What Would YOU Do?


5 minute read

March 7, 2012

There’s a lot of public perception out there that listing agents will often grind down buyers and their buyer-agents for every last dollar when in competition.

Here is an actual situation that happened on the weekend, and I’d like to know how each of you would have handled it…

I often complain about greedy sellers and their overzealous agents when it comes to the handling of multiple offer scenarios, but today I want to turn things around and look at it from a listing agent’s perspective.

I know that a listing agent has to work for his or her seller and get the most money for the property, but there are professional, ethical, and respectful ways to go about this.

Then, there are the ways that many listing agents conduct themselves in mulitples.

I’m not a fan of a listing agent sending EVERY buyer and their agent back for more money, when they could really work with, say, two of the offers, and let everybody else go home.  It bothers me when a property is listed at $799,000, and six agents have offers in the low-$800’s, and two agents have offers in the high-$800’s, but the listing agent sends ALL eight agents back for more money.  Does the guy who offered $805,000 really need to get his clients up to $815,000 when he’s going to get blown out of the water by the guy at $910,000?

I often tell the listing agent, “Tell me to either go back to my clients for more money, or tell me to go home for the night and save my clients the embarrassment of getting creamed by $100,000.  But take some time and think before you tell me.”

I’d like to think that a listing agent will send you home and spare your buyers’ dignity when you’re going to lose by $100,000, but some agents don’t care.  Some have no respect for anybody, and some are sadists who think it’s fun.

I hate when agents waste other people’s time, and when they take other people’s time and effort for granted.

So now that I’ve explained what I don’t like about how some agents handle multiple offers, let me give you an entirely different situation.

A colleague of mine had a property listed for $399,000, which she thought was a very fair price, and somewhat optimistic.

The real estate market being what it is, of course, responded kindly with a full-priced offer two days into the listing.

The sellers were unavailable on the day the offer was received, so the buyer extended the irrevocable period for another 12 hours.

As luck would have it, the next morning, a second offer came in.

Both offers were identical – $399,000 – the asking price.  But neither buyer was aware of a competing offer.  The first buyer made the offer before the second offer even came in, and the second buyer made the offer without checking to see if any offers had already been registered.

My colleague asked me, “What should I do?”

I gave her advice, based on the following:

1) Work for your sellerThere are two offers on the table now, and you can work this in your favour to get over the asking price.  It goes without saying that you should get a few thousand more for the condo.
2) Be as fair and respectful as possibleJust because you’re going back for more money doesn’t make you a bad person, so long as it’s done right.

I told her to tell each buyer’s agent the following:

“Thanks for your offer.  We have TWO offers at the moment, and both offers were made without the knowledge of a competing offer.  The only fair thing to do now is allow both buyers to improve their offers, but only this once.  We will not come back again, and again for more money – please let your buyer know that this is a one-shot deal, and please allow us until this evening to review it.”

And that’s what she did.

Both agents went back to their buyers, and both came back.

The problem is – they both came back at the same number: $405,000.

My colleague said to me, “What the hell do I do now?  Both offers are $405,000, and both have a $20,000 deposit.  WTF?”

So once again, I gave her multiple options…

1) Send them back again.

This option sucks, for several reasons.

First of all, it just sucks to send people back again.  I think almost every offer situation should be a “best shot deal,” but to send people back over and over is malicious.

Secondly, it sucks when you’ve already said, “I promise we won’t send you back again.”  You’re a liar, plain and simple.  Sure, you can use the obvious excuse, “What am I supposed to do?  There’s two offers, both the same price, and both the deposits are identical as well!”

2) Make a friend.

I’m not going to lie – this is what I would do.

I would choose to “award” the property to whichever agent I wanted to bank a favour from.

If one agent worked downtown/midtown, was from a reputable brokerage, and was somebody I had not only heard of (because that’s becoming a rarity…) but also somebody I had done a deal with before, or knew I’d run into again, then I’d give the deal to that person.

I’m not doing anything wrong, am I?  Both offers are the same, and the only truly “fair” option here would be an actual coin-flip.

So I’d make a friend, and bank a favour.  At some point down the line, that agent would remember this situation, and I’d get the wink or the tip of the cap, and I’d help my then-client by having made friends along the way.

Believe me, there’s nothing I hate more than the “wink, wink, nudge, nudge” side of this business, and it doesn’t happen nearly as often as people think.  But in a case like this, it’s harmless, and something’s gotta give.

3) Let your seller decide.

Okay, fine, this is the option I should likely take, but most sellers are going to ask you, “What should I do?”

A few things could play into this.

The seller might decide his or her own version of what is “fair,” such as the first person to have made an offer.

Or the seller might look at the names on the offer and say, “John and Jane Smith?  Are they a lovely young couple?  That’s terrrr-iffic!  Who is 1048549 Ontario Inc?”  Maybe the seller would rather give the property to the couple with a baby on the way than to the investor with a numbered corporation.

