6 minute read

February 14, 2011

I ran into an agent last week that had psychic abilities!

He knew, even before reviewing any of the offers in a multiple offer situation, that ALL the offers needed to be sent back!

Was he psychic?  Or just embarrassingly, unquestionably, shady

I can tell you right off the bat – I’m going to catch some flak for this post.

I’ve spoken to my industry colleagues about the “best business practices” when handling multiple offer situations, and nobody can seem to agree on what is acceptable, and/or what is the “norm.”

Dealing with multiple offers is a tremendous amount of fun when you are a seller.

There is no bigger ego-boost than having seven agents come into a conference room, sit down in front of you as you’re perched atop your throne, and proceed to shamefully present their offer with gleams of hopes in their eyes and pathetic stories about how much their clients love your pretty little home.

It’s like Christmas for adults.

The first offer comes in and you see: $425,500.  That’s amazing!  That’s way better than your paltry $369,900 asking price, and more than you ever expected.

But what about the next offer?  How about that one?

The next offer comes in at $427,000, and you can barely contain your excitement (but you’ve been coached by your agent to do so).

The process continues, until finally you receive an offer of $375,000 – a full $5,100 above your asking price, but by now, you’ve been conditioned to think that this agent and his clients are utterly pathetic and you cast them aside while you drink hot cocoa and warm your feet by the fire…

I have many issues with the multiple offer process and they can only be detailed by a very thorough example.

Here are the parameters:

425 Fake Street is listed for sale at $499,000.
There are twelve offers on the property.
Offers are being presented in person or by fax on Monday at 7:00PM.

There are four scenarios I’d like to explore:

1) Take the Highest Offer

I can’t fault either the selling agents or the sellers themselves if this is not the method that they employ.

And to take this one step further, in the spirit of brutal honesty, I don’t always abide by this method myself.

The last time I had multiple offers on a property, there were two offers that were $750 apart.  They had different closing dates, different deposits, different inclusions/exclusions, and different clauses/conditions.

I sent them both back.

Ultimately, had we sat down and calculated the cost of my clients’ holding their property for an extra three weeks (mortgage interest, maintenance fees, utilities, property taxes) it might have significantly reduced that $750 amount.  We also had to account for the cost of the custom light fixture that the buyer wanted, and ultimately the offers were dead-even.

So we sent them both back, and one came back $5,000 higher while the other stood firm.

Case closed.

When I review multiple offers, I always tell agents, “Bring your best offer.  We’ll be taking the highest offer, so don’t leave anything behind.”

Nine times out of ten, I’m true to my word.  

If I’m reviewing offers on 425 Fake Street, and I have ten offers of $525,000 and below, and then one terrific $545,000 offer, I don’t send back the $525,000 and the $545,000 just to squeeze an extra $2,000 out of the guy at $545,000.  I have honour and integrity, and if I say “I’m taking the highest offer,” then that’s what I’m going to do.

2) Working With The Highest Two

This is the most common scenario, and I alluded to this method above.

In the scenario for 425 Fake Street, we have twelve offers on a house listed at $499,000.  One of those offers is a clueless buyer who offers $499,000 (or sometimes less) and 3-4 of those offers are for less than $10,000 over asking.  There are 4-5 more offers that are in the $520,000 – $540,000, and then there are usually two offers that blow the other ten out of the water.

Let’s say they’re at $572,000 and $576,000.

I’ll go on record and say that if I’m reviewing offers for this property, and I’ve already told ALL the agents and their buyers that I’m taking the highest offer – then I’ll take the $576,000 offer.

But this is where some agents differ from my approach, and who is to say that they’re doing anything “wrong?”

Call it a different strategy if you want to.  Call it “working for your seller.”

There are many ways to skin a cat, and if you want to send-back the highest two offers, it’s very likely that the guy at $572,000 may just say “screw it – let’s go nuts” and come back $10,000 higher.

With 12 offers on 425 Fake Street, I think it’s somewhat decent of the listing agent to let the other ten agents go home without wasting their time, and without getting their buyers’ hopes up.

3) Sending Back ALL Twelve

Last year, I submitted an offer for a unit in the St. Lawrence Market area, and some greasy scum-bag had his hands on the listing.

There were twelve offers, and mine was undoubtedly one of the top.

After two hours of reviewing the offers, the agent called me and said, “David – we’re sending everybody back.”

I couldn’t believe what I was hearing.  He was sending back ALL twelve offers.  I wanted to jump through the phone and make him eat the pages of ten of those offers that weren’t even close to the top!

I was super sarcastic and said, “Really?  You mean out of twelve offers, you can’t pick one that you like?”

