In post after post on social media, conversation after conversation with my REALTOR® colleagues all around the country, I hear the same refrain: This market is crazy! It’s nuts! Where are the houses? How will my buyers be able to buy a home?
And then an agent posted something this morning really put it into perspective: it’s like every Friday is Black Friday…and there’s just one flat screen left on the shelf.
Another good friend of mine chimed in on the post: “Why demand offers after just one or two days? For my market area, that seems very hasty. Why not give the seller a full week of exposure?”
So I got to thinking (à la Carrie Bradshaw): When homes are typically listed on Thursday or Friday to be fresh and new for the weekend’s showings, and there is a frenzy of activity, the deadline for the highest and best offers is set for Sunday evening — or even Monday at noon –, and then showings are cut off, did that home get enough exposure? How much exposure is “enough” for a seller to be sure they’re getting the best offer? How do we best advise each client and seller individually and with a strategy that fits their unique needs, wants, priorities, and situations?
The ethics argument used to be that “Coming Soon” and “Pocket Listings” sold off-market didn’t give the seller enough exposure. Allowing a limited number of agents who had buyers looking for this type of home and not listing the home openly in the Multiple Listing Service (MLS) meant that, sure, that seller might get their asking price. Still, the prospect of multiple offers was low, therefore limiting what the seller could potentially net and also, possibly, limiting the seller’s negotiation power through the process — on the inspection and appraisal, if needed — since selling off-market simulates conditions more similar to a balanced market, rather than a seller’s market. In other words: it could be great for that buyer, who might otherwise have to fight to secure a contract (or at least put forth a more attractive offer), but potentially not as great for the seller.
Now, I put forth the argument could be this: two days on the market or one long weekend — or an even shorter period (I’m looking at you, REALTORS® who love to shout from the rooftops, “SOLD IN 1 DAY!”) — may not be sufficient market exposure for that seller. Perhaps it is, but entertain the thought with me that maybe it’s not.
IS “SOLD IN 1 DAY” A GOOD THING?
I guess that depends on whom you ask. I’m sure the agent using it is a marketing ploy; it’s a great thing! “Look at me! I sold this house in ONE DAY!”
What does the seller think? I guess that depends on the seller, doesn’t it? If it’s a seller dreading the showing process, the incessant parade of buyers with their agents through the home, being displaced for hours or even days on end, the interruption of daily life…for that seller, one day is likely a blessing. “We only had to endure that for one day!” If that one day yields the perfect offer (if that even exists), the seller is likely perfectly happy.
I would argue that a seller who got everything they ask for in the offer they receive (or the offer they choose) is likely happy, perhaps even thrilled, after one day of showing.
However, I would also make the argument that, in many cases, the seller simply goes along with the agent’s suggestions without really understanding what their options are, that they should have input and that they could likely get more interest, more offers, more money with more exposure to the market, especially in a low inventory market.
I was teaching a class last week on Multiple Offer Strategies, and I posed this question: “Who decides whether to disclose the existence of multiple offers; who decides to call for the highest and best?”
The overwhelming answer was: the listing agent. Let me take this opportunity to say, “Noooooooooooooo.”
In a 2018 Q& article “Staying Mum On Multiple Offers” that appeared in REALTOR® Magazine, with the “A” penned by Bruce Aydt, this issue is addressed. Of course, the listing agent cannot lie — if asked, do you have any offers on the property; if you do, you must be honest. However, beyond that, your answer can (and should) be: “I’m sorry, I’m not at liberty to disclose any further details.” Unless the listing agent has discussed with the seller and received explicit permission to call for the highest and best offers on a property, you shouldn’t do it. Why? It may deter interested parties from seeing the home; it may also make some buyers who have already submitted an offer change their minds and withdraw, and there’s a chance that they may have been the best buyer.
HOW CAN THE AGENT HELP THE SELLER DECIDE?
There are several ways to involve the seller in the conversation about multiple offers to protect their interests in their home sale, their equity, and your interests as their agent.
- Discuss your multiple offer strategy upfront. Especially in a low inventory market, your multiple offer strategy is your value proposition. The initial buyer or seller consultation is a great opportunity to discuss your past experiences (and successes!) with multiple offer scenarios on both the buying and selling sides, as well as to describe your strategy — how you work to analyze each client’s unique situation and work for your clients in a challenging market.
- Ask the seller to prioritize offer terms that are important to them. Part of being able to strategize for each client is knowing what is important to them. Great REALTORS® know that buyers may want a deal and sellers may be attracted to the highest price offered to them, but other terms may be equally as — or even more — important to a client. A seller may place a higher priority on their preferred closing date or a rent-back scenario than on the highest price or be more attracted to a cash buyer than one with a financing contingency.
- Formalize, in writing, the terms the seller authorizes you to share. Use the listing agreement or other written document both the agent and the seller review and sign to formalize the terms the seller authorizes you to share with buyers and their agents. Making sure the seller is aware of what you can/will share with potential buyers can help avoid misunderstandings.
- Put in writing the information you will share with other agents so that every showing agent and buyer receives the same information in the same way. Why? Fairness. And by proxy, as a nod and acknowledgment of your commitment to upholding the Fair Housing Act. Using a Multiple Offer Notification Form (whether you create one or your broker or Association has one you can use) which you share with every showing agent and buyer (and having this form signed by your seller, again, to avoid any misunderstanding) is a way to ensure that you share the same information with all parties, avoid miscommunication about offer deadlines or the seller’s preferred terms, and remove any fear or suspicion of discrimination.
Maura teaches classes on working in low inventory markets and multiple offer strategies, as well as negotiation strategies and new perspectives on negotiation and conflict management. Contact her today for more information!