Ethical to say you have a full price offer?

Question

Matt Lefebvre · Answer

I believe it is ethical to tell them you have an offer.  Not necessarily a full-priced one.  You generally should not disclose the amount (and by saying it is full-priced, you are sharing how much it is for) to others.

John Horner · Answer

I agree with Jeff, we have had this happen.  We wait to sign the contract and let all the showings know what we have.  It weeds out the not so serious buyers but you may create some competition as well!

J Scott · Answer

This is likely a rule of thumb that listing agents follow because they have a fiduciary responsibility to their client, and generally speaking, disclosing the amount of an offer is bad negotiating.

So, while I see absolutely nothing wrong with the seller disclosing the offer amount if s/he wants (it's their house, they can say whatever they want), I agree that it's not a good negotiating tactic.

Tell the other buyers that you have an offer-in-hand and you plan to make a decision on the offer in [INSERT YOUR TIME FRAME HERE]...so they can view the house and decide if they want to make an offer as well.

And all good responses above...

Russell Brazil · Answer

@Brandon Nappi This is a question that you should ask your broker.  In my local jurisdiction you are not supposed to disclose how much an offer is for, only that you have an offer in hand or the amount of offers you have.

What I would do in your case is I would contact all the people with scheduled showings and tell them to move the showings up ASAP and let them know you have an offer in hand the seller is considering.  This would likely generate offers with escalation clauses.

Bryan Hancock · Answer

It is generally always ethical to tell the truth.

Whether or not you should disclose the amount is up to you though.  Just ask all the other bidders for their highest and best.  The highest price isn't always the best offer.

Ed W. · Answer

Brandon, what follows, while not a direct answer to your question, may be helpful. My reply assumes you have not yet accepted that initial offer.

First, 14 showings indicates a very hot market or, at least, a very popular type of property. You have an excellent opportunity to get a very good feel for the value the marketplace of buyers places on the property and how well the property is received. Maybe you’ll get multiple offers or maybe you’ll find out you got lucky (An acquaintance turned down the first buyer to look at their property. That buyer offered 99.5% of ask. That offer turned out to be the only offer my friend received for a year).

Second, if you haven’t accepted the first offer, I don’t believe you have an obligation to change anything you have set up. The people scheduled don't know when you received that offer.  It could have been texted to you while they were walking through the property.

That said, what I would do going forward would depend a lot upon how solid I believed that initial buyer is and how reasonable or not their contingencies are and what, if any, seller assistance they are looking for.

Have you vetted them thoroughly? Do you have a good understanding of their cash position, their credit, their other debt and monthly payments, their income stability and reliability, their job reliability, etc.? In short, do you really know that they can perform and are likely to perform?

Are their contingencies minimal and reasonable?

Is their full price offer offset by any buyer costs you have to pay?

If the buyers who made the initial offer appear solid as a rock and have reasonable contingencies I’d probably be inclined to suggest to others who want to make an offer that for you to consider their offer(s) they would have to be above asking price and you can politely suggest that fewer contingencies and more buyer-paid costs would receive favorable consideration. In the alternative you can take backup offers from well-qualified buyers that tie up the backup buyers for n weeks if the contract language is solid and there is a reasonable EMD (that is not refundable ?) if they bail before n weeks.

If the buyers who made the initial offer are questionable, even an offer less than full price from a very strong buyer (e.g., an all cash buyer with few or no contingencies) might be the better alternative. You might, in this circumstance, be able to hold onto the initial buyer as a back-up if they are strongly interested.

There are other possibilities but I think you get a sense of the types of considerations you can apply.

Jeff Rabinowitz · Answer

Yes. That may lead some people to cancel their showings but the property may be priced low and you may get a higher/stronger offer this weekend. If you have accepted the first offer you should say that so people do not waste their time.

Russell Brazil · Answer

I do not typically do this on a listing, but I know agents who do. Say they have 4 offers in hand. They will call each of the 4 buyers agents and tell them they have 4 offers in hand and ask them to submit their highest and best offer. This could drive the price up even more.

What I typically do what I know will be a hot listing....I list on Wednesday or Thursday. I have an open house for sure on Sunday, and sometimes on Saturday. I let the other agents know that offers are due by Tuesday at noon and they will be reviewed Tuesday at 8pm, and that we expect multiple offers. This takes a lot of the back and forth away from the whole equation.  When I do this I am almost guaranteed to get offers with escalation clauses.  Again this is for hot listings.  I might do this for a listing in Petworth, Logan Circle, parts of Rockville. I do not ever do this when I have a listing in Montgomery Village or most of Gaithersburg. (These are cities and neighborhoods in my market)

Ethical to say you have a full price offer?

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