Are Multiple Offers a Trick or For Real?

By
Real Estate Broker Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY

I have been on both sides of an offer in multiple offer situations. Whether I am the listing agent or buyer agent I often see buyers view the news of multiple offers with incredulity. More often than not, they just don't believe it. If they think that the news is just a trick to get them to raise their offer and they hold firm, they often lose the house. 

While I don't dispute the existence of dishonest licensees who fabricate competing offers, in my experience the overwhelming majority of multiple bid situations are legitimate. There are two main reasons for this:

 

  1. If you like a well priced, well cared for, updated house in a good location, then the chances of someone else liking it are fairly high. The notion that a buyer's market is devoid of anyone actively looking but you is inaccurate. This is still the USA. There are still people looking to buy a home. 
  2. The consequences of fabricating a false competing offer are catastrophic. Suppose the agent lied about another offer to get you to raise your bid and it backfired-instead of raising your offer, you instead withdraw it. That agent just lost their commission, and will look pretty silly when the house never goes under contract in the MLS. Few listing agents would risk losing their entire commission and reputation when a solid sale is within their grasp. Moreover, if the seller found out, they could rightly get the agent in huge trouble with the law and real estate board. It makes no sense to take that risk, even if you don't have scruples. 
There have been a few times when a listing goes from 2-3 offers to nothing, and that is as rare as it is rough. But it does happen. We've had multiple bid situations where the deal we accepted didn't perform, and the other offers moved on to other homes leaving us with nothing. To outward appearances it looks bad. But it does happen, and as hard as we strive to have the seller go with the best buyer, you don't know how buyers will behave until you engage them.

Westchester has a lot of really nice communities with built in demand that transcends the economy. Buyers will go for the nicer homes at the same time even in a slow market. It may seem coincidental, but in most cases coincidence is just a reflection of the reality on the ground. If you have you eye on the prettiest girl at the dance, you probably aren't alone. The same goes with the best deals. So if you see one you like, remember that if you like it, it may appeal to others. Plan your actions accordingly. The times are on your side.  

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Topic:
Home Buying
Location:
New York Westchester County
Groups:
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Rainer
88,760
Christine Hynes
Orange County Senior Loan Consultant
American Capital Corporation

J - I know there are always a few rotten apples out there.  Just like Jean said sometimes we are getting up to 150 offers per house.  And like you, it is for the homes priced well, clean, and ready to go.  Take care!

December 06, 2009 03:01 PM
Ambassador
779,822
Susan Emo
Kingston and the 1000 Islands Area
Sotheby's International Realty Canada - Brokerage

We had a local realtor concoct a 'phantom offer' which motivated the other Buyers to up their offer.  They won and then found out what he did and ended up sueing him, the brokerage and then the agent was fined but did not lose his license over it!  Now, we have new procedures in place for any multiple offer situation.  Of course the media went into a feeding frenzy over it and our Buyers are highly suspect when told of a multiple offer situation - can you blame them?

December 06, 2009 08:05 PM
Rainmaker
446,345
Jeff&Grace Safrin
SpousesSellingHousesTM
F.C.Tucker 1st Team Real Estate

our MLS board has a multi-offer disclosure form in which all parties signatures are required!

buyers,sellers,agents!

it's all on paper - here are the people involved= you are all on notice and it's disclosed....bring your best offer forward please within the defined time period:)

may the best offer win

and it does

no bluffing needed lol

December 07, 2009 10:04 PM
Rainer
28,348
Angela Penkin
RE/MAX Plus

Hi Phil, Nice post and it is still happening. Happened to my buyer client a few weeks ago. Something people do forget is that often a house that needs TLC sits there - buyers are waiting for it to go lower in price. When someone finally steps up to the plate with an offer (my clients) the lising agent may contact people who have been on the fence trying to decide. Now, different points of view about this, but it is the listing agents job to get the best offer (sale Price, terms, etc) for his client, the seller. In this case, the agent was able to have 2 other offers submitted - my buyer didn't get the house - they decided to stay with their price. They are very happy they did that, this past weekend we wrote on something they liked much better. They believed me that if they considered the house, other people would too.

I loved the pretty girl at the dance analogy!

December 09, 2009 01:16 PM
Rainer
192,550
Nan Jester
Realtor, Exit Real Estate Gallery
Exit Real Estate Gallery Jacksonville Beach, FL

Here it is three years later and there is no Santa Claus. I just submitted an offer $30K over asking price. ($89K asking price $120K offer) I know it is going to be a bidding war because of the area and the listing price.  It went up for sale yesterday and by 1:00 PM today there were already 10 offers in on the property.  The only saving grace is that it is a REO and not a short sale.  Had one like that but three times the price only to have bank come back MANY months later and ask for MUCH MORE!  UGH!!! This market in Florida is a mess! 

July 18, 2012 12:42 PM
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Rainmaker
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J. Philip Faranda

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Additional Information

Phil Faranda is broker and owner of J. Philip Real Estate LLC in Briarcliff Manor, NY. Since founding the firm as a sole practitioner in late 2005, the team has grown to over 30 agents & closed 350+ transactions valued at $140 million. He is in his 4th term as Vice President of the HGMLS. This blog commentary is geared toward consumers and industry colleagues alike. You can reach him at (914) 723-8900.
Warning: *Sarcasm and irony advisory at all times.*



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