Andrew Wetzel's Musings

May 15, 2021

All Offers Must Be Received By … and Will Be Presented on ….

The type of Real Estate market produces some creative ways to “protect and promote” the interest of our clients.  The ebb and flow of who has “power” and “leverage” is interesting.  What may work (or frustrate others) in one market may appear insane in another.  That being said, we are required and expected to respect different “business models”.  However, do we have to do as we are told?

Many listing agents use a “Presentation of Offers” form which spells out what they want included in a purchase offer and how they conduct business.  I respect different “business models” and think the concept makes sense but I am left wondering about some of what they expect.  As long as the seller agrees that is fine but some of what I see seems counter-productive.  Here are a few examples:

  • An agent must submit an offer before being allowed to show a property;
  • A buyer must perform inspections before submitting an offer;
  • Do not have any contingency expire on a weekend or holiday.  If you do, add language to the agreement stating that the time frame is extended to the next “business day”. What exactly is a “holiday” anyway?;
  • Offers received after 5pm will be presented to the seller the next morning;
  • Offers received after 5pm on Friday will be presented to the seller on Monday;
  • Offers are to be submitted at a “specified time” and will be reviewed at a “specified time”.

Respectfully, if a seller agrees with any of these or other terms, perhaps that is their wish and their choice, that is fine but some of these make me wonder.  Real Estate is not a 9-5 job although it should not be 24/7 either.  I guess it all comes down to the type of market.  The question is:  do we have to comply?

We are in the hottest seller’s market I have seen in years.  Every house seems flooded with showings and multiple offers which, combined with the pandemic, many sellers and buyers are finding very frustrating.  To accelerate what I refer to as the “second step” to selling or buying Real Estate, the “third step” being when an offer is negotiated, some listing agents are doing one of two things to generate immediate interest.  They start showings at an “open house” or use a “Coming Soon” strategy to make buyers salivate before they can legally get in.  Both can work but may be creating a frenzy that will not play out as expected.  Some buyers are making offers “sight unseen”, waiving inspections and/ or going well over asking price, all in an effort to beat real or perceived “competition”.  Some agents just make their listings “active” and let the fun begin.  Th market will change.  It always does.

Some agents take this a step further and advertise when offers are due and when they will be presented to the seller.  These are bold steps that must be managed.  I find it interesting when a property listing expires unsold or a contract gets canceled and the listing agent neglected to remove language stating that offers were due and would be presented weeks or months ago.  OOPS!

Let’s suppose I activate a listing on Friday, state that offers are due by Monday at 3pm and will be presented to the seller at 7pm.  Pick any days of the week or time frames you prefer.  What happens next?  Compliant buyers and their agents will honor the listing agent’s instructions assuming they will be followed.  But will they?  Suppose they aren’t?  Some agents will try to submit offers after 3pm.  Does the listing agent say NO?  Is that buyer or agent penalized for being late?  Suppose the buyer agent has difficulty reaching the listing agent to say they have an offer or has trouble getting it to them?  We do so much electronically these days so that should not be a problem but it can be if there are Internet or equipment issues.

Suppose I have a buyer who does not like competition, may have lost out on one or more other houses they really wanted to own or they just want a quick answer so they can pursue other options before they sell?  What should I do?  I would submit an offer as soon as I can and, if my buyer is willing, we can make it expire prior to the 7pm deadline.  Listing agents are required to submit all offers in a timely manner.  While it is possible that their seller has said not to present anything before Monday at 7pm, if I were the listing agent I would let my sellers know that I had something, especially if it is compelling.  Suppose the seller says they want to accept the offer that came in early?

Buyers and their agents who were in the process of meeting the 3pm deadline have every right to be upset but did the listing agent do anything wrong?  Suppose a seller signs an offer before an “open house”?  At the very least, if my seller decided to sign an offer earlier than we advertised, I would let agents know what happened to be transparent and fair.  I would not want to waste their time and effort.  You never know, something could happen with the accepted offer and we may need to resume showings.  Perhaps a buyer is willing to provide a back-up offer.

Multiple offers are common these days which sounds nice but explaining them, evaluating their differences, responding to them and selecting the “winner” can be more complicated than it seems.  Are they taken at “face value”, which means that no one is provided an opportunity for a “second chance”, or are all or some “negotiated”?  What happens if they only “entertain” a few of them?  Even with multiple offers there is no guarantee that a seller will get what they want but they might learn the market’s perception of value.  Sellers determine the price but buyers determine the value.

