How should the Listing Agent handle a multiple offer situation?

​There are 2 approaches to handling Multiple Offers.
The first approach is for the Seller to instruct the Listing Agent to ask for the “Best and Final” or “Highest and Best” offers from all potential buyers.  This process carries some risk. It may cause some buyers to back away. Buyers don’t like to bid against themselves and don’t like bidding wars. It’s a risk the Seller takes.
 
The second approach is for the Seller to pick the offer that looks the best and negotiate that one.  If it does not work out, the Seller can move on to the next offer – if it has not been withdrawn.  There is no rule that the Seller must negotiate the offers in order or that the seller must choose any particular offer - so long as the process is fair and does not violate Fair Housing rules.
 
The key is that the client decides how they wish to proceed – not the agent.

Principles To Follow
Practically speaking, negotiating multiple offers comes down to these principles.
 

1. First, remember that as REALTORS®, there are legal and ethical duties owed.

“When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their clients. This obligation to the client’s interests is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly.” (REALTORS® Code of Ethics Article 1.)

1. You should discuss the potential for multiple offers with the seller at the listing interview; explain the available options to the seller upfront and get the seller’s instructions for handling multiple offers in advance.  Explain to sellers that your advice is just that and that your past experience cannot guarantee what a particular buyer may do.

 

1. Remember—and remind the seller—that the decisions are theirs to make—not yours, and that you are bound by their lawful and ethical instructions. While the listing broker can offer suggestions and advice, decisions about how offers will be presented – and dealt with – are made by the seller - not by the listing broker.

 
 

1. Unless the client directs otherwise, it is recommended that all offers receive a notice via email that its offer was received and presented on a certain date. You may want to say that it is likely to be a few days before the seller is in a position to respond.  Communication is key to retaining offers.  Keep the parties informed.

 

1. The existence of purchase offers is not confidential. With the Seller’s approval, competing offers can be disclosed (not the names!). A seller or listing agent is not ethically bound to disclose to buyers and selling agents the existence of any offers. In some cases, sellers may make other buyers aware that an offer is in hand, or even disclose details about an offer to another buyer in hope of convincing that buyer to make a “better” offer. In some cases, sellers will instruct their listing broker to disclose an offer to other buyers on their behalf.   Remember that all parties must be treated honestly. (COE Article 1). If you disclose multiple offers or the current highest offer to one party, you should disclose to all parties and allow them a chance to respond out of fairness.

 

1. DO NOT counter to multiple offers or counteroffers! You may find yourself under contract to multiple buyers!  If you are following approach 2, be certain to conclude a negotiation, either by sending a Notice of Withdrawal or a Rejection of a Counteroffer or otherwise, prior to responding to another offer! If there is any question, call one of the Broker Team!