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Submitting Multiple Offers

By Sidney Jimenez

Real Estate Agent with Keller Williams Realty SW

June 05, 2008 11:54 PM

OK--multiple contracts or offers being submitted to the lenders is killing the process, not only for you but the rest of the industry. As these deals take longer and longer the multiple submissions are keeping other buyers from actively pursuing another property--I acknowledge that some do but overall most don't. That waiting period is stagnating the market and making the other properties drop their prices. Prices are getting lower and lower which is making it less likely to gain an acceptance from the lender. if matters were let to run their course and if the lenders were considering one strong offer then this market would right itself sooner rather than later. There would be many more sold properties establishing market value. Right now, the public has the misconception that they're going to get a steal and their offers reflect that. Don't think the lenders and investors don't know this--they do the same thing themselves. If they believe that is the case they will not accept a short sale and will leave the file on their desk until something they deem worthy comes along

Submit one strong offer and hold the rest as back-ups. The time should be taken to properly price the property and not necessarily come onto the market as the lowest price so we can presumably gain an advantage and get a quick offer. Quick does not equate to good. The lenders want to see that there was an effort ot gain the maximum price. They want quality and not quantity.

A key to short sales is to convince the lender that you have the best price and their best interest is to accept the deal in front of them. It is not a strong strategy to submit multiple offers and let the lender pick one. It does not give them or the investor a sense of urgency and hence the deals take months and months.

If prices have dropped 40% in you area, how are you going to convince the lender of that if there are no closed sales to compare your property to? At that point it's a no win situation--let the waiting begin!

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Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Until lenders understand that they can't sit on Buyer/Seller contracts until the spirit moves them, buyers will continue to seek other properties, make multiple offers and sellers will continue to list low to get as much value from competing bids as possible.

Lenders don't know how to sell real estate, never have. Experienced real estate agents know how to move property. Lenders should turn the job over to the listing agent representing the seller and when they get an offer, turn it around in 24-48 hours and get on to the next one.

Agents learn early on that procrastination is costly to their client buyers and sellers.

Jun 06, 2008 12:00 AM

Brian Schulman

Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA

Lancaster County PA RealEstate Expert 717-951-5552

Sidney, giving lenders (or sellers, or buyers) too many choices tends to muddy the waters, confuse the issue, and take longer to resolve.

Jun 06, 2008 12:03 AM

Heather the Realtor Orlando, Lake Mary

LemonTree Realty - Orlando, FL

First Time Home Buyers, Bank Owned Homes

I agree I find what a true market price is and then adjust for condition and put it a hair in front of the curve. I will say that MI companies are also killing these deals like you wouldnt believe.

Jun 06, 2008 12:09 AM

Charlie Ragonesi

AllMountainRealty.com - Big Canoe, GA

Homes - Big Canoe, Jasper, North Georgia Pros

The whole process is not as easy as many think. Nice post

Jun 06, 2008 12:10 AM

Sidney Jimenez

Keller Williams Realty SW - Pembroke Pines, FL

CDPE, ASP

LENN--I don't think the vast majority of agents really know how to sell properties. It takes more than just sticking a sign and putting the lowest price. The lenders and investors want to make sure they're getting the best price. The agents are doing a terrible job establishing that. They are just submitting offer after offer. That tells the lender that the agent has no idea of the property's fair market value.

BRIAN--You're right on Brian. And we are where we are, neck deep in muddy waters.

Jun 06, 2008 12:12 AM

Gene Allen

Fathom Realty - Cary, NC

Realty Consultant for Cary Real Estate

Of course it would help if the banks would come out with some criteria for us as well. When you give an agent the REO, give him the paperwork and the conditions with which you would take an offer. Maybe that would help some. Right now buyers and agents are running amok because a friend of a friend just bought a $1million house for $400k. Its crazy.

Jun 06, 2008 12:08 PM

Lynn Pineda

eXp Realty - Boca Raton, FL

Real Estate Promises delivered in SE Florida

Sidney you're absolutely right in stating that multiple offers can only lengthen the approval process; a definate negative as most sellers don't have a lot of time to mess around as time isn't on their side as they need their home sold in order to escape foreclosure. This alone is the adverse side of multiple offers.

The properties should be priced at or near fair market value to get the property sold. What too many buyers agent do is automatically assume that they can throw in a low ball offer and the Lender will jump at. One should be able to back up their offer with solid comparables; how can you convince a Lender of a good offer if your offering isn't backed up by anything? The process of moving inventory would be accelerated if everybody looked at fair market value establishing some type of normalcy. One can dream.

Jun 06, 2008 02:15 PM

Sidney Jimenez

Keller Williams Realty SW - Pembroke Pines, FL

CDPE, ASP

LYNN--You are dead on. Great Job!

