Multiple offers continue to be widespread in our small section of the planet. Buyers sometimes mistakenly assume all agents know how, and are willing, to handle these transactions in their best interests. This should not be taken for granted. As a buyer, your agent's lack of diligence could cost you a year's salary. 

Asking the right questions

Not long ago, prior to presenting, and at the presentation of the offer, the selling (buyer's) agent asked the listing agent the number of other offers. Told there were two in addition to his, he advised his buyers accordingly. Relying on this communication, they wrote an offer and it was accepted.

The next day, the selling agent requested the names of the two contending agents. He was now notified there were no other offers. Informed of this discrepancy, the dismayed buyers lowered their offer to what they felt was suitable.

After much turmoil, the sellers accepted the adjusted price. Had they not done so, this could have been a messy legal situation because the listing agent had not acted appropriately.

Realtors agree to adhere to a written Code of Ethics. The code indicates that "Realtors pledge themselves to…treat all parties honestly." Further, "Realtors shall avoid…concealment of pertinent facts relating to the property or the transaction." 

Obviously, the number of people with written bids is a material fact. As a rule, the greater the number, the higher the ultimate price. A seller may instruct his agent not to disclose how many offers to buyers and their agents; however, I have never heard of this happening in our area. 

In this case, because the seller had not made that prohibition, the listing agent was ethically bound to volunteer that there were no other offers before the one actual contract was presented. 

Fortunately for the buyers, their agent acted to protect them by asking the right questions. Furthermore, the buyers had given their agent written instructions on how much they were willing to offer, based on the number of competitive bids. This is usually done orally, but having it in writing is preferable as it proves the buyer's intent and protects his agent.

Not asking cost the buyer big

In another recent scenario, the selling agent submitted a contract that was astronomically higher than the one other offer. Of course, this superior bid was accepted.

Most interesting is that the buyer's agent never inquired, either before or after presenting her offer, how many competing ones had been written. This is a major oversight because I have never met a buyer who would offer more than is absolutely essential. Vying with only one other buyer certainly requires a lower bid than if the competition is greater. 

It turned out that the "successful" buyer had been beaten out of other homes more than a dozen times. His agent knew he was primed to win at all costs, but it did not mean he had to overpay. In the end, this buyer paid $60,000 more than necessary for this particular property. To have avoided this, all it would have taken was an agent acting in his best interests. 

Final thoughts

Multiple offers are tricky because the number of bidders can keep changing right until the time of presentation. The most professional listing agents keep all parties informed, but as a buyer you should not count on this. You need a proactive Realtor who will stay on top of the ever-changing circumstances.

Although the vast majority of real estate salespeople are honest and conscientious, for a few, "It's just business." If you are a buyer getting the business, you may never know how costly it actually was.

Related Articles: Multiple Offers Part 1 and Part 2