Ethics Question: Do you "say" there are other offers?

42 Replies

This question comes out of frustration over the seemingly ubiquitous "We've received another offer, please give highest and best." 

I live in a hot market, and it seems whenever I call about a property, there's always "another offer."

As a listing agent, it is my duty to get the best deal for my client, but it seems like sometimes the other agent doesn't actually have another offer. 

Your thoughts?

Mindy Jensen, Real Estate Agent in CO (#FA100049656)

This definitely happens all the time in a hot market. Do I think the realtor actually has multiple offers? Maybe not. Here's how I would proceed:
If you are buying the house as an investment, go by the numbers you are comfortable with and don't over bid. Know when to fold up and walk away.
If you are helping a client, help them put a number together on what the house is worth. They may over bid if they are in love with the house. When you visit the house look for the realtor cards. If you know any of them, ask if someone is bidding on the house.

I have a friend that owns over 600 SFR and is one of the most successful I know. When he is taking offers, he tells the potential buyers "we will be evaluating all offers after 5PM" or something to that effect. So he is not stating he has other offers, but the people making an offer may believe so. Tricky but honest wording IMO.

John Thedford, Real Estate Agent in FL (#BK3098153)
239-200-5600

Hmmm.  I was always of the belief that an agent was not allowed to claim multiple offers unless there were actually multiple written offers that had been submitted on the property.

There have even been times where I was required to sign some silly addendum stating I was aware there was a multiple offer scenario. It was stupid.

I guess in my mind, I don't really care any more. Typically my offer is the best and highest I can do right from the start. Usually, I just write those deals off though as I know I can't compete with an owner occupant so I rarely get deals that go to multiple bid scenarios.

That being said, the last one that I got that on , I bumped my offer by changing my EM from 1k to 5k and changing the closing period from 30 days to 21 days. That was a couple of months ago and I actually got the house. So that may be something you can try.

Keep your offer price the same but bump your EM and closing periods and eliminate any contingencies (ie. no home inspection contingency and no financing contingency) and then that may bump up the value of your offer to a lender or seller quite a bit.

Its not as good as all cash, but its a pretty strong statement to come in with no contingencies, quick close, and a higher EM. They'll know that if they pick you, the sale is very likely to go through - especially if the other bidder is an owner occupant doing conventional financing.

I'm in a hot market. The vast majority of listings that are priced at the market and marketed correctly sell for full price. I am always honest if I have an offer or not. It's true I want to get my client the highest and best offer, but I have an ethical duty to be honest to other agents and buyers. 

When I run into this situation where I'm representing the buyer and I have doubt there is an offer, I ask a lot of questions to tease out any information that may say otherwise. 

Ken Konecny, Broker in CA (#01922442)

@Mindy Jensen  Great question! We put an offer in on a bank owned property yesterday with the hopes that no one else would.... that didn't last! Followed by highest and best due in 4 days. Talk about a great way to build up the suspense! 

 When representing my client as their listing agent, I don't play games. If someone brings an offer that works for my client and they are happy with it then that is what we do. If one person presents an offer and I were to tell them bring their highest and best the following day (and they are the only offer) that wouldn't set right with me. Negotiating is a massive part of real estate transactions and life, period. However, I am all about the win-win-win. In this business, it is inevitable not to cross paths with people that you've done a deal with 6 or 8 months ago. 

Our listing agreements actually has a section where the seller decides whether we can tell other agents if there are other offers or if that is private information.

I always have my sellers give me the authority to disclose whether there are other offers or not.  

If you feel the other agent is lying, that is a violation of the NAR code of ethics, so if you have good reason to believe they are lying you can file an ethics violation against them.

If I am in a position as a buyers agent where I am escalating...after we are under contract I always request a copy of the 2nd best offer, or the 3 pertinent pages that make up the offer, the pages with the price, seller subsidy and other buyers agent name, so I can then call and confirm they made the other offer.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

@Mindy Jensen   Unless it is needed for an assemblage  then I tend to say...  "Don't worry about it.  I am cancelling my offer.   Maybe that will make things easier for you."

