agent and her client should be well prepared for the onslaught, while an experienced buyers' agent should be forwarning his client so as to avoid the feeling of being manipulated.

Dec 12, 2016 06:22 PM #17
Rainmaker
1,215,483
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

In a hot market, sellers may receive multiple offers, even within the first few hours or days of having their home on the market. In evaluating offers, the following factors should be considered:

  • Net sales price (sales price minus any closing costs, including commissions and credits)
  • Buyer’s financing (amount of down payment, type of financing (conventional, FHA, VA)
  • Contingencies (home inspection, appraisal, financing, HOA review, sale of home)Earnest money deposit and type (e.g., promissory note vs. check)
  • Will the property appraise for the agreed-upon sales price?
Dec 13, 2016 12:05 AM #18
Rainmaker
278,558
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Owner,Broker

There is no single way to structure multiple offers that will always work.  Depends on the buyer's alternate choices, all the other aspects on the offer, and the seller's confidence of getting another offer if multiple offer counters scare the buyers away.  I always let buyer's agents know if they are going into a multiple bid counter offer situation and encourage escalation clauses  To me, having to name your highest price up front is not realistic; can you imagine buying your Christmas Presents on EBAY by going straight to your high bid on each item to start?

Dec 13, 2016 06:45 AM #19
Rainer
420,125
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

IMO serious buyers will always win because they will always walk if their offer is rejected. They know that there will always be another property available regardless of the circumstances especially if they have the financial ability, they will eventually get what they want. Curious buyers will make inquiries about offers they submitted, serious buyers will move on to the next opportunity. Serious buyers move fast and don't have time for games like escalation clauses or other rules of engagement. 

Dec 13, 2016 07:18 AM #20
Rainmaker
446,537
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

There is no obligation to conduct multiple offer bidding. Also, highest offer is not always best offer. Buyers need to make clean offers with their best price if they want to reduce the risk of competing in a multiple offer free for all.

Jul 10, 2017 04:02 AM #21
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
1,306,376

Brian Madigan

LL.B., Broker
Ask me a question
*
*
*
*
Spam prevention

Additional Information