In my personal opinion, it is much easier to represent the buyer rather than the seller on a multiple offer. Personally, found it easier to convert my multiple offers into closed transactions. To be successful as a buyer's agent in a multiple offer situation, here are some simple guidelines.
- When you first begin working with a buyer, ask them how they would want you to handle a multiple offer situation. Here are the options:
a. Do they want know when they are negotiating against someone else?
b. If they are the first to submit an offer and someone brings a second offer after their negotiation has started, do they want to stay at the negotiation table or do they want to withdraw their offer?
c. Do they want to put an offer on a house where an existing offer is being negotiated or would they prefer to see whether the first offer is accepted?
d. In many multiple offer situations, at least one of the buyers may offer full price or over the asking price. How would they feel if they offered full price and someone who offered more got the house?
Having this conversation and recording the buyers' preferences is a great way to avoid difficulties when an actual situation occurs.
- Prepare your buyers for a multiple offer situation when you first begin working with them by having them pre-approved (rather than just pre-qualified) for a loan. Include the pre-approval/pre-qualification letter with any offer you present.)
- If you and your buyers find yourself in a situation where there are preceding offers on the subject property, let your clients decide how they would like you to negotiate on their behalf by asking the following questions.
"I need to know how you would like me to negotiate this offer on your behalf. There are three different strategies for handling a multiple offer situation. Which of these three strategies is the best for you?"
a. The first strategy is to make an offer as you would in a normal situation. If another buyer offers more, we may not get a counteroffer, even though I will definitely ask the seller to give us an opportunity to negotiate for the house.
b. If this house is one you really want, and you feel the asking price is fair, you may want to make a full price offer. If there is a multiple offer, most sellers will give someone who has made a full price offer a chance to continue in the negotiation, even if some other buyer offered more.
c. If you absolutely cannot live without this property and it will be a complete and total disaster if you don't get it, then offer slightly over the asking price. This usually guarantees a counteroffer or an offer acceptance.
How would you like me to negotiate this offer on your behalf—it's your decision, what would you like to do?
- What are some strategies for making your offer stronger than the competition's?
a. Let the seller determine the closing date as well as selecting the title and closing agent.
b. Shorten the contingency times. (However, do not waive your inspections—even if the property is a "tear down." I have clients still living in "tear downs" I sold them 10 years ago.)
c. Provide the pre-qualification/pre-approval letter along with a bank statement showing the source of funds for the buyer's down payment. (Be sure to omit the account numbers).
d. Advise the buyer to be flexible on any special needs the seller may have such as a "leaseback" after closing or taking something that is currently "attached" to the property and hence, is part of the purchase price.
- Some agents are not experienced in handling multiple offers. If possible, request the office manager be present during the multiple offer presentation, especially if the listing agent has his or her own offer.
- Before you present your offer, ask the listing agent to allow everyone enough time to get back their offers. Also, suggest the listing agent have each party bring back their best offer on the next round so the negotiation doesn't drag out for an extended period.
- Inquire about the other offers, even though it is inappropriate for the listing agent to tell you. A better question to ask is, "What has the seller turned down?" Whether or not you communicate this to your buyer is debatable. Many times sellers, especially when their circumstances may have changed, have accepted much less than what they have turned down.
- Many times your buyers will be angry if they don't get the house. Listen to them and then say, "What would you have me do differently—my goal is to give you the best representation possible."
- Many buyers are fatalistic about not getting a house—you can say, "This house, for whatever the reason, obviously wasn't the right house for you. Let's keep looking."
Multiple offers can be challenging, but if you will follow the simple guidelines above, you may be surprised how often you're taking a closed transaction check to the bank.