The time was mid-2020 through about early 2022. The setting was every real estate market across the continental United States of America. The stars of the show were real estate agents of varying skillsets and experience levels. The victims were countless buyers paying absurd amounts of money to buy and overly excited sellers settling for the highest offer with the least amount of exposure.
This short blog entry is not to criticize the players of this proverbial game nor to make anyone feel bad or remorse about any decisions they have made. However, I thought I would take a moment while things are cooling off a bit to share my over 21 years of experience in stable, hot, cold, buyer and seller markets, particularly how to properly handle the “multiple offer” scenarios like a pro.
First of all, this market made the most novice of agents seem like real estate gods. Does this sound familiar?
- Agent puts a home on the market
- Buyer sees home online and wants to see it
- No showings aloud until the 90 minute open house on Saturday.
- Highest and best offers are due by 5:00 Saturday evening.
- Home goes under contract for some crazy amount of money with unfavorable terms to the buyer
This may sound amazing if you were the seller but what if that crazy amount of money could have been more? What if the terms and conditions of the offer could have been BEYOND what the seller could have ever expected? What if the buyer gave the seller everything they wanted and more buy also was an unpressured buyer never once looking for a way out of the deal. What if the best buyer was 48 hours away?
The feeling of control gets the adrenaline flowing for the listing agent and they pass their emotional high onto their sellers. Logic and strategy completely go out the window. Buyer’s are heart-broken from previous bidding war losses. They pass their emotional distress onto their agents and collectively we have a mess of a situation.
How do we right this wrong? Well for starters, ELIMINATE “Highest and Best” from the table unless absolutely necessary. Use offer deadlines to individually counter multiple offers separately. As the listing agent, uncover exactly what your seller client wants. Literally determine what their unicorn offer looks like. As the buyer agent, uncover what their life looks like after closing based on presenting the most pie-in-the sky offer. Let them see the absolute worst-case-scenario and come to terms with it. As a buyer, be willing to wait and also be willing to present multiple offers on multiple properties using creative escape clauses. Yes, you will need to have a smart and seasoned agent to guide you but you will be thrilled with your outcome.
Can we be real for a minute? As a seller, you are paying your agent to not just place your home in the Multiple Listing Service (MLS) but often times, you are paying for marketing, guidance, negotiation and for expertise. I mean, you don’t have to be a genius to know that many of these characteristics are not used in many of the “highest and best” scenarios. In fact, when used as a first option, you should question the strategy.
My team is not afraid of the “highest and best” strategy but we pride ourselves in the ability to use it wisely and as an integral part of a negotiation. Don’t sell yourself short as a seller, let my team guide you with knowledge, wisdom, expertise and professionalism.