That is code for... "That is because you listed the property below market value to start a bidding war and I do not play games."

There is also a fallacy in lying and saying you have another offer. You dont want to do that because then the person asking might not submit an offer if it is someone scared of a multiple offer scenario.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

Indeed, @Mindy Jensen, Boston, MA is the same way. We have both a hugely competitive retail market and an equally competitive investor market. The good "off market" deals all have multiple bids and are a few if not zero percentage points away from MLS deals unless you get lucky.

If the broker doesn't have multiple offers and they're simply lying to you, its hard to give advice on how to do business with someone who is just playing games, best bet is to use your gut to determine whether or not they're bluffing. However, giving them the benefit of the doubt, giving highest and best in a multiple offer scenario isn't a bad way to go:

If they ask your client's for highest and best, and your client's give them the most they're willing to pay for that property , (of course keeping emotions out), then no games can be played. If someone else outbids your clients, they either over paid or have different goals, and you move onto the next one. If the broker comes back and says, "well if you just add another $______ to your offer, its yours" or.. "there's higher bids than you, do you want to raise yours?" Then you politely remind them that they asked and for, and received, your highest and best offer and if the seller wants more they can get it from someone else. If they're bluffing then your clients win, and if not then they didn't over pay. Don't let your clients get emotional in a bidding war and make sure they've decided on the number at which they're willing to walk away, ahead of time. 

*If your clients are investors and this isn't their primary residence, its imperative they fall in love with the numbers, not the property. 

I would be curious to know, if you think an agent is playing games with you and they don’t really have multiple offers, if reverse psychology would work and you submit another offer even lower than your original or with more favorable terms for you or both. I suppose it would depend on how long the property had been on the market

In those cases I have heard people who have offered $100 over highest offer up to $XXX - and if there offer was accepted the agent needed to show the other offer (and they would confirm it)

Originally posted by @Russell Brazil :

Our listing agreements actually has a section where the seller decides whether we can tell other agents if there are other offers or if that is private information.

I always have my sellers give me the authority to disclose whether there are other offers or not.  

If you feel the other agent is lying, that is a violation of the NAR code of ethics, so if you have good reason to believe they are lying you can file an ethics violation against them.

If I am in a position as a buyers agent where I am escalating...after we are under contract I always request a copy of the 2nd best offer, or the 3 pertinent pages that make up the offer, the pages with the price, seller subsidy and other buyers agent name, so I can then call and confirm they made the other offer.

 Interesting move, are they required to comply w/ that? Curious how that'd play out if they said no, but the numbers still made sense to move fwd vs walking. 

Originally posted by @Matt K. :
Originally posted by @Russell Brazil:

If I am in a position as a buyers agent where I am escalating...after we are under contract I always request a copy of the 2nd best offer, or the 3 pertinent pages that make up the offer, the pages with the price, seller subsidy and other buyers agent name, so I can then call and confirm they made the other offer.

 Interesting move, are they required to comply w/ that? Curious how that'd play out if they said no, but the numbers still made sense to move fwd vs walking. 

 Well if they dont comply, they will likely lose their license as well as have a huge liability for fraud, both civil and criminal liability, so yes they comply.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

I’m not a psychiatrist or anything but if you offer someone and offer and they don’t have any other offers, even if they’re lying your either 1. Submitting a calculated real estate offer and or 2. Being the only offer submitted. Right? I mean, would knowing the agent is lying or not change your offer price? In my opinion is shouldt but I’ve never actually bought a house sooooo idk?

Originally posted by @Russell Brazil :
Originally posted by @Matt K.:
Originally posted by @Russell Brazil:

If I am in a position as a buyers agent where I am escalating...after we are under contract I always request a copy of the 2nd best offer, or the 3 pertinent pages that make up the offer, the pages with the price, seller subsidy and other buyers agent name, so I can then call and confirm they made the other offer.

