WE ARE GLAD MULTIPLE OFFERS ARE BACK: JUST BE CAREFUL

June 1st, 2012 at 7:01 pm

As we all know, one of the signs that our markets are turning around is the return of multiple offers. No matter where I go, I hear the same thing: Because inventory is so low, if a property is priced correctly, it will go in multiples. While we are glad to see this activity, multiple offers do raise certain issues that we haven’t seen in a while. With that in mind, I thought it a good idea to remind you about these problems and, most importantly, what you should do to handle them correctly.
The issues we most often see in multiple offers arise from the appearance of two potential conflicts of interest, both resulting from the listing agent representing one prospective buyer. In that case, two things almost always happen: the other offerors think you are favoring your buyer with the seller, and the seller thinks that you are acting in your buyer’s interest rather than theirs. The reason for this suspicion is obvious: You will earn both sides of the commission if your buyer gets the property. As a result, if your client does end up as the ultimate buyer, no one will believe it was for legitimate reasons. So, while avoiding this situation and not representing both sides in a multiple is the easiest solution, there are other things you can do to properly represent your clients without violating your obligations to anyone else.

First, always get your manager involved in multiple offers. Their involvement acts as a buffer to your potential conflict of interest and oftentimes makes the other parties feel like they are getting a fair chance. More importantly, however, is to have your manager represent the seller in the offer process when you also have a buyer. That way, no one can claim that you improperly steered the seller to your buyer. After all, when following that process, you will not even be in the room when decisions about counters or which offer to accept are made. Rather, at that point in time, your manager protects the seller’s interests and you protect your buyer’s. As a result, everyone feels like the process was fair to their client. Of course, after an offer is accepted, regardless of which buyer is chosen, you can then step back in and represent the seller. By that point, the potential conflict has gone away and you can perform your duties as listing agent and represent your client.

Please understand that this policy came into being after a lot of experience. Without following it, you are very likely to get a complaint. If you do follow the process outlined above, however, our experience is that your deal goes much more smoothly and you can avoid these problems.
As always, contact us with any questions you may have.

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