Perhaps the only thing that sellers more fervently desire than a high offer is multiple offers.
Multiple offers imply a bidding “war,” in which buyers fall all over themselves trying to impress sellers.
While it is true that multiple offers almost always benefit sellers, disclosure of multiple offers may not be such a good thing.
They can cause a buyers’ retreat that makes swimmers look relaxed in seas suddenly filled with Great White sharks. Many buyers just won’t stand for the competition, though they may be the same enthusiastic bidders on antiques or paintings at an auction.
Having learned that there already are offers on their dream home, some buyers won’t even submit their own. If other offers come in subsequently, they may be moved to withdraw their offer or refuse to improve it.
They don’t like to feel manipulated, don’t have a strong stomach or don’t shrink from trying to teach the seller a lesson. However, I contend that such buyers are only self-defeating.
Buyers in such situation serve themselves well by appreciating that numerous factors can influence sellers, and price is just one of them. Among others are the bidders’ financial resources, apparent motivation, likely appeal to a co-op board and inclusion of contract terms such as contingencies or proposed settlement dates.
The point is that the existence of multiple offers is not the best reason for buyers to walk.
At the same time, sellers need to appreciate the possible consequences of disclosing their existence. And because real estate brokers are bound to protect the confidentiality of the clients they represent, the decision to disclose does not belong solely to the sales agent.
The disclosure of multiple offers is insider information, a material fact. Before disclosure, sellers must release brokers from their fiduciary duty of confidentiality.
Although that disclosure must be carefully considered and thoroughly discussed. I suspect that most brokers believe it always is helpful to the seller to offer information about multiple offers.
The question is whether they consult their clients before doing so. They should.
Tomorrow: One broker, two guvnors
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Licensed Associate Real Estate Broker
Senior Vice President
127 E. 56th Street
New York, NY 10022