Negotiating Multiple Offers. A Tutorial.

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

call Me 407-873-2747Hi Folks, If your market is saturated with REOs, as mine is, you may be incountering multiple offers quite frequently. This article, I wrote a couple of years ago. may help you deal with them.

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 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 however 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." Does this help? 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Yvette Gardner 04/15/2009 12:24 AM
  2. Ed Silva 04/15/2009 01:21 AM
  3. Joy Daniels 03/30/2016 04:45 AM
Topic:
Real Estate Best Practices
Tags:
education
multiple offers

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Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Remember it's not what we want to do  it's what our sellers want to do .

Apr 15, 2009 09:38 AM #62
Rainmaker
1,137,743
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota Real Estate Expert

I think we forget that its the sellers choice sometimes.  However its to their advantage to disclose multiple offers or another offer. The interested buyer then needs to bring their best with no messing around.

Apr 15, 2009 09:40 AM #63
Rainmaker
157,008
George Bennett
Inactive - Port Orford, OR
Inactive Principal Broker, GRI

Bryant - Thanks for the tutorial and for sharing your experience.

Apr 15, 2009 10:00 AM #64
Ambassador
241,842
Aaron Auxier - "Hollywood's Connection to Vegas"®
Realty ONE Group - Las Vegas, NV

My best to you and the wife Bryant.

Apr 15, 2009 10:24 AM #66
Rainer
156,952
Sandy Childs
Keller Williams Realty - Spartanburg, SC
Realtor - Spartanburg, SC

BB: This is an awesome tutorial thanks for taking your time to put it together and for sharing it with us. Personally, I like multiple offers. Infact, in this market, I like any offers. Thanks again for such a great post.

Apr 15, 2009 11:56 AM #67
Rainmaker
2,372,440
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

I am just glad we are getting offers ad homes are starting to move. But good read and you have the house seal of approval.

Apr 15, 2009 02:20 PM #68
Anonymous
James Kahenya

Great post! This kind of post will help greatly those of us who are new to the business. Until now, faced with multiple offers, I would have thought acknowledging the existing of other offers without providing any other details would be the right thing to do!

Apr 15, 2009 02:57 PM #69
Rainmaker
314,256
Carol Culkin
Reece & Nichols - Leawood, KS
Overland Park

BB - Very informative post. I agree with all your strategies and have used them. It's great that you pint out that it needs to be the seller's decision on how to handle more than one offer at a time. I don't think a lot of agents get this.

Apr 15, 2009 04:39 PM #70
Rainmaker
1,533,410
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Your right BB that it's the seller choice on how to handle the multiple offers when the situation arises, not yours.  I'm not sure that a couple points would make you a favorite with buyers agents but then as the lisitng agent, who cares.  I am thinking it doesn't sound cooperative to the other agent, if you said that to me I'd reply 'and what does that mean?'

Apr 17, 2009 01:32 PM #71
Rainer
17,482
Debbie Moran
Exit More Real Estate - Henderson Harbor, NY

Very informative post and a nice refresher for when multiple offers come back to our area! We usually use highest and best but have a multiple counter offer form where the seller can send out counter-offers; the buyer can agree and sign and nothing is valid until the seller reviews them and does a final signature on the one he accepts. Haven't had to use that one in awhile!

Apr 18, 2009 07:46 AM #72
Rainmaker
180,751
DeAndrea "Dee Dee" Jones
Home Buyers Marketing II, Inc. - Manassas Park, VA
The NorthernVARealEstateLady & DMVRealEstateChick

It depends on the state in Southern Virginia are listing agreement has a box that says I authorize or I do not authorize agent to disclose multiple offers, that seller checks. 

Apr 21, 2009 01:50 AM #73
Rainer
55,551
Kelsey Barklow
Hurd Realty - Johnson City, TN
423/948-9154

I like the fourth option as well. It separates "the men from the boys", as it were. Thanks for the post. 

