Multiple Offers

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Multiple Offers

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Quick Takeaways

Buyers should come prepared to make an offer
Sellers should price their homes correctly
Stay in touch with backup bidders

Source: The Buyer and Seller Guide to a Real Estate Bidding War (U.S. News & World Report, Mar. 11, 2024)

The REALTOR® Code of Ethics does specifically touch on multiple offer situations in Article 1. REALTORS® must act in an efficient and timely manner, present counter-offers, and always work in the best interests of their clients. According to Article 1, Standard of Practice 1-8, REALTORS® have “no obligation to continue to show properties to their clients after an offer has been accepted unless otherwise agreed in writing.”

Outside of the Code of Ethics, there are other legal and ethical issues REALTORS® must consider when dealing with multiple offer and/or bidding war situations. There are designated time periods in which sellers can still accept other offers, some are legal but not necessarily considered ethical. Keep in mind that buyer love letters and other methods of gaining a “personal” edge in a bidding war can sometimes fall in a Fair Housing gray area.

When representing a client involved in a bidding war or multiple offer situation, there are many ways to help your client help themselves. Make sure they have secured stable financial backing, help them craft a competitive offer, and let them know some practical options that may sweeten the deal, like a quick close date. However, remember that your clients best interests are always number one, and it is your job to be the voice of reason in an emotional bidding war scenario.

As a client entering into a multiple offer situation, there are a few things you can do to increase your chancing of getting your dream home. Be wary of too many or zero contingencies, and don’t bid above your financial means. Making a competitive offer right away and sticking to it is often the best bet for you, but ask your REALTOR® what else you can to do heighten your chances.

See References for more information.

References

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

Code of Ethics

Typically, state governments establish laws addressing client confidentiality and disclosure, and may even denote the time frame within which one must respond to an offer of purchase on real property. The REALTOR® Code of Ethics also establishes requirements on responding to offers and protecting the interests of clients:

Article 1, Standard of Practice 1-6 denotes that, “REALTORS® shall submit offers and counter-offers objectively and as quickly as possible.”
Article 1, Standard of Practice 1-15 addresses REALTORS®’ obligation in multiple-offer situations: “REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker.”
Article 1, Standard of Practice 1-7 denotes that, “When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide, as soon as practical, a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/ landlord has waived the obligation to have the offer presented. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease."
Article 1, Standard of Practice 1-8 denotes that “REALTORS®, acting as agents or brokers of buyers/tenants, shall submit to buyers/tenants all offers and counter-offers until acceptance but have no obligation to continue to show properties to their clients after an offer has been accepted unless otherwise agreed in writing.”
Article 1 denotes that “When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client.”
Article 1, Standard of Practice 1-9 establishes requirements for ensuring client confidentiality and non-disclosure compliance.

Code of Ethics (National Association of REALTORS®)

Part 4, Appendix IX- Presenting and Negotiating Multiple Offers (National Association of REALTORS®, Multiple Offers, Jan. 1, 2024)

“Perhaps no situation routinely faced by REALTORS® can be more frustrating, fraught with potential for misunderstanding and missed opportunity, and elusive of a formulaic solution than presenting and negotiating multiple purchase or lease offers and/or counter-offers on the same property. Consider the competing dynamics. Listing brokers are charged with helping sellers get the highest price and the most favorable terms for their property. Buyers’ brokers help their clients purchase property at the lowest price and on favorable terms. Balanced against the Code’s mandate of honesty is the imperative to refrain from making disclosures that may not, in the final analysis, be in a client’s interests.”

Legal & Ethical Considerations

4 Ways to Reduce Risk Amid Multiple Offers (REALTOR® Magazine, May 5, 2021)

This article discusses 4 key areas that are a risk for complaints and fair housing issues when multiple offers are vying for a property: love letters, escalation clauses, waiving contingencies, and preparing sellers.

Can a Home Seller Under Contract Still Accept a Higher Offer? (realtor.com®, Aug. 9, 2022)

“As a seller in this case, you can still accept the other or better offer as long as you are still in attorney review,” says Lukasz Kukwa, a real estate agent with Coldwell Banker Residential Brokerage in Westfield, NJ. “Although this will cause some pushback and sometimes isn’t looked at as the most ethical, a seller can legally still accept any other offer up until attorney review conclude as the deal isn’t officially under contract.”

How to Handle Bidding Wars Legally (MetroTex Association of REALTORS®, 2020)

“Be mindful of your legal and ethical duties. Your state likely has laws and regulations regarding timeframes for presenting offers and what needs to be disclosed to the other party in a multiple offer situation. Some states, for example, prohibit revealing the terms of a buyer’s offer without the buyer’s consent. The REALTOR® Code of Ethics also speaks to handling multiple offer situations, such as requiring that REALTORS® “protect and promote the interest of their client” in multiple offer situations.”

Advice for Real Estate Professionals

What is an Escalation Clause in Real Estate and When You Should Use One (realtor.com®, Nov. 25, 2024)

“Escalation clauses in real estate can cause a lot of stress for homebuyers, especially when their dream home is on the line—but when they’re boiled down to the basics, they’re fairly straightforward. Remember to be realistic, to be comfortable with how much of a competing bid you’re willing to offer and put down as a down payment, and to confidently go after a piece of real estate at that price.”

