Let’s talk multiple offers. Most buyers know little about the process save the feedback their agent can offer about the number of offers registered and his estimate of selling price based on the crowd gathered. Then you wait and do whatever you do when you care but have no control, hospital waiting room training 101. Here’s a peek into what happens at the other end, some insight into where to focus your karma if you believe in that sort of thing.
To start the listing agent sets a date and time to look over offers when the listing is inputted to MLS. If you’ve got a particularly hot property – i.e. it’s really well turned out or, and this is key, you’ve priced it well below the estimated value – then you spend the day fielding calls from agents asking silly questions like “What do think it will sell for?” and “How many offers do you expect?”.
Everyone registers their offer at the last minute, supposedly if there are 12 offers on the table being the only one possessing knowledge of the more accurate number of 13 is somehow an advantage. Some even arrive late without giving notice, the major league version of this strategy. Each agent then presents his or her offer to the vendor and the listing agent, theoretically in a sound proof room but usually only in really hushed voices. The principle is if everyone is clueless about how much everyone else is offering then someone will do something clueless. It may work on occasion but my belief is if you’ve seen 20 properties, made 3 to 4 unsuccessful offers then you pretty much understand market value for that time and place.
In a normal offer presentation (I actually mean “not so normal” as in 12 years ago when it was just one buyer and one seller) the standard opening question is the empathy generating “Tell us about your buyer”. Once I had a vendor say “Honey, what’s $10,000, let’s give it to the young single mother this agent says works at my office”. Hmm, ulterior motive? He’s divorced now. 12 offers and some agents still ask this ridiculous question. Maybe rednecks in Mississippi care but in TO what does a vendor whose only concern is the 8 numbers on page one if you’re presenting in Rosedale, or the 5 numbers if it’s a parking space on Bloor St or a nice 2 story in St Johns, think about this kind of rapport building. “Do your buyers drink and how much have they had tonight?” that’s useful information.
Next, some agents, presumably having misplaced their Chapters rewards card, take this opportunity to read every last word of all 11 offers. View this in light of the fact that, and here’s the only pearl I have to offer about multiple offers, of the 12 offers in most cases all but 3 are usually ludicrous. My personal record as a listing agent and maybe a Canadian record; June 2009, 13 offers, 2 over asking, 1 at asking, and 10 other buyers optimistic enough to believe they could buy a $400k property which 12 other people wanted for various amounts between $5,000 and $45,000 less than the vendor was asking. Doctor Phil was working OT that day! Meanwhile as I endure this blanket of empathy the other 12 sit out of earshot.
Not all behave with dignity. Two have cried in my presence, many beg for the opportunity to be favoured over the rest and one (maybe another record this time for bad behaviour and soaring ambition) after being asked to leave several times, being threatened with police action, finally complying, pushed his way past me and back into the home once again to plead his case that the vendor accept his $10,000 lower offer because he said he would 5 minutes before the higher offer arrived.
Sometimes agents will advise the vendor to accept the highest offer. This is dumb except in the rarest of circumstances but still it happens 30% of the time. Asking is the backbone of negotiation so unless one offer is ridiculously high its best to ask everyone at least once. If the higher offers are close in price the listing agent may dismiss the lower ones and ask the few highest to return to their client to secure a better price. This may happen more than once. Not much threatens this process from proceeding endlessly save the possibility of all buyers walking away. Fortunately, most sellers understand the fountain of greed isn’t endless and eventually decide on one offer. Dismissing the losers is all that’s left and it can be unpleasant too.