"Multiple Offers" are Realtors Blowing Smoke?

Buying & Selling Real Estate
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"Multiple Offers" are Realtors Blowing Smoke?

Jim Zatko
Investor · Muskegon, MI · Member since 2014 · 71 posts · 29 votes

I live in Michigan just north of the state line from Toledo, OH. I just flipped and am currently renting out a house in Toledo. And I'm looking for another house to flip. I found one here in Michigan on the MLS in a little town called Summerfield. There isn't a lot of investor completion in this town. Anyway... This house has been on the market for about 10 days or so. I walk through and make an offer yesterday. AS SOON as my realtor contacts the agent to submit an offer, my realtor calls me back and says, "there are 2 other offers that just came in, you need to submit your best and highest offer". Why didn't the agent tell my realtor when she called to see the house? It just seems to me like these realtors, just say things like that to try to make a fake bidding war. It's kind of laughable. I re-cruunched the numbers and offered $2,000 higher. It's still a really good deal. I was just curious if you guys run into "phantom bidders" or houses that have been on the marked for weeks, and all of the sudden have multiple offers when you make an offer?

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Mike Sattem
Investor · La Grande, OR · Member since 2014 · 194 posts · 176 votes
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Hi Jim,

I am a Realtor and an investor and have been in this situation on both sides. I am sure it changes from state to state, but in my locale making any kind of misrepresentation such as a fake multiple offer situation, could result in a fine or loss of license. However, on my personal residence, when I wrote an offer and was told there were multiple offers, I decided to increase my sales price, only to find out that the "other offers" were $20,000 less than my original offer. Long story short I gave the sellers an extra $5K because I got scared. So, trust your Realtor when they say there are multiple offers, but definitely stick to your initial valuation, and do not let your desire to "buy this house" get in the way.

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  • Kimberly T.
    Investor · Colorado Springs CO · Member since 2014 · 535 posts · 253 votes
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    I'll give you my experience on buying/selling several properties in the last few years:

    We made an offer on a fourplex that just got listed next door to a fourplex we already owned.  Inventory was fairly low and it was a decent deal, so we weren't surprised to hear there was another interested party (not sure if they'd made an official offer yet).  The seller countered our offer, and we accepted it since the numbers still worked and never heard anything more about the other interest/offer.

    My brother and I listed our grandmother's house for sale.  The market was still pretty hot, and we'd listed it a little below what we thought we could get for it because we wanted to make sure to sell it within that tax year rather than try to squeeze a few more bucks from it.  We got about 5 offers within the first few days of listing it (most of them over asking), and our agent told the last one that there were multiple offers and that offer ended up being the highest; we went with that offer.

    A fourplex got listed that we were interested in, and it was in a really good part of the town we were looking at.  We made an offer a little below asking, then heard that there were multiple offers but decided not to raise our offer price.  It went into escrow, so we figured there must have been a higher offer, but then a few days later we heard that buyer backed out and the seller wanted to know if we were still interested, so we ended up buying it at our original offer price.  So, win-win for us, because we ended up getting the property but didn't have to raise our offer price.

    I have sometimes wondered that myself, whether they're really being honest about having multiple offers, but like others said, it's impossible to prove they're lying.  You just have to make a judgment call for each property and decide how you want to proceed.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
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    While I know highest and best is an industry norm, I don't play that game on the buy side.  My original offer is my highest and best offer.  I resubmit it when asked "for highest and best".  Sometimes I try to sweeten the terms (shorter closing date, more EM into escrow), but I stay with my purchase price. Sometimes they get accepted.  I track most of what I make offers on to find the final sale price. It's a rare property that it sells for a price I would have been willing to pay.

    On the sell side with listed properties, I let my agent play that game because that's his gig. For the many properties I've sold without an agent, I've never once done that to buyers.  I countered with what I wanted or I rejected the offer.  Highest and best is a head game.  Do onto others.....

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  • Jim Zatko
    OP
    Investor · Muskegon, MI · Member since 2014 · 71 posts · 29 votes
    11y
    Originally posted by @Account Closed:

    While I know highest and best is an industry norm, I don't play that game on the buy side.  My original offer is my highest and best offer.  I resubmit it when asked "for highest and best".  Sometimes I try to sweeten the terms (shorter closing date, more EM into escrow), but I stay with my purchase price. Sometimes they get accepted.  I track most of what I make offers on to find the final sale price. It's a rare property that it sells for a price I would have been willing to pay.

    On the sell side with listed properties, I let my agent play that game because that's his gig. For the many properties I've sold without an agent, I've never once done that to buyers.  I countered with what I wanted or I rejected the offer.  Highest and best is a head game.  Do onto others.....

     Great insight, Thanks!

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  • Account Closed
    Real Estate Investor · San Diego, CA · Member since 2015 · 7 posts · 0 votes
    11y

    I definitely have to agree with a lot of people on here. You never know if they are blowing smoke or not; However, I do know that since the GFC, America transformed into a highly litigious and highly regulated country. There are a lot of things that realtors cannot do. Marking up the prices on a property would be one of them. Who would want to even risk 5+ years in prison for a measly extra $200? That's nuts. 

    Wish you the best of luck Jim. 

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  • Jim Zatko
    OP
    Investor · Muskegon, MI · Member since 2014 · 71 posts · 29 votes
    11y

    To follow up with everyone, I didn't get the house, so the realtor wasn't blowing smoke. HAHA. The asking price was $45, 000. I bid $35K, and I raised my bid to $37K. 2 people out bid me and one of them bid higher than asking. There was a lot of work to do, and the ARV was only like $105K. One big red flag was the basement was all wood, and had a leak in the basement wall.

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