How to Standout in a Multiple Offer Situation (Sunday River Living, Aug. 27, 2023)

"In a multiple offer real estate situation, creating a great offer is an art that involves a blend of market knowledge, strategic thinking, and emotional connection. Your real estate broker is an essential partner in conducting thorough research, understanding the seller’s motivations, and crafting a well-balanced offer, so that you can position yourself as a serious and appealing contender for your dream property. Remember, a great offer isn’t just about the numbers—it’s about showing your genuine interest and dedication to making the property your own."

How You can Ensure Your Clients Get a Fair Appraisal (REALTOR® Magazine, Feb. 8, 2023)

“Agents can be advisers to their clients when they’re selecting a lender. Remind your clients to ask lenders about their protocols around fair housing and implicit bias training as well as their criteria for selecting appraisers. You also can provide appraisers with relevant, objective data about your listing and comparable home sales. Remember, it’s OK for you to talk to appraisers and answer questions they may have about the home.”

11 Ways to Win a Bidding War (Boston Agent, Mar. 19, 2021)

Local agents in Boston shared the tips and tricks they have been counting on to gain advantage in today’s unprecedented market including; offering a pre-inspection, checking with the seller pre-offer to see if there is something – like a flexible closing date – your clients can offer, working quickly to keep the time frame tight, and making sure your client has solid financial backing.

Guiding Buyers Through Multiple Offers (Ann Wilson Homes)

“It is critical to set and manage expectations with your buyers before they jump into the process. Skipping this step will lead to shock, frustration and disappointment for both you and your client, which can damage the relationship and hinder future referrals… If your buyer is prepared to accept the market realities, take some time to go through what those things actually mean. Everyone needs to be on the same page, so go through what the buyer will experience when moving forward with the transaction under these conditions. Also offer how you can help mitigate some of the effects. This is part of managing expectations so that the road ahead is crystal clear to all parties."

Advice for Clients

The Buyer and Seller Guide to a Real Estate Bidding War (U.S. News & World Report, Mar. 11, 2024)

“For buyers, a proper offer on a home includes a strategic number (offer price), a proposed closing date, and financing terms. A buyer should arrive at each of these three terms based on the comps, as well as timing and financial needs. Arming yourself with current and relevant data and information will help you approach the process with confidence and efficiency, which can work to your advantage. And when it's time to make an offer, being flexible and friendly are two of the best ways to win over the seller and/or the listing agent.”

“For sellers, properly handling this exciting but likely stressful process is paramount and an experienced real estate agent should be able to guide you. Above all, it is important to manage the offers and buyers so nobody feels misled. Sellers and their agents must keep in mind that many buyers who enter a bidding war might have already lost out on another property, so their emotions may be running high. This is especially true when inventory is low. You should be timely in your response to each offer…”

Mastering Competitive Bidding Wars in Real Estate (Tim Trevathan Homes, Feb. 29, 2024)

“Competitive bidding wars are common in today’s real estate market, but with the right approach, you can navigate them successfully. By understanding the landscape, setting clear limits, crafting strong offers, working with experienced professionals, staying flexible, communicating effectively, and managing emotions, you can increase your chances of emerging victorious in any bidding war scenario. Remember, patience and perseverance are key, and with diligence and strategy, you can find the perfect property at the right price.”

Bidding Wars: What Home Buyers and Sellers Need to Know (Rocket Homes, Jan. 1, 2024)

“A bidding war is when multiple buyers compete by making offers on the same property. Each buyer will make a more attractive offer in response to the last; hoping to have their offer accepted and win the home. A bidding war often drives up the home’s price beyond what it was listed for.”

“If you’re a seller hoping to receive multiple offers on your home, make sure you don’t get too greedy. The last thing you want to do is alienate potential buyers to start a bidding war. If you’re a buyer who’s trying to win a bidding war, make sure you don’t get too carried away. As a buyer, avoid offering a price way over your budget or terms you can’t possibly meet.”

How Do Sellers Handle Multiple Offers? (realtor.com®, May 18, 2022)

““If the seller receives an all-cash offer that's at or above asking price versus an offer under asking price that requires a loan, they'll take the first offer all the time,” says Maria Jeantet, a Realtor with Coldwell Banker C&C Properties in Redding, CA. The terms of the sale are important as well. These terms could help make your offer more appealing:

Providing a pre-approval so the seller knows you are already locked for the mortgage amount you need
Waiving your right to an inspection
Offering to close on the seller's timetable (Sometimes a seller wants to close ASAP, or wants to wait until the kids' school year ends.)”

A Buyers’ and Sellers’ Guide to Multiple Offer Negotiations (National Association of REALTORS®)

“This consumer-focused brochure is designed for use by REALTORS® to inform buyers and sellers of the potential consequences of multiple offer situations. It was approved by the Professional Standards Committee at the 2005 Annual Convention in San Francisco and is excerpted from the Presenting and Negotiating Multiple Offers white paper found in NAR's Code of Ethics and Arbitration Manual.”

eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

Close That Sale (Audiobook)

The Altman Close: Million-Dollar Negotiating Tactics from America's Top-Selling Real Estate Agent (eBook)

The Complete Idiot's Guide to Buying and Selling a Home (eBook)

How a Real Estate Agent Can Prepare for a Successful Negotiation (Audiobook)

Improvisational Negotiation (eBook)

The Negotiation Book (eBook)

Negotiation Genius (eBook)

Secrets of Power Negotiating (eBook)

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