Jun 06, 2008 02:24 PM

Susie Genet

Chinowth & Cohen Realtors - Tulsa, OK

I agree that pricing a property appropriately is where we need to start. By pricing a home according to the comps, the agent will have a better chance at receiving an offer that the bank will accept. If it is priced significantly below the neighborhood (as I see many short sales listed) it is just that much harder to get an offer that is going to work!

Jun 08, 2008 02:18 AM

Sidney Jimenez

Keller Williams Realty SW - Pembroke Pines, FL

CDPE, ASP

Lloyd--I don't believe this is a gov't matter, but I do agree that there needs to be some kind of standard that should be established. The fact that the lender are sitting on offers has more to do with the fact that there are too many agents that believe the sending of multiple offers is the way to go. They believe the lender will chose a contract to their liking and approve the sale. It really is not working that way.

The multiple offers confuses the establishment of value. That makes the reliance on the BPO and appraisals more important to the lenders. Value, in their minds, is not made up of where a Realtor prices the home but rather on the lastest sales and opinions of the professionals who's job is to establish and defend their perception of value. Realtors sending in multiple offers, many times low ball offers, takes away our clout as professionals and experts in the field we are licensed in. What would you do if you're trying to sell your car on eBay and no one hits your reserve price--you sit and wait. It doesn't matter what the buyer thinks it's worth--but it definitely matters to you.

The lenders are sitting on the offers because for the most part, they are low offers. It doesn't pay for the lenders--in most cases--to accept a short sale when they believe the value is higher and they can net more in a foreclosure. When Realtors start taking the process more seriously and learn the techniques necessary to convince the lender that they have a legitimate contract at or close to market value then the process will be smoother. It is still a business for them and they want to lose as little as possible. By sitting on the offers they are telling you that they are not convinced they have the best price. Honestly, who's fault is that?

This will straighten itself out by the court systems once these jilted buyers start suing because they are being deceived, the sellers will be in breach of contract for signing and submitting multiple offers. Nobody is putting together a standard because of liability issues and that will be resolved in court system.

Remember that some of these buyers are losing their chance of purchasing a home as their qualification for a mortgage disappears as they wait for an approval, or their program is discontinued or even their pre-approval letter becomes invalid.

Jun 08, 2008 02:26 AM

Sidney Jimenez

Keller Williams Realty SW - Pembroke Pines, FL

CDPE, ASP

SUSIE--Good job! When a property comes onto the market the agent automatically prices the property lower than the rest. That does not establish the true value in the eyes of the lender, their investors or even the appraisers. It is a much better tactic to start the process at a higher price and lower the price regularly until you reach a point where you get an offer. That makes your argument to the lender that you tried to get the best price much more credible. It also gives you a better footing to fight if the BPO comes back at a higher price.

We should also remember that many of the properties that are on the market have multiple offers and quite possibly higher offers that the new property that just came onto the market. Some of properties have been in negotiations for months so their offers are from a couple of months ago when the asking prices were higher. Knowing that, it is safe to assume that many properties have higher offers than the new one that were just listed. That means that market values are higher than what is reflected on the MLS. All the "Actives" give the impression that nothing is moving and we need to lower the price. That is a wrong assumption.

Don't you think the lenders see this pattern and therby reject the ridiculous offers being submitted. They are content to wait for, what they deem, to be the right price.

Submitting a single offer for a price that is reasonably close to the asking price is getting us better approval ratings. An interesting side effect of the single contract submission tactic is that you will get a better and higher offer than many of the other properties on the market. Buyers are willing to pay more for a property when they know they have a legitimate opportunity to buy it and not just sit around and wait like it's the lottery

Jun 08, 2008 02:38 AM

Tina Farinas

Fusion Real Estate Network, Inc. - Roseville, CA

REALTOR, ABR, GRI, SFR, CHS, e-PRO

Sidney, thanks for this post. This is a thorn on my sides. It is bad enough that short sale is an excrutiating long process. Submitting multiple offers makes it even more difficult. Just like you, I believe that the strongest offer should be the ONLY one submitted and rest held back.

Jun 10, 2008 05:57 AM

Chris Ann Cleland

Long and Foster Real Estate - Gainesville, VA

Associate Broker, Bristow, VA

Sidney: I love what you are saying. You're preaching to the choir on this issue. I realize that I am not working for the bank, but as you so eloquently put it, tyring to convince the bank to work with my sellers. THe bank did not hire me and does not have the right to dictate that they receive every offer that comes in. And when did listing agents forget the art of negotiating? It's okay to counter offer before you send an offer to the bank. Remember, your sellers have to be happy with the offer FIRST. Then you convince bank. These Micky Mouse contracts that you are throwing at the banks are killing all of us. Stop the madness.

Jun 10, 2008 06:52 AM