Or maybe the seller wants to look beyond the price and the deposit to the closing date and the fact that buyer number-two wanted the bird-feeder.  Maybe the less significant negotiable points make all the difference to the seller.

In the end, my colleague used option #3.

She let the seller decide, and the seller chose the first offer.

The seller felt that the first buyer was “the first person to show interest,” and she said she’d actually feel guilty if they went back for more money.  “And what happens if they both come back at $410,000?  Where does it end?”  She asked.

It’s funny, because my colleague said she didn’t really like the agent representing the second buyer, so she felt it was somewhat fitting.  Not that she would ever make a decision based on the professionalism and friendliness of the agent she was working with, but if she did – this young lady would not have been the winner that day!

There are those people out there that will say, “I would keep sending people back over and over until I had every single penny in my pocket.  Why wouldn’t I?”  I can’t disagree with that.  Everybody is different.

But on a long enough time horizon, people remember these sort of actions.

Another colleague of mine encouraged his clients not to offer on a house the other day because of the listing agent for the property (who in-turn double-ended the property, to nobody’s surprise…).  As time goes on, this listing agent might find that people aren’t making offers on her listings, because they know her reputation!

Call me old-fashioned, but I think if you tell somebody “bring your best offer; we’re taking the highest,” you should honor that pledge.

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

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  1. Joe Q.

    at 9:05 am

    As time goes on, this listing agent might find that people aren’t making offers on her listings, because they know her reputation!

    As long as new listings are tight and inventory is at 10-year lows (as it is now), I have a hard time believing that will happen!

  2. Geoff

    at 9:29 am

    I think letting the seller decide is probably best, but there could be a recommendation in there on which one the realtor would choose (that’s why I pay you: advice). It’s also not guaranteed that if you sent both sellers back they’d both come back; they might both walk. It’s in the realm of possiblity, as they say.

    1. George

      at 12:43 pm

      Great point about the chance both buyers could walk away from the deal. For that reason alone, I would advise my seller to pick one or the other and not look for even more money.

  3. Pen

    at 10:58 am

    Option 3 always and would have sought information about both buyers to help the seller decide even perhaps encouraging a face to face meeting. It should never be about the REALTOR’s interests. In Option 2 they may be a good guy and all even wink & nod back but it does nothing for the seller if the buyer turns out to be the buyer from hell.

  4. Center of the Universe

    at 3:32 pm

    David, I would always take the “clean” offer with no conditions. That way the deal is closed. David, what is your opinion on the fact that a condo apartment has no land value. According to my MPAC assessment, our house value has depreciated, but the land value has appreciated. Isn’t land value a hedge against a market correction. Why buy a condo apartment then?

  5. Paully

    at 7:08 am

    I am curious. When an agent sends all of the offers back for “improvement” how often do any of the buyers call it quits and refuse to submit another offer?

    1. David Fleming

      at 11:59 am

      @ Paully

      It happens. But unfortunately, if there are 2-3 offers that are all very close; neck-and-neck, and they get sent back to improve, then sticking to your original price likely means you won’t get the property.

      I tell my buyers to put their best foot forward, and draw a line in the sand somewhere. If you don’t want to pay more, then don’t. Just make sure you won’t be upset tomorrow when the property sold for $5,000 more than your highest bid.

  6. Gord Martin

    at 1:10 pm

    Smart seller. I was thinking as I read the options that, other things being equal, the first offer — who had to extend due to a seller issue — should have the edge.
    We, when our clients agree, will actually put in writing when in competition that if, after adjusting for non-price factors, if we have an acceptable offer that is more than $x,000 better than the next-best offer we will send them back. Otherwise we will accept the best offer.
    Most agents seem to appreciate the clarity of process and we believe it helps them to get their buyers’ best offer.
    Gord, another agent with a blog: gordmartin.blogspot.com , currently blogging about the process of selling his own home.

  7. Ralph Cramdown

    at 12:41 am

    Two brokered offers for 500 shares of Bell Canada at $40.25 are identical. Two offers for your client’s real estate are only identical if they have the same closing date, NO conditions and a certified cheque for the entire amount.* Anything less than that and its a judgement call, playing the odds.

    Call me old fashioned, but when the listing agent contracted with the sellers, the compensation was COMPLETELY specified. If the agent wants to play the deal for “future [inter-agent] considerations,” that is definitely compensation, and should be disclosed to the principal, NOT rationalized away with ” the principal gets the same amount anyway.” Would you be comfortable saying to the vendor “from your point of view, I believe that these deals are identical, but I’ll gain a valuable favour if you sell to the clients of the King-Agent of Kensington, so if you pick them, I’ll discount my commission by $75”? Discuss.

    * – Even then, there’s always the possibility of litigation. No matter how ironclad the contract, who wants that?

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