I suppose in the interest of time, I could have called them “FAQ’s,” but personally I grow tired of incessant short-forms that make me want to yell “WTF” and often LMFAO…

It occurred to me today that if you haven’t transacted in real estate in the last ten years, and have, but not in multiple offers, then you might have a LOT of questions about how the process works.

As I’ll explain at the onset, there is no one identifiable process, so let me go through the questions which I am asked most frequently, or QWAAMF, as they are commonly known…

These are in no particular order, FYI.  Ah, another short-form…

“What is the process for reviewing multiple offers?”

This is probably the most common question, but it comes with the worst answer: there isn’t one.

There isn’t one identifiable “process” for reviewing multiple offers, and that’s what frustrates buyers, buyer agents, and often even the listing agents and sellers as well.

It’s funny because while there is often too much structure in real estate (ie. the archaic rules that don’t allow us to share information with potential clients), there’s often not enough structure in other areas, like when it comes to how to deal with the most complained-about process in real estate: reviewing multiple offers.

I usually tell my clients, “There’s no one process for reviewing multiple offers, and every listing agent handles it differently.”

That’s why it helps if I know the agent and have worked with he or she before, or if one of my close colleagues has, so I can get some inside info.

But I’ll tell my clients that the process is more or less as follows:

“On the designated “offer day,” offers are registered with the listing brokerage throughout the day, and the listing brokerage keeps track.  Offers will be presented at 6:00pm or 7:00pm at the brokerage, and buyer agents can physically present in person, or email/fax their offers in.  The listing agent and seller will review all the offers, and then accept one, choose to “work with” more than one (ie. they allow them to improve), or maybe send them ALL back.  From there, we could have a “winner,” or enter another “round.”  It all depends on the listing agent.”

I can’t remember the last time I entered a “third round,” and I would probably lose my mind on a listing agent if they “sent me back” twice.

Many agents feel it’s simply expected to send back the top couple offers, and as we’ll talk about in a bit – some buyers and their agents structure their offers accordingly.

“Will we know how many offers there are?”

Absolutely.

In fact, I would never allow my buyer to come up with their offer price unless we knew exactly how many offers there were.

An offer must be “registered” with the listing brokerage, meaning the buyer’s agent calls the brokerage and actually says, “Hello, I’d like to register an offer, please.”

The brokerage keeps track of the number of offers, and by 7:00pm or thereabouts, you’ll know exactly how many there are.

“Can an agent lie about how many offers there are?”

I suppose so.

An agent can do whatever he or she likes, but there are repercussions to their actions.

If a listing agent told a buyer agent that there were eight “registered offers,” and there were only two, and the buyers made an offer predicated on eight offers, that offer would be absurdly high.  After the fact, the buyers would have grounds for a mutual release, and that listing agent would most likely be fined by RECO.

Now, can an agent say there are seven offers when there are six?  I suppose so.  He or she could claim, “I lost track.”

But it’s not unreasonable, as a buyer agent, to say to the listing agent, “I’d like you to email me the names of all the buyer agents who have registered offers so that I have a record of it.  Thanks.”

“Will we know which agents are presenting those offers?”

I always ask.

I’m honestly not sure if the listing agent MUST provide the names of those agents, but I’m under the impression that they are.

It depends on how far you want to take it.  Real estate is a relationship business, and it’s done in person, face-to-face.  If you ask for a list off all the agents who have registered offers, and the listing agent says, “Come on man, I’m too busy today.  I have a business to run, see you at 7pm,” then it’s up to you how to proceed.  If you want your broker to call his broker, then you’ll get that list.  But do you really want to go crying to the teacher?

“Will we know what the offers are, ie. the prices?”

No, we won’t.

I get a chuckle out of this question, because some buyers really don’t have any clue (nor should they, really, if they’ve never done this before!).

I often get these real direct questions like, “So…..when do we find out what all the offers are?” like it’s some sort of gigantic reveal, and all the prices are shown on large poster boards.

Then some buyers have asked, “So do we get to know what the other offers are, and then have a chance to change ours?”

Um, no.  Absolutely not…

“Will they simply accept the highest offer, or will there be multiple rounds of bidding?”

This is the burning question to every buyer.

As I said above, many buyers and buyer agents simply assume there will be a “second round of bidding,” or that the top two offers out of six, or top three offers out of ten, will automatically be sent back.