He didn’t care for my tone, and said, “David – we’re sending all twelve back.  You can improve yours if you like.”

Knowing that my client didn’t have a dime more to add, and knowing that he’d still take our offer if it was the highest, I launched into the following diatribe, which is almost verbatim:

“Here’s a thought – why don’t you take the highest offer, or work with 2-3 that are close?  Why don’t you let the other 9-10 agents go home to their families instead of waiting in their cars on King Street in the freezing cold?  Why not let these nervous first-time buyers down easy?  What if somebody adds $5,000 to their $320,000 offer and the property sells for $387,000?  What’s’ the point?  What the hell are you doing here?  Have some integrity!  Let those ten agents off the hook and save their buyers the frustration!”

He didn’t care at all.  He just said, “Will you be improving your offer or not?”

So I told him something that I can’t write on my blog but it involved….okay, nevermind, I can’t even hint…

This agent had zero integrity and I hope I run into him again one day, perhaps when I’m reviewing multiple offers, or perhaps in a down market when his clients are desperate to sell.

If there are twelve offers – there’s no reason to send ALL twelve back.  Let those who agents who aren’t in the running go home to their families, and let their buyers salvage some pride.

4) Decide in Advance To Send Everybody Back

Psychic!  Absolutely psychic!

Last week, I was preparing an offer for a property in the Queen West area, and the agent told me there were four offers.

I was shocked, dismayed, although slightly playful when he said, “Just so you know – once we review all the offers, we’re going to send everybody back for a chance to improve their offers.”

I said, “Really?  You haven’t even reviewed the offers but you’re already sending us back?”

He send me a 400-word response which was a BS way of justifying his pre-meditated price-gouge, and I emailed him back and said, “Well if I know you’re going to send us all back, then I’m coming in $200,000 under asking, and I’ll improve later on.”

He didn’t see the humour, but I sure did!

How can you decide in advance that you’re going to send everybody back?  There’s no reason other than greed.

This property was priced at $399,000.  If they received offers of $401,000, $402,000, $403,000, and $431,000, would he send all four back?  Apparently, he would!

He had decided in advance that there would be a “second round” of bidding!  Haazaaah!

Is he psychic?

Did he really, truly know in advance that all four offers would be dead-even and he would therefore need to send them back?

Nope.  Just a bit shady, in my opinion.

It sets the table for some guy like me to offer $350,000, and make a mockery of the whole process by coming back later at $431,000.

I’m not happy with this method, and I never thought I would find a more condescending method than #3 detailed above.

But as the old adage goes, “If you don’t like the rules, nobody is forcing you to play.”

After all, what can we do?

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

Find Out More About David Read More Posts

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  1. Carl

    at 9:56 am


    As long as there’s still wide open and unchecked opportunity for phantom offers, there will always be a #5

  2. Reits instead

    at 10:07 am

    What we can do is buy REITs.

    I have enough cash to buy a house tomorrow with no mortgage. But I can’t justify the valuation – cap rates are too low. So I rent and have bought REITs instead. The cap rates (earnings yield) is more than twice that of housing and asset values are highly correlated. So I’m paid to wait. And won’t be left behind if values keep rising…

    Btw – I like your blog and I like your style. You write well and I respect the integrity in your posts.

  3. Mike

    at 2:36 pm

    The competition bureau in their infinite wisdom thinks these practices are ok but is more concerned that homeowners be able to post mere listings on MLS.

    I guess as their name implies the “competition” of multiple offers is in their belief a fair system.

    Maybe one day Ms. Melanie L. Aitken will list a house for sale and the listing will say offered kindly reviewed on… and we can all submit 1 dollar offers..

  4. steve

    at 6:03 pm

    A savvy realtor knows he/she should always hang on to the best offer while inviting others to resubmit…you don’t want to send every offer back and risk turning off the front runner and losing them to greed. It’s happened before, and will happen again. s

  5. AP

    at 3:15 pm

    This was an insightful and outstanding article.
    Thank you!

  6. The Last Bastion

    at 9:59 am

    You’re all crooks! Real estate agents should all die in a fire and let the buyer and seller hash it out on the front porch or be sold in open outcry auctions. You’re the scum of the Earth, responsible for the inflation of home prices and should all be ashamed of yourselves. Again: go die in a fire you rent-seeking, useless middlemen.


  7. Joren Carlson

    at 9:56 am

    If I didn’t know better, I’d swear you were talking about a house I heard about a few weeks back in the west end….

    Three offers on “offer night”.

    The Realtor sent all three of them back.

    All three walked away.

    House was still on the market the next day.

    Would have paid to be a fly on the wall when the idiot had to tell his seller that! 🙂


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