If there's not already a bidding war... then START one!

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Real Estate Agent with Hunter-Broker

I am curious to know what the general consensus is on listing agents disclosing OVER full-price offers to competing buyer agents, or even under-asking-price offers, if the situation warrants it (i.e. if it would be useful to MY client, the seller).

My latest experience in this was on a home that was 7 days away from sale, and I had an all-cash buyer who might be interested.

The asking price was $1.7MM and the property had been on the market for a significant time.  Since my buyer's max budget was in the neighborhood of $1.5MM, I suggested to the agent that we might offer that.  Her response was that she already had an offer "a little over that". 

When I asked her what it would take to beat that offer, she refused to say, saying instead that "it wouldn't be fair to the other agent".  There may be negotiating reasons to deflect the question, but "fairness to the other agent", does NOT seem like a valid reason to me.  After all, our FIDUCIARY is to our client! 

When I represent sellers, I often tell a buyer agent (especially if the offer is OVER asking) that we already have a strong $xxx offer, and any offer less than that won't prevail (assuming this is true, of course). After all, what use is another offer that is less  than what I already have?  I realize that there is some chance that the later offer could come in higher if the buyer agent didn't know the amount of the other offer.  But, hey, as soon as that buyer makes his offer, I am going to go back to the first buyer (or buyers, if more than one), and let them know that they need to raise their offer, or lose the property. I will keep this round-robin process up until I feel that I have the highest offer I am likely to get (and KEEP, since in California, the buyer has up to 17 days to back out of a signed offer).

I realize that there are more dimensions than just price in selecting an offer, but just to keep it simple, I want to limit my question to what the consensus about disclosing other offers is.  I would be interested to know what other agents think of this question.

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Thanks,

Terry Hunter, MS Economics
Owner/Broker ePro
Terry@ Hunter-Broker.com
Mobile: 949-278-1595

Hunter-Broker.com
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Terry,

Excellent. I was afraid to see the same "I hate bidding wars" and all that crap. You are right, it is not about us, it is about the Principal and the principal's interest.

What I would do is getting a written permission to disclose the prices, and then each time there is a new price, letting everyone else know it.

It is fair, it is ethical, it is our job

Mar 02, 2011 12:39 PM #1
Rainer
183,305
David Miller
Seacoast Realty, Inc - Melbourne, FL

The object is to get the highest price, not protect the first agent to submit. I always feel its open season until the offer is signed.

Mar 02, 2011 01:12 PM #2
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Terry,

I thought that this is an important issue and the right angle, so I sugggested this post

Mar 02, 2011 02:05 PM #3
Rainer
23,308
Terry Hunter
Hunter-Broker - Newport Coast, CA
MS Economics

Jon:
Thanks for suggesting it.
Your input is also excellent, and impelled me to contact the Legal Hotline for the California Association of Realtors.  After your input, to avoid problems from buyers or their agents, I have developed my own best practice regarding this, and thought I would share it with you. 
In CA, we have a monstrosity of a statewide disclosure (SBSA... 10 pages of boiler-plate and counting).  In para 43, it states that offers are NOT confidential unless a separate confidentiality attachment signed by the principals and the agents (typically form CND), is included in the contract (disclosure still being subject to seller's OK, however).  Sometimes agents add this addendum to their offer, sometimes it is handled later, with the other disclosures, as just another disclosure (JAD :-)).  Can't recall that I have ever received an offer with a CND. 
But, henceforth, I will be countering back with an SBSA (if a counter is otherwise required, and an SBSA was not included with the offer) to cover this matter.  The fact that the disclosure states that offers are not confidential (it is NOT the SBSA which MAKES them non-confidential... the SBSA is just disclosing the situation) is probably sufficient to cover, but, being a "belt AND suspenders" kind of guy, including it as part of the contract, and not just a later disclosure, seems like a good idea to me.

David:
I agree with you.  I have personally seen HUNDREDS of THOUSANDS of sellers' potential proceeds "given away" by agents whose top priority is NOT maximizing their clients' welfare.

Mar 04, 2011 07:04 AM #4
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Rainer
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Terry Hunter

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