Technology TransactionsRepresenting The Seller In A Multiple Offer
When I was actively selling in Southern California, multiple offers were a fact of life. While you may think receiving two or more offers on one of your listings is a great situation to be in, actually it"s not. For properties that sell with a single offer, the "fall out" rate is 10%. For properties where there are two or more offers, the "fall out" rate is 50%.
The reason there is such a significant difference is buyers often feel they were unduly pressured by the multiple offer situation. After they have time to reflect on the situation, they often end up resenting both the agents and the seller. To minimize hard feelings as well as the very real potential for litigation over the subject property, try following the guidelines below.
*Although your company may not have this policy, it"s still smart to ask your manager to be present. Difficult people often behave themselves when they know management is involved. Have your manager present whenever any multiple offers are presented.
*Have the buyers" agents and your seller come to your office. This gives you better control of the situation as well as insuring that you will have any tools you need to handle the situation.
*Each offer is confidential. It is unethical to disclose the contents of competing offers.
*Explain the presentation guidelines to each agent who presents their offer prior to hearing the offer. This includes when any counteroffers may be due.
*If the agents for the buyers are presenting their offers in person, have them present their offers privately, one at a time.
*Let the seller decide which offer they want to accept or if they want to counter all the offers. If the seller does decide to make a counteroffer, it is a smart idea to counter all offers. You never know who will step up to the plate to complete the purchase. Also, the counteroffers do not have to be the same. Your seller may counter them any way they choose. Be advised, however, it is not unusual to have the sellers make a counteroffer and have both sets of buyers walk away from the situation.
*If you have your own offer on your own listing, your manager should represent the seller to keep the situation fair as well as to avoid any problems with agency. You will represent your buyer. (The manager should not disclose the terms of the other offer to you until the negotiation is finished. At this point you may step in to handle the remainder of the transaction.)
*If you issue more than one multiple counteroffer, make sure it includes the following language.
* "Buyer"s signature on this multiple counteroffer does not constitute an accepted offer until it is countersigned a second time by the Seller."
What this means is the seller will sign the counteroffer, the buyer will sign it, but it will not be binding until the seller signs the second time.
*Have all parties agree when to reconvene to consider the buyers" responses to the seller"s counteroffer. Do not make it a race. This doesn"t benefit the seller and it greatly increases the likelihood that the transaction won"t close. Usually 18 to 24 hours is sufficient.
*Advise the buyers the seller will be making their final decision on the multiple offers at this second meeting. Ask the buyers to bring back their "best" offer. If you issue an additional counteroffer beyond this point, the buyers may both walk away. If you need to "clean up" a minor point, an additional counter may be appropriate. Countering over the price the seller chose on your first counteroffer, however, will generally cost you the transaction.
*Never sign on behalf of the seller—overnight the offer, have it faxed, whatever it takes—it is not your house. Also, make sure everything is done in writing—no verbal negotiations no matter what.
*If you have a counteroffer out and you receive a new offer that is better than the one you are negotiating on, immediately check with your manager on what your company policy is. In many cases, rescinding the existing offer can lead to litigation. The best course of action is to generally let the existing counter offer expire and then counter both offers as a new multiple counteroffer. In some companies, their policy is "first in, first negotiated." What this means is that the seller must conclude the negotiation with the first buyer. If this doesn"t work out, at that point, the new buyer"s offer may be presented.