In last week's market update, I shared that we again are seeing multiple-offer situations in the local market. While they do not have to cause frustration, they easily can, especially with a lack of communication and understanding from all parties involved. Thus, I wanted to expound on the guidance I offered in late April regarding multiple offers.
Our Code of Ethics obligates Realtors to be honest with all parties, to present offers and counteroffers quickly and objectively and to cooperate with other brokers. Cooperation involves sharing of relevant information.
When it comes to multiple offers, frustration and misunderstanding frequently result from cooperating brokers being unaware of the status of offers they have presented on behalf of their buyer-clients. Listing brokers should make reasonable efforts to keep buyer-representatives up to date on the status of offers. Similarly, buyer-representatives should keep listing brokers informed about the status of counteroffers their seller-clients have made.
Sellers and buyers alike are encouraged to appreciate that the listing broker's advice is based on past experience and is no guarantee about how any particular party will act (or react) in a specific situation. The listing broker can explain the pros and cons of various negotiating strategies. However, the decisions are yours, whether you are the buyer or seller - not the listing broker's -- to make.
Sellers may be faced with multiple competing offers to purchase their property. When faced with multiple offers, sellers can accept the best offer; inform all potential purchasers that other offers are on the table; counter one offer while putting the other offers to the side, awaiting a decision on the counteroffer; or counter one offer and reject the others. Again, while the listing broker can offer suggestions and advice, decisions about how offers will be presented and dealt with are made by the seller, not by the listing broker.
Sellers are encouraged to ask their listing broker to explain the options and alternatives. Each approach has advantages and disadvantages.
If you are the seller, patience may result in an even better offer being received. Inviting buyers to make their best offers may produce an offer (or offers) better than those on the table -- or discourage buyers who feel they've already made a fair offer, resulting in them breaking off negotiations to pursue other properties.
Similarly, if you are the buyer, a low initial offer may result in buying the property for less than the listed price - or it may result in another buyer's higher offer being accepted. On the other hand, a full-price offer may result in paying more than the seller might have required. In some cases there can be several full-price offers competing for the seller's attention and acceptance. The buyer-representative can explain the pros and cons of these (and possibly other) negotiating strategies. Again, though, the buying decisions are the buyer's, not their representative's, to make.
Did you know that generally, purchase offers aren't confidential? In some cases sellers may make other buyers aware that your offer is in hand, or even disclose details about your offer to another buyer in hope of convincing that buyer to make a better offer. In some cases, sellers will instruct their listing broker to disclose an offer to other buyers on their behalf.
Listing brokers are required to follow lawful, ethical instructions from their clients in the same way that buyer-representatives must follow lawful, ethical instructions from their buyer-clients. While some Realtors may be reluctant to disclose terms of offers, even at the direction of their seller-clients, the Code of Ethics does not prohibit such disclosure. Thus, buyers may want to discuss with their buyer-representative the possibility of making their offer confidential, or of establishing a confidentiality agreement between themself and the seller prior to commencing negotiations.
Also, buyers should realize that their broker likely has other buyer-clients, some of whom may be interested in the same properties. Ask your broker how offers and counteroffers will be presented and negotiated if more than one of his or her buyer-clients is trying to buy the same property.
The Greater Chattanooga Association of Realtors, a regional organization with more than 1,400 members, is one of more than 1,800 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. GCAR services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. For more information visit gcar.net.