 Interesting move, are they required to comply w/ that? Curious how that'd play out if they said no, but the numbers still made sense to move fwd vs walking. 

 Well if they dont comply, they will likely lose their license as well as have a huge liability for fraud, both civil and criminal liability, so yes they comply.

 But if the private info boxed was checked they wouldn't? Not trying to split hairs here... genuine curious because that could help improve my strategy in the future. 

Originally posted by @Matt K. :
Originally posted by @Russell Brazil:
Originally posted by @Matt K.:
Originally posted by @Russell Brazil:

If I am in a position as a buyers agent where I am escalating...after we are under contract I always request a copy of the 2nd best offer, or the 3 pertinent pages that make up the offer, the pages with the price, seller subsidy and other buyers agent name, so I can then call and confirm they made the other offer.

 Interesting move, are they required to comply w/ that? Curious how that'd play out if they said no, but the numbers still made sense to move fwd vs walking. 

 Well if they dont comply, they will likely lose their license as well as have a huge liability for fraud, both civil and criminal liability, so yes they comply.

 But if the private info boxed was checked they wouldn't? Not trying to split hairs here... genuine curious because that could help improve my strategy in the future. 

 They have to provide the other contract to prove the escalation.  If they do not, then there is no other price to escalate against, and the offer is merely what the face value of the offer, no escalation added.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

I was taught that you must have another offer and to be honest about the situation rather than just trying to drive the price up.

Jordan Moorhead, Real Estate Agent in MN (#40542303)

@Mindy Jensen When I'm representing a buyer, I'll use an escalation clause that states: "Buyer will increase their offer to exceed the highest bonafide offer by $1,000.00 up to a maximum price of $XXX,XXX.00.  Seller must provide the highest competing offer for verification. Offeror's surname may be obscured for security".

That said, I have successfully orchestrated bidding wars when representing sellers.  Most recently, I intentionally listed a home $25K below market value in a very hot market. We ended up $59,600 over asking ($34,600 over market value) and I was able to get the high bidder to waive their home inspection contingency.

There's always a risk that the property won't appraise if the high bidder is using a low down payment loan.  In this case the buyer had a very large down payment, so it wasn't a problem.

Charlie MacPherson, Real Estate Agent in MA (#9532146)
781-412-4151

Russell Brazil is right on the money. His usual. If they will not show evidence of an escalation then you have a choice to make. Do you want the deal or their head. If the deal makes sense and you want it then ignore the agent's behavior and get your deal done. If on the other hand you suffer because the agent will not disclose the contract to prove escalation and you want his head report him and walk away. 

Assuming the property is listed by a licensed Realtor there is only one right answer to this question. As @Russell Brazil stated, it would be an ethics violation. Realtors follow a code of ethics. By comparison, a wholesaler isn't bound by any code of ethics, so they could theoretically do what they wanted. 

One thing to keep in mind when people ask for your "best and final" is that you may already be the high offer. Personally, I just look at the deal and decide what price I want to pay. If someone is caught up in the frenzy and wants to pay more, then I will just lose the deal and move on.

What gets my goat is when a realtor wont show the property any more or even bother themselves to return a phone call. I had one I was interested in a bit back, I called and called and called. I finally called the agency and asked if the agent was sick or out of town - "No, she's just really busy". I asked if there was someone else who could show the property and there was, so we set an appointment. I get a call that night from the agent who I set the appointment with and she says "I finally got hold of the listing agent who says they stopped showing about a week ago", to which I said "gee, I called to see it over a week ago". I was tempted to call the owner and let them know the realtor wasn't showing the property to all interested buyers, but decided to just let it go.

Of course I have no idea what the real story is, but my suspicion (at least my impression) is that the realtor was playing games and maybe had a friend she would have preferred to score the property. Maybe that's just cynical on my part, but when a realtor can't even return a call to a buyer, it just seems very odd. I dunno. Maybe she is just that good and has too many buyers in her life. I can say for sure she will never list a house of mine or get a reference from me either.

