SparkNotes – Mutiple Offers (the Ghost of Christmas Past)

by Kris Berg

Realtor, Associate Broker

Author website

It’s a strange real estate world we live in. Some markets, such as Manhattan and San Francisco reportedly thrive, while others such as Southern California have been more than mildly affected by declining home prices and slower sales. And then within each region there are micro-markets. In my own San Diego, it is the tale of two cities.

It is the best of times, it is the worst of times. There are two distinct buyer psychologies at play. One segment is looking for a deal; the other is looking for an upgraded, turnkey opportunity. There are similarly two demographics at work. One wants (needs) the lower-end, entry-level product (in San Diego, these prices start with a “4”), while the other is less affected by trivialities like mortgage rates, economic indicators or general market trends (in other words, money is no object). Mediocrity, whether it be price or condition, is just not being rewarded. It’s enough to scare the Dickens out of a seller.

“Ms. Blogging Person, have you actually read A Tale of Two Cities?”, you ask. Heck no. I, for one, detest Dickens. Given the choice of being subjected to one more reprisal of A Christmas Carol and bamboo shoots under my fingernails, I will opt for the root canal every time. That’s what SparkNotes are for.

And, Multiple Offers are alive and well. Having been involved in several during the past month, it has become painfully clear that newer agents who may have missed the wacky knock-down-the-sign-installer-to-be-the-first-offer-in-the-door antics of the late ’90’s and early 2000’s may be unfamiliar with the intricacies of multiple offer situations. It has also become clear to me that many veteran agents just don’t get it. Thus, I generously offer a few tips to the buyer’s agent who may find himself in a competing offer position. If you missed the book, here is the cheat-sheet.

1. “Multiple” means “more than one”. Fancy yourself the expert negotiator? Well, Mr. Kissinger, good luck with that. You are not the only offer on the table, and your “look at me – I have a Buyer!” position of strength has been compromised. You need to be somewhat less worried about what the seller is thinking and more concerned with what the other would-be buyers’ motivations are. Just this week, the agent submitting the third offer on one of our listings decided a 30-minute lecture on neighborhood price history was in order. He was even helpful enough to include copies of closed sales in his submittal to support his client’s offer and his contention that we were overpriced. “But, three people can’t be wrong!”, I spaketh in exasperation. Which leads me to…
2. Comps-schmomps. Do NOT attempt to beat me upside the head with your supporting comparable sales data. This particular home is worth what someone is willing to pay. Unless you are absolutely certain that other offers on the property are stinky, you should be hanging up the phone with me and having a serious talk with your clients about what the home is worth to them. In other words…
3. Don’t play with house money. When I delivered the bad news to one agent that the seller accepted another offer and that home went full-price, they responded, “My clients would have paid full-price”. Then why, for Pete’s sake did your clients offer $50,000 less, knowing that two other offers existed? You strutted to the table, rolled the dice, and crapped out. In trying to save them money, you lost their home.
4. Ignore Mick Jagger – Time is not on your side. (Rant ensues). When I tell you that we have issued a Multiple Counter Offer with a deadline for acceptance of 9:00 tomorrow, and you tell me that your client will be writing an offer at 8:55 tomorrow, and I tell you we will not accept an offer until you have had time to present, and you present an offer at 8:59 that is far below asking price and asks for the washer and dryer, the bar stools, a $10,000 credit toward closing costs, and the family’s Miniature Schnauzer, do not expect us to delay the sale to allow you time to “negotiate” the sticking points.
5. Mick Jagger was right – Time is on your side. Get inside the brains of the competing buyers. Let me attempt to explain the time-space continuum and how this can work to your advantage. The first offer thinks he is operating in a vacuum, and his offer is likely made assuming a few rounds of back-and-forth negotiating. The second guy to submit is now aware of the first, and, if even if he has only the early signs of frontal lobe development, he will take this into account when crafting his offer. The last guy in is aware of the presence of everyone who preceded him – It is his to lose! When wearing my Listing Agent Hat (green, three-pointed, little bells at the tips), if I don’t see each successive offer being more compelling than the last, I can read volumes about the motivation of the various buyers (or, the intelligence quotient of their agents) and use this to my advantage.
6. Talk is Cheap! And, money isn’t everything. Do NOT submit an offer EVER (multiples or otherwise) before you have talked to the listing agent. How can you possibly craft the most compelling offer when you have no idea what the sellers’ hot buttons are? Long escrow or short? Rent back or no? Are there any wedding gifts attached to the walls or ceilings that they are planning on excluding from the purchase? When all else fails, start giving the sellers things that cost you nothing but have value to them. Shorten time frames, increase the earnest money, relinquish the choice of escrow and title, or agree to an early deposit release. And, for heaven’s sake, don’t ask for the Schnauzer! Unless, of course, the seller wants him gone.

As a buyer’s agent, your clients have entrusted you to negotiate ferociously, to diligently and tirelessly represent their interests, and to ultimately secure the home they have chosen at the best possible price. It is one thing to pound the table on their behalf when you are the lone offer, but Multiple Offers beg for a different approach. Don’t blow it. Your clients have Great Expectations.