But this isn’t always the case.  Some agents take the highest, and some will tell you that they’ll take the highest right from the start. This can cause problems for some buyers…

“Should we go in with our best offer, or leave something for the second round?”

Exactly what I was just saying.

Absolutely, positively, go in with your best offer.

Do not “hold something back” for a second round, because what if there is no second round?

You would pay $700,000, but you want to offer $680,000 “to start.”  Well what if there’s an offer of $690,000 that beats your offer of $680,000, and the seller accepts it?

Not only that, refusing to go in with your best offer might cost you more money in the end.

Let’s continue that example above.  Let’s say your “best” was $700,000, and you went in with $690,000, just to hold something back.  Now let’s say that you were “sent back to improve” with two other buyers, and you came up significantly – past your max, to $705,000.

Well what if the other two offers, unbeknownst to you, were $680,000 and $681,000?  Perhaps they were so close to your $690,000, that the listing agent thought, “I might as well send all three back.”

Had you offered your $700,000 to begin with, maybe it would have beat the other two offers by a large enough margin that they would not have sent all three back.

Or what if one of the $680,000 and $681,000 buyer made a massive jump to $710,000?  It happens all the time.

Don’t leave the door open to another buyer beating you, or you having to pay more.

Put your best foot forward, and don’t hold back because you assume there’s a second round of bidding.

I’ve been in situations before where I’m getting a photocopy of the accepted offer, as the listing agent is catching an earful on the phone from some other buyer agent, who says, “How come there’s no second round?  There’s always a second round!  My buyer would have come up in price!”

Sure.  Hindsight.  Always…

“Is there anything we can do, other than have the highest price, in order to win?”

Theoretically, yes.  But in practice, probably not.

The terms and conditions of the offer are important.

You should have a deposit cheque with you when you present in person.  I’ve won before by being the second-highest offer, and being there in person with a cheque when the listing agent says, “The highest offer was emailed in from a guy in Ajax, there’s no cheque and I don’t trust him.  Can you come up $5,000?”

You should ask for the seller’s ideal closing date, and do whatever you can to adhere to it.  I just won in multiple offers on Monday night where the seller wanted a 20-day closing because here mortgage renewal was coming up.  It might have cost her more money to accept a 60-day closing.

Some people think the buyer’s deposit matters, but I couldn’t care less about it.

Faced with a $900,000 offer accompanied by a $40,000 cheque, and an offer of $899,000 accompanied by a $300,000 cheque, I’d take the former.  The buyer gets interest on the deposit, and the deposit does NOT automatically forfeit to the seller in the event the deal doesn’t close, so who cares about a deposit.

In the end, it’s very tough to win in multiple offers if you don’t have the highest price.

But what can happen is if you’re the second highest, and the highest has other terms and/or conditions that are undesirable, you can be offered the chance to “bump up” your offer, as the seller and listing agent might prefer to work with your offer instead.

“When will we know the sale price?”

The easy answer: the next day.

The worst possible answer: ten minutes after the listing agent says, “Sorry, but we’ve accepted another offer.”

I always wait until the next day, and I will NEVER tell an agent that night.

Case in point, a situation that transpired in my office a couple years ago.

A colleague of mine received eight or nine offers on her listing, and after sending back the highest two, she went with the highest at that point, and had her seller sign the acceptance.

She told the buyer agent with the second highest offer that he didn’t get the property, and then when he asked how much it sold for, she told him!!!

So what that buyer agent do?

He ran out to his car and got his buyer to initial a revised offer that was $2,000 higher than the sale price, and then ran back inside, opened the door to our conference room, and slammed it down on the table.

Now the ink was still wet on the other offer that had been accepted, and it was a legally-binding agreement.  But it hadn’t been handed over to the buyer agent, so where did that leave the seller, listing agent, and two buyer agents?

It’s a grey area, no doubt about it.

The seller wanted to take the revised offer and get another $2,000, but the listing agent was standing there holding an accepted offer at a lower price, and she had verbally conveyed to the other buyer agent that they’d accepted.

In the end, they went with the lower offer, because that was the legal thing to do, the ethical thing to do, and I think the listing agent didn’t want to deal with that sleazy agent and give him the satisfaction.

But what if the offer was $20,000 higher?  Then what?  How do you tell your seller that they’ve already accepted a different offer?

–

Well, those are the most common questions, or FAQ’s, if you will.

Any other questions, feel free to ask!