Technology TransactionsWhy It"s In the Seller"s Agent"s Interest to Treat Buyers Fairly in Multiple-offer Situations
In the last couple of years, many housing markets have improved to the point that homes offered for sale frequently have multiple offers, raising the final selling price equal to or above the listing price. Does that mean in hot seller"s markets that buyers overpay? What can be done to make sure that buyers are treated fairly and don"t become disillusioned in a multiple-offer situation?
In Chicago, where unprecedented growth has resulted in a surge of multiple-offer sales, buyer"s agents must be wary that their clients may possibly overpay for a home, warns Ron See, vice president and regional director of RE/MAX of Northern Illinois. "A seller"s agent has a responsibility to get top dollar for a client"s property. As professionals, they also want to treat all buyers equitably, and that can be difficult when competing offers are involved. A buyer"s agent wants to be sure his or her client is sufficiently aggressive to avoid being pushed out of the negotiations."
According to See, it has been typical of the last two years" markets to have 20 percent or 30 percent of homes in a given submarket selling at or above their listing price, with contracts signed within a week or less of the home being posted to the MLS.
Because of the frequency of multiple offers in some markets, both buyer"s and seller"s agents may want to consider the following strategies:
For seller"s agents
When you have a listing which is generating multiple offers, inform all buyer"s agents that they are in a multiple offer situation.
Ask for the highest and best offer, so that the agent"s buyer isn"t excluded from consideration.
Inform the buyer"s agent that the first offer may be his/her only shot at the contract, as a counter-offer will only be made to one offer
Encourage the buyer"s agent to keep contingencies to a minimum, so as to improve the buyer"s chances of having his/her contract accepted.
Remind the agent to prepare his/her buyer for the possible heartbreak that can attend multiple offers. Only one buyer is going to get the home. The others will be turned away, and may possibly miss out on other homes offered for sale in the same time period.
For buyer"s agents
Be an agent with a strong network. Work well with other agents so that you are in the loop when new listings come on the market. Hearing about a listing before it goes into the MLS may be the advantage that your buyer needs.
Be aware who has "pocket" listings in your farm area. If you are an exclusive buyer"s agent, be willing to share tips on properties that you think might be offered for sale soon, so the seller"s agent may be more willing to give your buyer first shot at their seller"s property.
During the offer period, be available, and have your buyer available to give a quick responses to seller"s questions or to negotiate counters on the offer.
Underscore your buyer"s seriousness by demonstrating their ability to proceed to closing without impediments. Some examples are that your buyer should already be pre-approved for a loan, and your buyer should not have contingencies such as needing to sell another home before proceeding to closing.
Encouraging buyers to remain flexible while giving the home of their dreams the best shot possible isn"t easy, but helping the buyer to understand current market conditions can be the first step toward a successful contract for buyer"s agents.
Taking advantage of a seller"s market has its down side for seller"s agent. They should have as much of a vested interest in keeping buyers from walking away from the multiple offer experience disillusioned as the buyer"s agent. The reason? The buyer may decide to stop trying rather than face another disappointment. Or worse, the buyer may make an offer on a home that s/he really doesn"t want in the heat of the market. As they realize they made an offer just to make an offer, they might back out of the offer at the slightest opportunity, such as when an inspection or appraisal may suggest a problem, leaving both agents high and dry. The more pleased the buyer is, the more likely the seller"s agent will be to get the referral from the buyer"s agent when it comes time to resell the home.