Disclaimer: This information is intended to be of a general nature. Please do not rely on any of the content as being a professional tax or legal opinion and seek your own independent advice.
Agents have differing approaches as to how to deal with multiple offers but normally will inform buyers that their offer is one of many. Details of competing buyers’ offers are not normally revealed (unless, of course, you’re bidding at an auction) so as a buyer offering in competition with others, it is difficult to know what price and conditions will ensure purchasing success without paying significantly more than the next highest offer.
…don’t shoot the messenger
Buyers ought to remember that agents have a legal responsibility to act in the best interests of their Principal (usually the seller) unless it is unlawful or unethical to do so. They are paid to ensure the buyer pays the highest possible price on the best possible terms.
One of the most effective ways to achieve this and discharge their fiduciary responsibility is to have multiple purchasers competing to buy. Naturally, buyers don’t like having to compete as it is almost impossible to gain a negotiable advantage in such circumstances.
When faced with buying in competition my advice to buyers is this:
Ask the agent if there are any other offers on the property before submitting your own offer. This knowledge might influence your initial offer.
Consider removing some of the conditions of your offer such as a Building Inspection Report clause especially for more modern homes. Ask the agent about the seller’s preferred settlement period and try to make your offer fit in with their needs. The notion that agents should assume the buyer’s first offer is not their “best offer” is nonsense. A buyer who tells the agent that this is their best offer should not assume the agent thinks it a lie. Know that you may only get one chance at buying the property; the seller is under no obligation to provide you an opportunity to negotiate further.
Believe the agent when they tell you there are other offers in play. Buyers are prone to thinking the agent is telling fibs; it is rare nowadays that they are.
Ask yourself if your best offer is really at your limit.
Please don’t shoot the messenger if you miss out. Being told your offer was one of many, choosing not to submit your best offer and missing out ought not to give rise to admonishing the agent.
by Hayden Groves
REIA Deputy President