Low inventory markets mean supply is low and demand is high — simple high school economics — paired with sustained buyer confidence, which ultimately means a high likelihood of multiple offers. And of course, with multiple offers comes the potential for confusion and stress, for both the seller and the buyer. And of course, multiple offers can happen in any market, but are more likely when inventory is low and demand is high, but really, it can happen anytime. Therefore, discussing multiple offer scenarios in your initial consultation appointments is crucial.
Discussing Multiple Offer Scenarios with Buyers
Most commonly, we discuss multiple offer scenarios with our buyer clients. We explain the tricks and strategies we have up our sleeves for helping them “win” in a bidding war. We define “highest and best” and try to make them see that the highest offer price isn’t always be best offer. We discuss ways we can help them see the offer from the seller’s standpoint and make their offer terms more attractive than the other offers on the table. We try to prepare them for the possible disappointment of being outbid.
It’s easier to see why multiple offer scenarios could be stressful to buyers: blinding bidding against an unknown number of other competing offers with unknown terms, trusting that the listing agent is being honest and ethical, not only in telling us that there actually are other offers, but also in the handling of the offers when presented to the seller.
Buyers have more reason to be suspicious, more reason to possibly feel that they’re being taken advantage of: are there really other offers? how do I know the listing agent isn’t sharing the terms of my offer with other buyers or agents? can I trust what my own agent is advising me to do in terms of price and other offer details?
Counseling the buyer on multiple offers in your initial counseling session is crucial. Not only is this your time to explain technical things, such as the offer process, the contract documents, and the contingency periods, this is also your time to build confidence and credibility, to enter into a partnership with your clients, to create a culture of mutual trust between yourself and the client…so that when the time comes, they lean into you for advice and trust what you tell them.
There’s no better time to explain and advise about multiple offers than in that initial session. You should not only be proving that you are the local expert but also an expert negotiator, and while you cannot guarantee that they will win every bid they put it, you will do your best, while acting in their best interests, to make your offer stand out be chosen.
Discussing Multiple Offer Scenarios with Sellers
We sometimes forget that multiple offer scenarios can be even more stressful for sellers than they are for buyers. All sellers think they want a bidding war…until they’re in one. Having one good offer to work with is a lot easier on the seller than having 20 buyers knocking down their doors. Sure, they may net more than their asking price, but then what about the appraisal? Will the buyer be more demanding because they bid high? And the worst question of all: what if I choose the wrong offer?
Discussing your multiple offer strategies with your sellers in the initial listing consultation not only lets your expertise shine, but it shows the seller that you’re thinking three steps ahead. It shows you have a gameplan. It proves to them that you’re on their team.
Additionally, having the conversation about multiple offers with sellers up front can help them to mentally prepare for the possible stresses they may experience with having to make quick decisions, evaluate the offers and look at the big picture, and put their trust in you that you have their best interests in mind and the experience and knowledge to lead them through the process.