What happens when the “sight unseen” buyer finally sees inside or the buyer who waived inspections questions the condition of the property or what the seller disclosed?  What happens when the appraiser files their report?  The “creativity” that secured a signed purchase agreement does not guarantee a deed transfer.  Real Estate is like 3-dimensional chess compared to a basic retail transaction where I pay you and I get my purchased item right away.  Real Estate provides “delayed gratification”:  every day until settlement may offer an unpleasant surprise.  It is never over until the seller has the buyer’s money and the buyer has the seller’s keys.

Even in “normal” markets, which generally means 3-6 months of available inventory, depending on what you believe, things can get contentious.  While we generally “cooperate” with each other, this is a competitive industry.  Only one buyer gets the house.  Buying or selling Real Estate are emotional decisions justified with logic.  Putting in the time and effort to buy or sell Real Estate requires commitment and exposing yourself to potential frustration.  They are not things most people do every day.  What one person thinks is creative can have quite a different reaction from someone else.

REALTORS have to manage expectations.  We need to explain the process of buying or selling to our clients.  We have done this before.  The consumer has 24/7 access to endless amounts of data and information, including television shows, but it takes an experienced, trained and educated professional to add two secret ingredients:  knowledge and insight.

When it comes to buying or selling what is likely your largest asset and biggest investment,

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

Multiple Offers: Two Different Opinions

Competition and multiple offers seem normal these days.  Your opinion about them probably depends on whom you represent and your personal experiences.  They do not guarantee success for a seller but make it harder for buyers and their agents.  I recently heard two very different opinions about them.

A buyer’s agent, frustrated by losing yet another bidding war, told me that multiple offers are the result of pricing a property too low.  I guess that makes some sense, pricing it higher might reduce the amount of competition but is that best for a seller?  Would that result in their seeing the highest and best possible offer?  Who knows?  There are a few things I think I can say in general:

  • Competition tends to produce the “highest and best” offer, even if it is not what a seller wants.  When there is only one offer a seller may think a better one will come later.  They often do not.
  • Looking at and comparing multiple offers can get tedious, especially if they seem repetitive.  I have had several listing agents tell me that, at some point, their seller stopped reviewing additional offers.  Presumably, they had at least one they liked but that concerns me.  A buyer agent who shows a house and takes the time and effort to prepare an offer should be able to trust that their buyer’s offer was considered.  We have forms to confirm that but the bigger picture is that offers not presented may be better than what a seller accepts and that those that “appear” uncompetitive may just be a starting point for a buyer who really likes a house.
  • Some agents actively encourage a flood of showings hoping for multiple offers and a quick sale.  There is nothing wrong with that but it creates an environment that must be managed.  What is the goal?  I assume it is to shorten the marketing time and to get the “highest and best” offer that will appraise and close.  The real dilemma may be knowing whether to accept an offer or question whether it will appraise.  What if it doesn’t?  Having a pre-listing appraisal may help but may not be ideal, especially if the market is rising.
  • While there is nothing wrong with multiple offers, I think it places some responsibility on everyone involved.  Our clients must be advised of the advantages and disadvantages.

This agent was frustrated with writing offers that failed and having to start showings again.  Imagine being a buyer who loses your preferred new or “next” home to competition, especially if it happens again and again.  We are in perhaps the best sellers’ market I have ever seen and its major attribute, if you  want to call it that, is that the number of buyers far exceeds the number of available properties.  While this does not mean that every property will sell, every buyer will not get a house.

Another agent posted on social media that a buyer’s agent who writes offer after offer is not doing their job.  I would love to have these two agents in the same room.  While I do agree that some agents do not adequately prepare their clients, both buyers and sellers, for what is likely to happen in this market, every buyer will not be able to buy a house.  There is a supply problem.  Buyers can adjust their needs and wants and pursue a house that is not selling but will they?  If multiple buyers want the same house, only one buyer will get to own it.  Does that mean that every agent who represented an unsuccessful buyer failed to do their job?  NO, but it could.  In a multiple offer situation, a buyer  may want or need to make their “highest and best” offer rather than assuming they will get a second chance.  A buyer agent has to present what they are given but the buyer decides their terms.  Doing the same thing over again is not a formula for success but let’s not assume that the buyer’s agent did anything wrong.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same.

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