Handling & Negotiating Multiple Offers: Tips for Buyers’ and Sellers’ Agents

Multiple offers on a house are expected in a seller’s market. While you would think multiple offers might be great news for sellers and their agents, multiple offers can actually present challenges. After all, the highest offer may not always be the best.

Conversely, representing buyers in a hot market can be tricky and frustrating. How do buyer’s agents prepare their clients for bidding wars?

This article is for you if you are a real estate agent working in a hot seller’s market.

What Are Multiple Offers in Real Estate?

Multiple offers on a house are common in a hot market (or at least a hot market at a particular price point). A property’s quality and location can also increase the chances of a bidding war.

“Bidding wars” occur when two or more parties compete to purchase a home. Each buyer makes a more attractive offer in response to the last, hoping to have their offer accepted and win the house. A bidding war often drives up the home’s price beyond the listing price.

Importance of Being Prepared for Multiple Offer Scenarios

Being prepared for multiple offer scenarios as both a buyer’s and seller’s agent is crucial in today’s competitive real estate market. Here’s why you must prepare your buyer or seller clients for multiple offers:

• Your client must be able to make quick decisions. When multiple buyers want the same property, the dynamics can shift rapidly. For that reason, your clients need to understand they must be able to make decisions quickly.
• Your client must be prepared for the stress of a fast transaction. Multiple-offer scenarios can be stressful. Being emotionally prepared helps your client make rational decisions rather than succumb to pressure or make impulsive moves.
• Your client may need to be prepared to take possession or leave the home quickly. Your client may need to be prepared to move quickly if a fast closing date is important to one of the parties in the transaction.

Pre-Offer Preparation

Some of your clients will be navigating the buying or selling process for the first time. Others may have previously bought or sold a home – decades ago when the pace of real estate transactions was much slower. It’s crucial that you sit down with your clients and educate them on the market, possible contingencies, and the possibility of multiple offers.

Clear communication and education are vital to prepare clients who may experience multiple offers. Here’s how to prepare your clients and what you need to do to advise them.

Related Article: What Does Contingent Mean in Real Estate?

1. Educate your clients on the possibility of multiple offers.

Share your experiences with multiple offers in their market with your buyer or seller clients. They might be surprised to realize that they will encounter such a scenario and will recognize that they might need to move quickly.

2. Understand your client’s goals.

You must also spend time getting to know your client and their goals. Understanding what they hope to get out of the transaction will come into play when multiple offers are on the table. Show your worth as an agent by offering a game plan to meet your client’s goals.

3. Gather all necessary information about the property.

Understand your local market and the property’s features to prepare for quick offers. This will enable you to advise your clients quickly on outstanding offers or deals.

4. Set clear expectations with sellers or buyers.

Finally, educating your clients will enable them to have clear expectations of the likely outcome of the transaction. When you meet (or exceed) your client’s expectations, they are more likely to sing your praises to their friends and neighbors.

Tips for Buyer’s Agents

It can be frustrating helping clients get a home during a hot market. A client may fall in love with a particular property and then not be able to offer a competitive bid during a bidding war. Here’s some advice for buyer’s agents and their buyers on handling multiple offers.

Related Article: Real Estate Negotiation Strategies for Buyer’s Agents

Handling multiple offers as a buyers’ agent

Here are buyer’s agent tips for handling multiple offers:

1. Maintain regular and clear communication with the listing agent to stay informed about competing offers. Some listing agents will tell you the details of other offers as a strategy to increase the price of the home.
2. Know your client’s maximum budget so you can best advise them on creating a competitive offer.
3. Use your local market knowledge to guide pricing and offer effective strategies for winning a bid.

Negotiating multiple offers as a buyers’ agent

Here’s advice to share with a buyer who wants to purchase a property that will likely receive multiple offers:

• Get pre-approved: Ensure your client is pre-approved for a mortgage to show they are ready for the transaction.
• Know your budget: Bidding wars can be competitive. Advise your clients to know the maximum amount they are willing to spend for a property so they don’t make a purchase they regret later.
• Act quickly: Encourage your client to act quickly when making an offer to avoid missing out on the property.
• Offer a competitive price: Depending on market conditions, advise offering a competitive price, potentially above the asking price.
• Limit contingencies: Suggest reducing or waiving contingencies, such as inspection or appraisal, to make the offer more attractive.
• Increase earnest money deposit: Propose increasing the earnest money deposit.
• Offer flexible closing terms: Recommend offering flexible closing and move-in dates to accommodate the seller’s needs.
• Personalize the offer: Help your buyers write a heartfelt letter to the seller, expressing why they love the home.
• Include an escalation clause: Consider including an escalation clause to automatically increase the offer if competing bids come in higher.
• Be prepared for counteroffers: Prepare your client for potential counteroffers and have a strategy in place for responding quickly.
• Remain patient and calm: Remind your client to stay patient and keep emotions in check, as the process can be stressful.

Related Article: 11 Tips to Master Real Estate Negotiation

Tips for Sellers’ Agent

You may think it’s easier to be a seller’s agent when a bidding war erupts for a property. However, savvy agents can negotiate a good offer to make it even better.

Handling multiple offers as a seller’s agent

Here are some tips for listing agents who anticipate multiple offers on a property:

1. Defer showings for a short period to create demand for the home. This will give people time to look at the property online. Once you allow showings, buyers will be lining up around the corner to see the property.
2. Establish a deadline for receiving offers to create urgency and allow for organized review.
3. Carefully review each offer with your client, considering the price, contingencies, financing terms, and buyer qualifications.
4. Use multiple offers to negotiate better terms, such as a higher price, fewer contingencies, or a more favorable closing date.
5. Understand the ethics of handling multiple offers.

Negotiating multiple offers as a seller’s agent

Here’s advice to offer your sellers on how to handle multiple offers.

Focus on the buyer’s financial strengths: To reduce the risk of the sale falling through, prioritize buyers with pre-approvals or cash offers.
Consider escalation clauses: To maximize the sale price, evaluate offers with escalation clauses, which automatically increase the offer if higher bids are received.
Weigh contingencies carefully: Pay close attention to contingencies in each offer. Fewer contingencies generally mean a smoother and faster transaction.
Evaluate buyer flexibility: Consider the buyers’ flexibility regarding closing dates or rent-back options, especially if the seller needs extra time to move.
Stay objective: Encourage the seller to stay objective and not get swayed by emotional appeals.

Colibri Real Estate School will help you earn your state real estate license and become a successful agent. We are proud to have the #1 real estate negotiation training in North America – the Real Estate Negotiation Institute (RENI). With this training, you’ll learn to maximize profits and streamline closings. Your client satisfaction rating will be through the roof after you learn how to become a better negotiator with RENI. Take a look at the RENI course options and enroll today.

Key Takeaways

• Whether representing buyers or sellers, agents must prepare their clients for the fast-paced and competitive nature of multiple offer situations, ensuring they are ready to make quick, informed decisions.
• For buyer’s agents, maintaining clear and consistent communication with the listing agent is crucial. For sellers, setting clear offer deadlines and reviewing offers helps manage the process effectively.
• Agents should customize their negotiation strategies based on their client’s goals, whether it’s securing the best price for sellers or winning the bid for buyers.
• Buyers and sellers must be emotionally prepared to navigate the complexities of multiple offers to ensure they make decisions aligned with their long-term goals.