In addition to what's already been mentioned I begin the process by working to manage my client's expectations. I discuss what often occurs when there are multiple offers and then I get a sounding on how comfortable they are stripping away contingencies, offering above full price, etc.  Any offer is stripped of all the contingencies they're willing/able to drop and is at or near the best price they are willing to pay.

Hi Sarah and Les --- these can be very frustrating times for buyers and sellers too.  Ideally, my initial meeting with buyers is part overview of the market and establishing expectations.   We discuss shortening and/or removing certain contingencies and the ramifications of doing such things.  

The financial side is addressed as well to ensure their comfort level.  I have used escalation clauses and they have worked.  It's part of an education process because there are some listing agents who don't seem to be able to grasp the concept(and may likely not be able to communicate it to a seller) and may hurt a buyer.   

My conversation with buyers who are unsure of price is a question -- if I told you this house sold for X (some amount higher than your offer) -- how would you feel?   If the answer is that's okay, we're fine with that tells me that's their price.  If they respond that they would be disappointed, then the conversation should be continued until their answer surfaces.  

I have used escalation clauses in my home state of Virginia, and won my client the offer even though there was another offer above list price. When I moved to North Carolina, I found that the only way that escalation clauses can be offered is if they are written by an attorney, so I have not used one here.

If I know that I am in a multiple bid situation, I create a good CMA, and take into account why my clients love the house and its location, and how long they intend on staying there.

If they intended on staying put for over ten years, I would have them present an offer that is several thousand dollars above list. Of course, this is all dependent upon their comfort level...

We work hard to get those multiple offers coming in, it makes a difference in the negotiations when you have competition.

A letter from my buyers with the offer helps.

Put your best foot forward.

I'm doing the best I can.

What do I do?

First I ask the buyer if they are willing to pay the justified value for the property. (that is different than list price and certainly not 60% of value)

If they say, "No, I'm looking for a deal." I can't help them gain an edge. I already have folks on my A-List who will buy the deals.

If they say they simply don't want to overpay and will pay market value, I take them to a non-competitive market place. This is a 'one strike and you are out' opportunity.

Now, if they have been declared out, I will read the house and construct an offer in alignment with what the seller suggested. Triangle folded flag, lots of child pictures, religious symbols, library containing publications not in English, a globe, a safe behind a locked door, wall plaques and innocent comments by the owner are all disclosures made by the seller who has unknowingly revealed how to appear to walk towards them.  If my buyer rejects my suggestion, I start looking for a newbie.

A third opportunity exists based on the profile of the community. This option creates value that aligns with the sellers aversion or oblivious nature. High end folks will wait for price, low to moderate safety seekers. The number of boxes packed and ready to move are great big flags telling the buyer what the seller wants. If my buyer still can not hear, refuses to create their advantage, I introduce them to a newbie.

As a listing agent I like offers with an escalation clause. They are the easiest to shop and are never accepted.

Based on the seller profile, the advantage to create is the one were the sellers feels most insecure. For most sales it is the assurance of closing.

I try and treat them better than I would expect to be teated.