Flinch!: Whipsaw sellers to get the house you want at the price you want . . .

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Ardell has a story today about a multiple-bidder contest that occurred I know not where. As described, the situation would have been an Undisclosed Dual Agency in Arizona — even though both of the clients betrayed were buyers. Two agents of the same broker engaged in a bidding war, which means that the broker himself was pitting two of his own clients against each other, to his own benefit and contrary to the interests of both.

The story put me in mind of our own recent seller’s market. It was a lot of fun to be on the listing side. List on Thursday and the offers start coming in before the photos are integrated into the listing. Put everybody off until Monday, just let ’em pile up. Cathy wrote software to compare net sheets on an apples-to-apples basis, so we could winnow a stack of 30 offers down to the two or three most worth looking at and just ignore the rest — with the seller’s permission, of course, and always with a note of thanks faxed to the buyers’ agents.

But being on the buyer’s side was no fun. The house lists at 10:20 on a Sunday morning, heaven knows why. We’re there by 11. The lister says, “We’d love to have your offer, but it’s only fair to let you know that we already have five — and I’m expecting six more. Pound out a contract on the laptop at Denny’s, stealing power for the portable printer. Huge earnest deposit, non-refundable. Huge down payment. As-is. No appraisal contingency. Double-think and double-think and double-think the price, figuring out exactly where everyone else is so we can be a couple thousand dollars higher. Race it back to the lister by hand.

Hustle back to the office, where the fax machine is already spitting out the bad news — the worst news, really. Not a rejection. Not a counter. No, the worst possible fate in a market that crazy: A Multiple Counter Offer.

The buyer says, “A counter is a counter, right? Acceptance is transmittal, right? That’s what you told me. So all we have to do is sign it and fax it back, and it’s ours, right?”

“Don’t I wish. What a Multiple Counter offer says is, ‘If you agree to at least these terms, the seller might — or might not — accept your offer.’ We don’t know how many other Multiple Counter Offers went out. It could be zero — they don’t have to tell us. But it’s reasonable to surmise there are others. We don’t know the terms of any of the other offers that may have been countered, nor do we know how those other buyers might sweeten their offers. The color of our ignorance has just gone from black to bleak. How would you like to proceed?”

So we throw in five thousand dollars more and offer to polish their kids’ shoes every Sunday for three years — and still we lose the house.

Every time one of my buyers lost a house to a Multiple Counter Offer, I swore I was going to find a way to capture this monster and carry it back to the sellers’ cellars, to lock it up where it belongs. I figured out how to do it earlier this year, but I haven’t yet had a buyer game enough to try it.

I needed a strong buyer’s market for it to work, of course, but I also need buyers who can sustain a measured indifference to more than one house. This is very rare in owner-occupants, but it’s not even all that common among investors. People want what they want, which means they will pay what they have to pay to get it. This is one of the reasons that prices are tending to hold on the houses that sell, even with all the available inventory. Economists might strive with all their might to think like economists, but people almost always behave like people.

But buyers don’t really have to pay full price, at least right now, to get what they want — not if they’re willing to play a little game called Flinch! Here’s how to play: Take all the houses you would even remotely consider buying, then use the lowest-priced one to whipsaw the sellers of all the others.

How can this be done? With a Multiple Purchase Offer, of course. I’ll show you language, but please remember that, while I am a broker, I am not your broker. I don’t know the laws in your state, nor the policies in your brokerage. You proceed at your own risk.

Like this:

This offer is tendered as part of a Multiple Purchase Offer. The buyers named above are making simultaneous offers on one or more additional properties. This offer and all of the other offers tendered are conditioned upon and subject to the final approval of the buyers, which will be delivered in writing within three days of sellers' acceptance of this Purchase Offer, unless deadlines are extended by written agreement of the affected parties. Immediately upon transmittal of the buyers' final approval of one of the sellers' acceptance of the offer tendered to those sellers, all other offers in this Multiple Purchase Offer will be unilaterally withdrawn by the buyers.

This is called bargaining power. It will tick off every one of the sellers, so don’t look for cheerful repairs. But somebody will salute, and it seems reasonable to me to conjecture that one or more sellers might counter back, under-cutting their cheapest competitor. Those would be the motivated sellers.

If you do decide to do this, be very, very nice about it. Explain to each lister that you have to do what’s best for your clients, and you know they’d do the same thing if the tables were turned. Offer to buy ’em a drink. Why? Because a buyer’s market strong enough to pull this off won’t last. They might hate you now, but they have to like you well enough to get the job done later.

But what happens if it doesn’t work? Try again in a different neighborhood. Or try same neighborhood six weeks from now. Here’s the entire trick to winning at Flinch!: If you don’t Flinch!, sooner or later someone else will.

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