Navigating Multiple Offers, Part 2 Click here for Part 1.
Just as the listing broker has obligations to their client, so does the selling broker. Decisions about how offers will get presented, for example electronically, in person to the seller, in person to the listing broker, or electronically with telephone follow-up to discuss the offer are up to the buyer. Absent instruction from the buyer, the buyer broker should not indicate that the buyer would consider or accept a counter-offer, pay a higher price than offered, or otherwise suggest that any offer term is negotiable.
Because it is a seller’s decision to instruct their listing broker whether to let buyers know of the existence of other offers, the buyer broker may not always know when other offers exist.
Unless there is a state law or real estate regulation that limits the ability of brokers to disclose other offers, the buyer broker should inform the buyer that the existence of their offer and offer terms are not confidential and can be disclosed to competing buyers. The only way to obtain seller confidentiality for a buyer’s offer is to get written instruction from the buyer requiring the seller to sign a confidentiality agreement before offer presentation. The instruction should also include the course of action to take if the seller refuses, for example, to present the offer or to not present the offer.
Much of the frustration over multiple offers is because of lack of professionalism and communication by the brokers involved, especially the listing broker. The brokers should cooperate with each other, except when cooperation is not in the client’s best interest. For listing brokers, cooperation includes sharing information necessary to the transaction and keeping all buyer brokers informed as to the status of their offers or counter-offers.
According to information shared in Illinois REALTOR® Magazine, multiple offer complaints generally revolve around these scenarios:
- The buyer broker notifies the listing broker that she has an offer on his listing, but the listing broker does not return the phone call for days or even at all.
- The buyer broker delivers the offer to the listing broker, and then all is silent, nothing happens, leaving the buyer and their broker wondering if their offer was even presented.
- The listing broker decides which offer to present to the seller, and the seller accepts the offer, but then finds out about the existence of other offers.
- The listing broker receives one offer, decides to present it to the seller, and tells other brokers that they are too late, even though the presented offer is not yet accepted.
- A buyer broker delivers an offer, and the listing broker says the seller already rejected an offer at the same price, so it is not going to get presented.
- The listing broker had permission from the seller to disclose the existence of other offers, but didn’t disclose, and the buyer broker was not able to tell their client so that the buyer had a change to better their offer.
- The seller accepts one offer, but his broker does not complete the necessary paperwork for the other offers so the buyer brokers can show their clients that their offers were presented and rejected by the seller.
In most of these examples, the listing broker made decisions for the client, rather than allowing the client to make their decision. NAR Code of Ethics and Arbitration Manual guidelines make it clear that the client is the decision maker for looking at other offers, whether their broker should disclose the existence of multiple offers, and if or what counter offer to make to the buyer.
There is no standardized rule for presenting multiple offers to a seller. However, here are three strategies to consider when in a multiple offer situation:
- Individual presentations – Each contract gets presented by the buyer broker to the seller broker and seller, and then the seller agrees not to share the offer terms with third parties;
- Group presentations – Present all offers at the same time and in front of all the brokers having offers. Because some buyers will not want their offer or other information disclosed in public, and because real estate brokers are bound by confidentiality, buyers should be given the opportunity to revoke their offer before proceeding with this option; or
- Broker-to-broker presentation – Each offer is delivered to and discussed with the listing broker. In turn, the listing broker discusses each offer with the seller and then helps the seller to decide the disposition of each.
Managing buyer expectations so disappointment with offer rejection is minimized can be accomplished by sharing the following things about multiple offers with the buyer:
- A buyer broker may not be told there is a multiple offer situation.
- A seller is not obligated to consider offers in the order received.
- A seller is allowed to disclose the existence and terms of a buyer’s offer to other buyers – buyers’ offers are not confidential.
- A seller is not obligated to accept the highest priced offer.
- Regardless of the number of offers, the property is still on the market until an offer is accepted.
- A seller cannot counter-offer two different buyers at the same time.
- A buyer can revoke an offer at any time up until the seller accepts it.
- There is no rule or law requiring a format for the presentation of multiple offers to a seller.
- To get informed of multiple offers, the buyer broker must ask if there are other offers.
- The seller must grant approval for the listing broker to disclose other offers.
Even for the seasoned real estate broker, multiple offers can be hard to negotiate. For the new broker, following these points will help, but it is always the best practice to consult with your office manager when you know you are going to be in a multiple offer situation.
Page 1 | Page 2
Interested in more FREE coaching tips? Sign up here!
OnlineEd is a provider of pre-licensing, post-licensing, and continuing education for real estate licensees. For more information about OnlineEd, please visit www.OnlineEd.com.