By Stephen L. Fussell, Consumer Protection Officer
Like most real estate agents, you are probably confident in your ability to handle the negotiation of a single offer to purchase. However, you may feel less certain when presented with more than one offer for the same property. To answer your questions and address your concerns, here are some guidelines for the proper handling of multiple offers.
Listing agents must promptly present each offer to their seller-clients, whether there is only one offer or several offers on the same property. In no event may an agent wait more than five days to present any offer. If multiple offers arrive at the agent's office before he or she has had a chance to deliver any of them, the agent should present all of the offers to the seller at the same time.
There is no "first come, first served" rule: just because an offer is the first to arrive does not mean that it has priority over an offer that arrives later. The seller may accept any offer, without regard to the order in which the offers were made and received. Alternatively, the seller may choose to negotiate with any prospective purchaser, so long as the choice is not made for a reason that would violate Fair Housing laws.
The listing agent should inform the agent working with each prospect that other offers have been made on the property, so that all of the competing buyers can be encouraged to make their best offer. However, a listing agent is not permitted to disclose the terms of competing offers to one or more of the buyers, which is called "shopping" offers to purchase. The law requires that real estate agents treat prospective buyers honestly and fairly. An agent who discloses the terms of competing offers to one buyer gives that buyer an advantage over the others and thereby breaches the duty of fairness owed to the other buyers. An agent who informs each buyer that there are competing offers for the property, without disclosing the terms of the other offers, keeps all the buyers on an even playing field, and thereby fulfills the duty of fairness.
Once offers are presented to the seller, the listing agent may then assist the seller in determining which offer is best for the seller and whether or not the best offer should be accepted. If none of the offers is acceptable, the seller may reject all of them. In that case, the listing agent should advise the agents working with the prospective purchasers to invite those prospects to make new, better offers. The listing agent may orally outline what price and terms the seller would be willing to consider.
Alternatively, the seller could make a counteroffer to one of the prospective buyers. However, listing agents should be careful not to allow the seller to make written counteroffers to more than one buyer and thereby run the risk that each will be accepted.
In Summary
To handle multiple offers successfully, you must (1) promptly present all offers to the seller; (2) inform all buyers that more than one offer has been made without disclosing the terms of the competing offers; and (3) assist the seller in choosing the best offer.