The term “bidding war” lends an adversarial tone to multiple-offer situations, and pitting one side against the other is the wrong way to handle such a transaction, Greg Glosson, managing broker at Fast Track Realty in Memphis, Tenn., said Tuesday at a session called “Multiple Offers = Multiple Confusion” during the virtual 2020 REALTORS® Conference & Expo.
“We need to be very cooperative with one another because we are all trying to get to the same location, and that location is the closing table,” Glosson said.
Agents can help smooth out a multiple-offer situation, which can be rocky because of the competitive nature, for both buyers and sellers by being prepared. You should be familiar with your state and individual brokerage’s policies regarding multiple offers, understand your service obligations under the REALTORS® Code of Ethics, and importantly, communicate openly and often with clients, Glosson said. Listing agents need to respect that choosing the right offer is the seller’s decision, and buyer’s agents should impress upon their clients the urgency of making a legitimate, competitive offer.
But even with as much preparedness as possible, certain types of offers may be “dead on arrival” if they ask too much of the seller, Glosson noted. Buyers, whether they like it or not, should understand that sellers are in control in a multiple-offer situation. In a hyper-competitive market like today’s, it may behoove the buyer to acquiesce as much as they can to win. Glosson said these types of offers tend not to get a serious glance from sellers who are weighing multiple offers:
- Lowball offers
- Too many contingencies
- No verification of financing or proof of funds
- Too long or too short of a closing timeline
- Repair requests
- Short expiration time of the offer
- Too long of an inspection period
- Offers needing approval of multiple parties
- No earnest/trust money
- Offers that go against agent’s advice
Sometimes, the buyer’s agent may make a mistake in presenting the offer, causing it to be rejected, Glosson said. This includes:
- Incomplete offers (missing or incorrectly filled out paperwork)
- Poorly organized offer packages
- Not paying attention to offer instructions in the MLS
- Poor communication with listing agent (emailing offer without following up)
- Aggressive or condescending communication
Buyer’s agents can ask for important information from the listing agent to ensure their client’s offer is as competitive as possible. Glosson recommends that buyer’s agents ask: If my buyer could present an offer today that the seller would sign immediately, can you tell me what the offer would look like? Understand that the listing agent may not have their seller’s approval to share this information.
“[But] my experience tells me the listing agent is going to start singing,” he said. “If they do, I have to assume they have the authority to tell me this.”
Listing agents, on the other hand, should counsel their sellers that they have three options: to disclose the existence of other offers, not to disclose, or to disclose both the offers and their terms. The third option, though perfectly legal, tends to heighten the adversarial nature of a multiple-offer situation because it assumes no confidentiality for the bidders, Glosson said.
“You should always let the seller know that whichever choice they make, someone is going to [be] unhappy because only one bid can win,” he added.
Source: magazine.realtor