Apr 24, 2009 03:52 AM #74
Rainmaker
656,917
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Here, we can disclose how much is being offered, with the seller's permission.  My question, is why don't seller's agents disclose the highest offer amount?  I think you would get that bidding war fired up much better that way.  I have done this, and the buyers went thousands of dollars higher than they said they would.  That's money in my client's pocket.  Why wouldn't sellers want that if it's explained?  I think agents who do 'highest and best' either don't realize they could do better for their clients, or simply want to do things the easiest way.

Apr 26, 2009 03:12 AM #75
Rainer
30,353
matt mathews
mathews Realty Group - Yucaipa, CA

Had to comment again.  Actually a statement and a question?  Here in California, if the buyer makes a full price offer-the seller is obligated to sell the property at that listed price.  If I-the buyer find out that you the seller took a higher priced offer after mine.  I can sue you-Period!  How is it in your State??????????????

Apr 27, 2009 09:08 AM #76
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Matt, you're going to have to show me that law because I believe you are mistaken. The listing broker MAY be able to sue for a commission but that's it.
Apr 27, 2009 09:15 AM #77
Rainer
22,074
Kimberly Dotseth
Blend Real Estate, broker/owner - San Diego, CA
Try Our "Cancel Anytime" Listing!

I think the "highest and best" response is both lazy and cheeky.  Of course it's up to the bank to do this, but of all the times it's happened to my buyers, they've already submitted a superbly clean over-list price offer. Only 24 hours later to get that smug call that the bank is calling for "highest and best." I haven't ever had a buyer decide to write a new Page 1 and increase their price because there are plenty of other houses to buy in our REO saturated market. It's amazing how manners (like a proper counter offer) make for a truly successful contract and escrow.  Calling for highest and best doesn't weed out looky-loos, it disgusts great buyers. Who move on and buy something else.

I always tell my seller about this "do you have any offers" question during my listing presentation and tell them it's my philosophy to tell every caller and every inquirer the same thing: the truth. Every time they call. You can be polite and say, Yes, I have three offers and it's still active so please go show it.  And all my sellers have agreed. None tells me to keep quiet.

Maybe this openness makes the difference to that buyer's agent if they actually take time to see my listing or not.  And I have had dozens and dozens of multiple offer scenarios that have always been handled the same: everyone knows, every gets countered unless it's an embarrassing offer that isn't even close to working.  Everyone is professional and all offers are disclosed without disclosing terms.

Being very open, very honest and very kind has been very successful for me. And my sellers.  Even bank properties! 

 

(and Matt is mistaken...)

Apr 28, 2009 12:06 PM #78
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Kimberly, I too feel "highest and best" is lazy. I prefer to keep multiple offers cponfidential. But of course evfery case is different. To me it depends on what the offers loook like.

Apr 28, 2009 11:16 PM #79
Rainer
332,782
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

And, of course, the 5th example whereby the seller decides (based on the multiples) that YOU listed the property too cheaply and is unhappy with all the offers.

Great post, Bryant.

Apr 30, 2009 02:44 AM #80
Rainer
41,017
Muffy collins
Bridgeport, CT

Great info, i agree, it's in the sellers hand. I like it when the sellers ask for the highest and best!  I also like your reply to the realtor that ask if there are other offers - as we are speaking the property is still on the mls- that's a good one. thanks!

May 01, 2009 01:44 PM #81
Rainer
16,062
Julia Sirois
Lake Living Realty - Hillsborough, NH
Specializing in lake properties.

Thank you so much active rain members for your response to this.  I am currently in a multiple offer situation on a beautiful NH lake property that I listed.  The buyers know there are other offers, but the seller is slow to move on them.  Reminding me that I work for the seller is just the advice I needed.  I worry too much about offending the buyers, but my job is to do my best for the seller.  This is tough for a newbie to work through.  

Oct 24, 2016 09:54 PM #82
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