In today’s market, it is not uncommon to have multiple offers to purchase on a home. There are strategic ways an experienced realtor can deal with multiple offers. However, it is not only up to the realtor, ultimately the seller has the final say. Multiple offers cause bidding wars and it is important to follow best practices and etiquette when dealing with them.
Setting A Date For A Bidding War
If the strategy is to spark a bidding war, the offer date is generally set approximately 6-8 days from the date the property is listed. The listing agent and the seller should mutually agree on the offer date. The listing agent should check other offer dates for homes in the area to avoid splitting the buyers when selecting the offer date.
How Realtors Deal With Multiple Offers
As a realtor, under the code of ethics, they must disclose certain information pertaining to a multiple offer situation. The realtor must disclose the following:
- The number of written offers on the property to the seller.
- The number of written offers on the property to both the buyer and seller if you are representing both parties.
- A reduction in the cooperating commission by you or the buying agent to anyone who has a written offer.
- Any changes to the offer process.
The Registration of Offers
Prior to presenting an offer on a property, the buyers have the right to know how many other offers exist. Bill 55 was passed in the year 2015 and stipulates how offers are to be handled. Bill 55 requires that:
- A listing agent must have received an offer or a signed Form 801 indicating that an offer has been signed before they can tell buyers that an offer or offers have been received.
- Brokerages must keep a complete summary document or copies of all written offers and counteroffers that have been presented or countered from the seller.
- Any buyer who makes an offer on a property can request the number of offers are validated by RECO.
Offer and Offer Presentation Times
The listing agent will set a specific time for offers to be registered with the agent and then the listing agent will also set a time the offers will be presented to the seller. This is an effort to have all offers come in by a certain time, however late offers are always welcome. It is imperative that buying agents send any Form 801’s to advise the listing agent that they have a signed offer to purchase.
Offer Process Set Out By RECO
- Once the first offer is registered on a home the listing agent should have their brokerage contact all buying agents that have shown the home to advise them an offer has been presented on the home.
- Once a second or subsequent offer is registered, the brokerage should contact the first offer to advise them they are in a multiple offers situation.
- Keep your brokerage office informed if the listing agent has received form 801 directly from a buying agent.
- Sometimes there can be numerous offers and it can be difficult for the listing agent to inform numerous buying agents every time an offer comes in.
- Some brokerages are fortunate enough to have systems in place that will send an email to the buying agents that have registered offers so they know the total number at all times.
- Prior to presenting the multiple offers to the seller, send an email to all the buying agents that have registered offers advising them of the total number of offers there are.
Keep All The Offers Organized
It is important for the listing agent to be extremely organized. An ongoing list of email addresses and contact numbers for the agents that have shown the property is important. This way a mass email can be sent out advising them of registered offers. Always remember to BCC when sending emails so the competitive parties are protected.
Use a quick spreadsheet to outline the important details of the offers. The spreadsheet should include the following information:
- A checkbox for form 801 received.
- Time the offer was presented.
- The buying agent’s name and contact info.
- The offer price.
- The amount of the deposit.
- The closing date.
- The Conditions.
- The irrevocable time.
- Deposit cheque with the offer.
- Any important key points or notes about the offer.
Note: Should an offer come in when the other offers are being presented to the seller, the listing agent should contact all the buying agents to advise them the number of offers has changed as an offer that has already been registered can be re-submitted due to the fact that the number of offers has changed.
Listing Agents Should Prepare Their Clients Prior To Offer Presentation
When a multiple offer situation occurs, it can be very lengthy for the listing agent to go through every offer. In order to save a bit of time preparing clients ahead of the presentation, can be greatly beneficial. The listing agent can explain all the terms of a standard agreement of purchase and sale and walk them through the process. This way the listing agent avoids having to explain pre-printed clauses and paperwork during the presentation of offers.
Presenting Multiple Offers
When the listing agent is presenting multiple offers to the seller, it is important to highlight all the pertinent information such as:
- The Price
- The Closing Date
- Amount of the deposit
- Inclusions and exclusions
- Any other details that are out of the ordinary
Typically, the agent will present the offers in the order they were received.
Once the offers have been presented to the seller, the seller can accept one of the offers, ask other buyers to improve their offers or negotiate an offer with a buyer.
The Seller’s Obligations
It is imperative that the seller reads all offers, especially the one they are going to accept. They should read every single word in the offer as it is a legal binding agreement between the purchaser and the seller.