When a home is in a multiple offer situation, the seller has 2 or more competing offers to consider. There are several ways to address a multiple offer situation and while the listing agent/broker might offer advice on how to address the situation, the seller is the ultimate decider on how they want to approach the offers presented.
Sellers can review all the offers and simply accept the "best" offer, in their terms. They might take advantage of the multiple offer situation and inform all prospective purchasers who've seen the home that other offers are "on the table" and "highest and best" offers are due at a specific date and time. The sellers can review all offers and "counter" the offer they feel is best to negotiate with, keeping the other offers in a queue while they await the 1st offer they countered.
This is potentially one of the most frustrating situations a seller and buyer can be in during the process of a real estate transaction. Some important things to keep in mind are:
1. The seller wants to sell for the highest price possible.
2. The buyer wants to buy for the lowest price possible.
3. Listing brokers acting on behalf of the sellers represent the sellers
4. Buyer representatives acting on behalf of the buyers represent the buyers
A multiple offer situation is a complex situation with no direct approach. No matter what side of the transaction you're on, keep in mind the advice of your agent/broker is based on their experiences with multiple offers and is no guarantee as to how any particular seller or buyer will act (or react) in a specific situation.
Buyers- what you should know:
As a buyer your 1st question should be- "what does the seller plan to do, in the event there are multiple offers?" However, the seller might not know how they want to approach the offers until they review the offers. If you can get an answer to this question, it can help you figure out the best path to offer. You should always expect to submit your most competitive offer.
A low initial offer might be accepted- but it will most likely cause a chain of events where the seller just decides to go with the best offer. Your agent will offer guidance and information on how to approach a multiple offer, but know you are the one who needs to make the decision on how to offer.
Your offer isn't confidential. A seller may ask their agent to use details of your offer as leverage to counter another offer that came in, to get a better offer. While some REALTORS® may be reluctant to disclose terms of offers, even at the direction of their seller-clients, the Code of Ethics does not prohibit such disclosure. Consider speaking with your agent about creating a confidentiality agreement that all parties agree on, before submitting an offer.
Keep in mind, your agent/broker likely has other buyer-clients, some of whom could be interested in the same properties as you are. Ask your agent/broker how offers will be approached in the event more than one of their buyer-clients are trying to buy the same property.
Lastly, don't be discouraged by a multiple offer situation. The worst thing that could happen is your offer isn't accepted. At that point, we only have a couple hours invested in the attempts to purchase, it's not a big loss. Keep on keepin' on!
Sellers- what you should know:
Selling your home should be treated as if it were a business transaction. Take the time to take the emotion out of the decision process. And know, ultimately, this decision is yours to make.
Know that, whatever approach you take, there are advantages and disadvantages. It is your job to work with your agent/broker on what is the best path for you.
Calling for "highest and best" offers might result in an even better offer being received, but it could also result in you discouraging buyers who feel they've already made their "best" offer and you could lose one or more offers.
And last of all, as we like to say: "Que Sera, Sera." If it was meant to be, it would be!