By Elizabeth W. Penney, Information Officer
Lucky you! You’ve just placed a “hot” listing on the market and you already have an offer. Before you can deliver the offer to the seller, second and third offers arrive.
While you may feel confident in your ability to handle and negotiate a single offer, you may feel less certain in a multiple offer situation. Diligence and fairness to all including your seller-client and the prospective buyers is required to avoid problems. Emotions run high and care is needed to avoid a complaint. Buyers and their agents are impatiently waiting for an answer. Here are a few suggestions to consider when multiple offers occur.
Present all offers immediately. Commission Rule A .0106 states that “every broker shall deliver a copy of any written agency agreement, contract, offer, lease, rental agreement, option or other related transaction documents to their client within five days of the document’s execution.” Preferably, a broker will not wait five days but will deliver an offer to their client as soon as possible. Presenting an offer means personally delivering the offer or transmitting a copy of it to the seller. Oral communication of an offer is not sufficient to satisfy the Commission’s rule. If multiple offers arrive at the agent’s office before he or she has the opportunity to present any offer, the listing agent should try to present all offers at the same time to the seller.
A seller can elect to work only with one offer, or if the seller does not find any offer acceptable, the seller may ask some or all the prospective buyers to submit their highest and best offers. It is the seller who must make that decision, not the listing agent. If the seller calls for highest and best offers, the listing agent should advise all buyers they can submit a new offer or stand by their original offer. Contrary to some thinking, there is no ”first in the door” rule. In other words, in multiple offer situations there is no priority to one offer over another. A seller is not bound to consider offers in the order in which they were received, whether they are full price or exceed full price without concessions.
Shopping offers is strictly prohibited. Since 2008, Commission Rule A.0115 has prohibited brokers from sharing the price or other material terms in offers with competing parties without the express authority of the offering party (the buyer). Generally, there is no advantage to a buyer in sharing their offer’s terms with competing buyers.
In today’s market there are seasoned sellers as well as sellers who need assistance in evaluating offers and assessing the differences in the various terms and conditions. A listing agent can assist the seller in reviewing the different terms in order to choose the best offer for that particular seller. Once an offer is accepted, the seller may consider a back-up offer.
Occasionally a buyer agent asks to be present when an offer is presented. A listing agent should discuss such a request with the seller and allow the seller to make that decision.
Communicate with all prospective purchasers and their agents. A broker is not required to disclose a multiple offer situation, but should answer any questions about whether or not there are multiple offers honestly. The broker should follow the direction of their seller in what the seller wishes to be communicated, but the broker also should not “go dark” and fail to respond to contact attempts by buyers and their agents. By following the advice above, multiple offers can be handled successfully and efficiently with all parties being treated fairly and honestly.
This article came from the October 2017-Vol48-2 edition of the bulletin.