Two things:

1.  In my day job, I buy things that transact like portfolios of commercial real estate but are not actually real estate.  Every single broker has said they have other offers.  It does not change anything.  Sure, if I was allowed to see the other offers or know for sure there are no other offers, that would change my behavior as a potential buyer, but they'll never be allowed to show me other offers (NDAs), so I am absolutely forced to assume they are all lying, even though only a fraction of them probably are.  Because of that, it's completely pointless whether you say it or you don't, because the potential buyer you say it to will (1) assume you'll say that whether it's true or not and (2) never have any way of confirming it.

(Now, maybe in RE there's some law or ethic that will let you actually confirm it, IDK).

2.  How could there ever be a situation in which there were not multiple offers?  If I was an agent and I wanted there to be multiple offers I'd just let potential buyers know that the seller is looking for offers, any offer.  An offer could be "I'll take your house off your hands for you if you give me six billion dollars."  I imagine it would be unethical for an agent to ask someone to make a sham offer, but you can always get offers and saying "we have other offers" says nothing about how good they are.

(Sure, you can make an I'll pay 1k over the next highest offer up to X, but if I was the seller I would reject that.  I'd counter with $X.  You might walk out of spite, but I now know that $X is a price people are willing to pay, so while risking that you were the only person willing to pay that, I'd keep looking for someone else to pay $X).

Long story short: say whatever you want, the buyers assume you don't have other competitive offers, and if you want to be ethical, just get more offers, it's easy if you let people know you want to hear all offers.

Originally posted by @Merritt Steinbach :

What gets my goat is when a realtor wont show the property any more or even bother themselves to return a phone call. I had one I was interested in a bit back, I called and called and called. I finally called the agency and asked if the agent was sick or out of town - "No, she's just really busy". I asked if there was someone else who could show the property and there was, so we set an appointment. I get a call that night from the agent who I set the appointment with and she says "I finally got hold of the listing agent who says they stopped showing about a week ago", to which I said "gee, I called to see it over a week ago". I was tempted to call the owner and let them know the realtor wasn't showing the property to all interested buyers, but decided to just let it go.

Of course I have no idea what the real story is, but my suspicion (at least my impression) is that the realtor was playing games and maybe had a friend she would have preferred to score the property. Maybe that's just cynical on my part, but when a realtor can't even return a call to a buyer, it just seems very odd. I dunno. Maybe she is just that good and has too many buyers in her life. I can say for sure she will never list a house of mine or get a reference from me either.

 Or you could have hired your own agent to show you the property.  My experience is that if someone wants to see a property I have listed, and they do not have an agent, there is close to a zero percent chance that buyer is a serious buyer.  

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635
Originally posted by @Mindy Jensen :

This question comes out of frustration over the seemingly ubiquitous "We've received another offer, please give highest and best." 

I live in a hot market, and it seems whenever I call about a property, there's always "another offer."

As a listing agent, it is my duty to get the best deal for my client, but it seems like sometimes the other agent doesn't actually have another offer. 

Your thoughts?

 The Bay Area version of this is that not only is there "another offer," but it's "higher" and a "cash offer." Every single time, "better come strong, we have a strong all cash offer in-hand."

...And then 2 days later the seller accepts your offer. Ha.

If all these "other, higher, cash offers" were real, then I as a lender would be out of a job because, if the claims were true, that would mean no one in the Bay Area needs mortgages. At this point it's white noise to me when someone claims there is a "higher all cash offer." It's a lie most of the time, and I know this simply because I'm not unemployed. 

About six months ago I learned that an agent with 6 years under his belt did not know that there even existed a single offer counteroffer CAR form (or that you don't have to use CAR forms for it to be a valid contract...). He thought the multiple counteroffer CAR form was the only way to counteroffer in writing. This means that the agent in question literally did not even know how to be honest when there is only one offer.

Chris Mason, Lender in CA (#1220177) and California (#1220177)
415-846-9211

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