How We Handle Multiple Offer Situations

These days, it seems like every listing we sell starts off in a multiple offer situation. From the listing agent’s standpoint it’s what we want. The competition serves to drive up the price. But from the buyer and buyer agent’s standpoint, it can really be discouraging submitting offer after offer on different properties and never getting them accepted.

With limited inventory, few sales, and huge buyer demand in many areas, it’s like throwing darts trying to figure out where to make an offer. I can’t imagine a more difficult time to be a buyer agent.

I recently wrote an article about ways to draft an offer that might help move it to the top of the pile in a multiple offer situation, or at least near it, it’s not foolproof. The buyers who are working with agents who know what they’re doing will try to incorporate as many of those things into the offer as the buyer will agree to.

In this article, I’m going to share how we handle multiple offer situations on the listing side. As listing agents, we owe our fiduciary obligation to our seller clients, but that doesn’t mean we can’t make sure everyone who submitted an offer gets a fair shot at buying the home.

Before I get started, I want to make sure everyone understands listing agents don’t make the decision on which offer the seller accepts. The sellers make that call. They might ask for our advice or recommendations, which we’ll give, but we always leave that decision to them. Believe me, we don’t want the sellers feeling like we’re “pushing” any particular offer. If it falls apart down the road, it makes us look bad. Here’s how we handle multiple offer situations.

If One Offer Stands Out Dramatically Above All Others

  • This is easy because it’s the offer the seller usually wants to work with, but chances are there will still be things in the offer the seller will want to tweak. It might be the length of the seller leaseback, the closing date, earnest money, length of option period, etc. There’s much more to an offer than the price and sometimes even the highest priced offer isn’t chosen.
  • When one offer really stands out, I personally don’t think it’s wise to go back to all of the other buyers and ask them for a “best and final”. If you’ve got one outstanding offer, just work it. One time in a multiple offer situation, we had a great offer on the home, much higher than all the others. I suggested the seller just work that offer, but he wanted to go back to everyone and ask for their “best and final”. When that happened, the listing agent for the buyer with the great offer called and told me his buyer had terminated his offer. He said he wanted the home and put his best offer out there, but going back to everyone made him feel like he was being “played”. He walked away on principle. The end result is no-one else came close to that best offer so the seller lost money by pushing too hard.
  • When we get the go-ahead from the seller to work an offer, we’ll go through the details of the contract and make sure there’s an agreement on all points with the buyer agent. We also try to get more clarification and assurances of the buyer’s ability to close on the home and if it’s an all cash offer, we’ll verify the funds are there to close.
  • If everything checks out on the financing and we can come to an agreement on all other points of the contract, the buyer and seller sign the contract and then we’ll immediately notify the other buyers and/or their agents another offer has been accepted and thank them for their offer. We don’t want to keep them hanging. Of course, we can’t disclose the winning price but we’ll encourage them to submit a backup.

If There Are Multiple Offers With No Clear Cut Winner

It gets a little more complicated when all of the offers come in at around the same price without a clear cut winner. How does the seller know which offer to work? In cases like these, here are the steps I take.

  • With the seller’s permission, I’ll go back to all of the buyers and ask for a one time “best and final offer”. We might give the buyers until 5PM the next day to resubmit their offer for it to be considered. Some of the buyers might hold firm on their offering price and others might increase it, but I make sure they all know we aren’t going to keep repeating this process. This is a one time request for a best and final and the seller will make their final decision based on this last go-round of offers.
  • If there are quite a few offers, and we’ve had as many as 30, we’ll summarize the deal points in a spreadsheet from price to number of days the seller can lease back, earnest money, option period, etc.
  • From that, the seller needs to make their decision as to which offer they want to work. Again, it might not even be the offer with the best price, but something else the seller finds attractive.
  • Whichever offer the seller selects, we’ll reach out to the buyer or their buyer agent and try to hammer out the details. If we can get those worked out and we’ve verified the buyer’s ability to perform, the buyer and seller sign. Then we’ll notify everyone an offer has been accepted and again, we’ll suggest they submit a backup offer if their client is interested.

Here Are Several Things We Won’t Do

  • What really aggravates buyers and their agents is when they think they’ve been taken advantage of or were never given a fair shot at buying a home. If they’re all treated exactly the same way, they might be disappointed in not getting the home, but they should realize they were given every opportunity. If the offer in the number one position falls out, hopefully we’ll have a back up to work and then focus on that.
  • In no circumstance can our listing agent also represent a buyer on the same home. Although we’d make a lot more money by doing so (and many agents choose to work both sides), we won’t. It’s technically legal if done correctly, but double dipping on commissions taking both the buy and sell side is not doing our seller any favors. They hired us to represent, guide, and advise them throughout the entire process. You simply cannot do that working both sides of the deal.
  • If you’re wondering if we give our own buyer agents preferential treatment when they submit an offer on one of our team listings, we don’t. We’re very clear about that on our team. Admittedly, it can be a bit awkward at times, but our agents all have the maturity and experience to understand we have to treat all offering parties equally and fairly.