I read a post on Active Rain today about handling multiple offers. The author was bemoaning the practice many buyers’ agents have of asking if there are multiple offers. His argument is and I quote, “Whether or not we have multiple offers is none of your business!” The rationale being that he works for the seller and only he knows what is in the seller’s best interest.
“As a listing Broker…My Sellers need to know that they do not have to
- Disclose multiple offers.
- Counter offer.
- Ask for “highest and best”.
- Even acknowledge your Buyer’s offer.”
He goes on to say:
“There are many reason (sic) why NOT disclosing multiple offers or asking for ‘Highest and Best’ may be the best way forward.
- The Buyer may NOT submit an offer if they know there are multiple offers.
- A Buyer may also NOT want to get caught up in a bidding war.
- By disclosing multiple offers I could very well keep my Seller from getting a better offer.”
He went on to describe a transaction where a buyer’s agent did a less than stellar job getting an offer together and who was offended that he didn’t disclose that in the time it took her to get her act together, the sellers accepted another offer for significantly more money.
The listing agent feels that he best served his clients because they got more money than the original offer. My question is, how much more could they have gotten if the buyer had been given the opportunity to revise their offer with the knowledge that they had some competition?
This is what he has to say, “I really don’t give a crap what the Buyer’s agent and the Buyer think. I work for the Seller. They are the one’s paying me. While I certainly agree with having “professional courtesy” it does not extend to giving you insider information to help you negotiate a real estate transaction. Always remember who you are working for. (Emphasis mine)
What I find most interesting (and disturbing) is the vast number of people agreeing with his view. I guess this guy is a big name and is therefore supposed to be all knowing or something and it seems that no one is confident enough in an opposing view to speak up.
What Do You Think??
I think that the buyers’ agents are doing exactly what they are supposed to do in looking out for the buyers’ best interest AND giving the listing agent the opportunity to provide more value (not to mention money) to his sellers.
Knowing that there are multiple offers doesn’t actually help the buyers negotiate a better price for themselves. It allows them the ability to negotiate for the property, most likely at a price that is more advantageous to the seller.
Even if a buyer finds the perfect house, they still want to get the best deal that they can. So when they submit an offer, it is exactly that: an OFFER, not an ultimatum that the sellers must take or leave. Maybe it is their highest and best and maybe it isn’t. That isn’t what matters; what matters is whether or not the sellers find it acceptable.
There are a couple of things that might cause the buyers to change the offer, including a counteroffer from the seller or the knowledge that other offers are on the table; there is nothing wrong with either!! It’s called negotiation for a reason.
Do bidding wars that drive prices up benefit the buyer or the seller? How can knowing that there are other offers get the buyer a better deal??
Unless the agents supporting nondisclosure of multiple offers are strictly listing agents, surely they realize that when they are the buyer’s agent, their duty to the buyer’s best interest includes helping them negotiate for the property that they want, for the best price, in the least amount of time, and at terms and conditions that the buyers find acceptable.
No agent worth his or her salt would advise a client to offer more than necessary based upon the information available. Such information would include recent sales of comparable properties, age and condition of the home, or any other information that could affect the value of the property. (Think proposed zoning changes, physical or economical obsolescence, or knowledge that the seller might agree to a lower price, different terms, or is selling under duress.)
That being said, if the buyer’s agent knows of the existence (not the terms) of another offer, it is in their client’s best interest to be made aware of this factor that most certainly effects the perceived value of the property. If they love the home, they can bring a better offer—financially benefitting the seller. If they are ambivalent, they may choose to keep the same terms with the mentality that if they get it, great and if not, oh well. Yes, it is possible that a buyer might choose not to submit an offer or even withdraw an offer if they have competition, but the most common reasons for that are time constraints that make it impossible to wait for multiple offers to trickle in before the seller accepts or counters. This might happen if out of town buyers are in a rush to find a home and absolutely must have something under contract in a specific amount of time.
(*A simple solution for that is a “Time is of the essence” or “Expiration of Offer” clause with the offer and this should be considered in that situation regardless of whether or not multiple offers exist.)
None of these hurt the seller’s position. They will likely end up with a revised (better) offer or offers and they get to choose the one that best suits them. Or maybe the offers remain the same and they still get to choose the one that best suits them. In the third situation, if the sellers make the buyers wait too long before responding, countering, or accepting the offer the buyers are likely to withdraw the offer anyway if time is truly deciding factor.
The author of the Active Rain post may be correct about all of the things he mentioned that the sellers do not have to do or disclose, but has he ever explained to them in a way that they can understand, the potential benefits of doing so? Then again, maybe he doesn’t understand it either…
In your experience, has there EVER been a situation where a multiple offer situation hurt the seller’s position? Sound off below!.