By Ross Wilson

“The only competition worthy of a wise man is with himself.” – Washington Allston

Legal and ethical protocol dictates that during a bidding war, buyers are deliberately kept unaware of the terms of competing offers. To ensure a blind bid, all offers are typically presented separately in one session, and in the same order as they were registered with the listing brokerage. Each buyer agent is given a brief private opportunity to argue the merits of their client’s offer.



To help develop a feel for each buyer’s intention and position, a smart listing agent will take advantage of these moments by asking questions of each agent (who often inadvertently disclose too much) regarding their client’s offer. The length of each presentation will obviously depend on the quantity and complexity of the offers. Afterward, each agent is asked to leave a copy with the listing agent for later comparison during a private consultation with the seller. This continues, usually with all agents (and sometimes the buyers) waiting elsewhere in the home or outside, until all bids have been presented.

With a copy of each offer spread before them, the seller and their agent compare the pros and cons of all bids. Sometimes, the seller may reject the least acceptable and work with only the best few, or they may simply accept the best one. If the irrevocable dates permit, they might counter one while holding all others in abeyance. If that counter-offer is accepted, the show is over. However, if it’s rejected, the seller may repeat the procedure with the next best offer until an APS is executed.

When countering, it’s critical to be ever mindful of irrevocable dates and times. If a seller counter-offer is verbally rejected by a buyer, but the seller’s written irrevocable time and date haven’t strictly expired, that buyer could change their mind prior to the technical expiry of the seller’s offer and accept the counter-offer. Assuming a verbal report of its rejection to be binding, if the seller proceeds to deliver another fully executed counter-offer to a second buyer while the first counter remains officially valid, and the second buyer accepts it, the seller has risked contractually committing to two separate buyers. Be very careful – this is really easy to do. And you may pay the price for your negligence, maybe a big one.

Nevertheless, sellers often elect to return all offers untouched to the respective buyer agents, thereby allowing each buyer a chance to improve their bid. In this event, the listing agent should forewarn their seller of the possibility of some or all of the offers being withdrawn. When the remaining offers are re-registered, the entire process begins anew in the order of their return. After a brief private consultation with the listing agent, the seller usually chooses one.

When given the chance to enhance the terms of their offer, if a buyer is unable or prefers not to increase the price, they should re-submit anyway. One never knows; some or all of the other buyers may feel the same way and refuse to alter their offer terms or even withdraw from the competition. It would be a shame to lose a bid because your buyer gave up, especially since it costs nothing to persevere. Instead of quitting, consider other ways to improve their offer. Removing conditions, adjusting the closing date to comply with a seller’s preference, excluding chattels, eliminating seller requirements or increasing the deposit might do the trick. Usually, though, it comes down to conditions and price.

When a buyer unwisely shuns all competitions, they miss out on the possibility of acquiring an obviously desirable home. It’s like not buying a lottery ticket; you can’t win without playing the game. Rather than be frightened or intimidated, they should proactively commit to a maximum realistically affordable price – in advance – that’s not ridiculously over what you collectively agree is fair market value, and faithfully stick to it. Don’t budge.

During a competition, if offer prices soar into the stratosphere and well over your buyer’s previously determined maximum, encourage them to resist the temptation to join the frenzy. Bidding wars can be emotionally challenging and exceedingly expensive. If they lack sufficient financial clout or the stamina to continue, and/or prefer to avoid paying top dollar, tell them to walk away. There’ll be another property somewhere sometime that they’ll love just as much and maybe more.

In the final of this three-column series, I opine on the controversial topic of what has become known as the infamous bully offer.

SIMILAR ARTICLES

1 COMMENT

  1. Ross

    I always wait with anticipation for your next elucidating column. Well stated as always.

    It is always so much more practical to sit face to face at offer presentations. I acknowledge that isn’t always possible, (particularly with relo people, buying or selling), but when a listing agent instructs a showing agent when inquiring as to the current status of the property vis a vis offers, that there are four other offers in the works, one of which is for his own buyer being worked on, and says that his seller has instructed to fax all offers to the listing agent because the seller prefers not to sit at the table, this is where buyer agency really shows its worth perhaps.

    In a would-be situation, where there is “any” possibility of a listing agent having his own offer (which he must disclose), the intensity of the situation ramps up.

    Discuss with buyer, suggesting perhaps best to wait over the weekend to see if the four other offers materialize. Agreed. Prepared to pay well over list price but on the off-chance even more offers might surface, it might become unmanageable. Property on market quite awhile, not sold, and previously listed months before and didn’t sell. Now suddenly an abundance of offers in the wings.

    Check status again to follow up. No update change showing in MLS system. Check with listing office who knows nothing of advised, discussed, or registered offers. Speak to listing agent. None registered. Agent says he is still working on his offer. As are the other agents he is expecting to hear from momentarily. He prefers to work using email for purpose of discussions. He is very busy but good about reply emails. (Surely does make a good paper trail.)

    No further word from listing agent who insists if offer is happening it must be faxed. Buyer insists on face to face presentation. Word passed to seller that face to face presentation is required by buyer agent.

    Finally listing agent and seller agreed. Appointment arranged. Sitting at table, asking where are the other four offers that were in the works (all four still in the works?) No one looks up, not even the agent; totally ignored the question; blank expression on seller’s faces, whose first language is not English but has young adult son there as interpreter, if needed, reviewing an offer nearly 300k over listing price on expensive property. (Where is everyone with other offers?) Agent sits quietly, no talking, reading offer to himself. Short offer. No conditions at buyer request. Enough backup money available if anything needing doing. Firm offer. Reasonable closing. Seller can choose to change if needed.

    Sellers and agent do not respond or react to question about other possible offers. (That’s because there were none.) Agent eventually the next day totally denied ever saying such. But wait a minute, it was all in print, in emails. No denying it.

    And not the least of which: Body language serves the situation in a valuable way sometimes. Clearly the sellers had been instructed to say nothing and show no emotion. And clearly knew from nothing about other even possible offers being worked on, especially knew nothing about their agent working on his own offer. If had been forced to fax, buyer instructed not to present. Kill the firm offer. Written buyer instruction.

    Subsequently listing agent vehemently denies ever having said there were other offers being worked on. Including his own. He didn’t appear to remember at all, but several of the discussions were by email. He had put it in writing. So email is living proof of discussions, no?

    There’s much more to the situation but due to privacy cannot be discussed on the forum. But a good example of where buyer agency intercedes. And email is absolute proof of those discussions.

    Carolyne L 🍁

Leave a Reply