Multiple Offer Negotiations and Renegotiations

Contrary to what one might expect in this time of soaring interest rates and inflation—and amidst a less than encouraging political climate—we are seeing multiple offers proliferating across pretty much every price range and every category of our current crop of listings. 

The multiple offer is an aspect of the real estate journey that can bring out the best and the worst in people as it helps define both the principals and their agents in how they conduct themselves. And the dynamics between the parties often come into play not only during the initial offer but also at the contingency removal phase after the buyers have had the opportunity to get to know the property a little better. 

Taking a look at a few current situations underway shows how different a path each can take on the way to its eventual outcome.

In the case of a mountain property where the buyer raised a combination of some legitimate and some unsubstantiated issues with clearly inflated bids, we are able to get them to reduce the final concessions down to $55,000 from their original request for $180,000. 

This was achieved in part because we were able to resurrect discussions with another interested party who had submitted a competing offer but had never entered into a formal backup position. 

In another more friendly negotiation on a beach property, where the buyer and seller had developed a cordial connection in the course of their initial negotiations, the buyer initially overbid the property to encourage the seller to accept their offer prior to the intended offer review date. 

When it came time to remove contingencies, the buyer proposed a lump sum concession based on a combination of prior disclosures and new discoveries that came up. 

Here, despite the fact that the seller had a higher backup offer in the wings, she agreed to meet the request halfway in the interest of cultivating a friendly and fair result, and without risking a repeat of the process with the backup buyers. To her, the savings in time and emotional energy outweighed the prospect of getting higher proceeds. 

As well, she considered the fact that, under the mechanism of the industry standard Purchase Agreement that was used, the buyer reserves the ultimate call on whether or not to proceed with the seller’s response before a seller can switch over to the backup offer. 

In other news, on our listing of an assemblage of properties slated for high-density residential development, we are sending out a detailed questionnaire to vet multiple parties who have submitted competing offers, where the selection will be based as much on the credentials and experience of the buyer as it will on the terms of their proposal.  

Ultimately each outcome depends on a broadly varying range of factors, and in real estate as in business, or for life in general, there is not a set playbook to turn to when you find yourself in a multiple offer scenario. Rather, you have to read the room and understand where the leverage and motivations for the other party lies. 

And it often helps to pay attention to factors which may not be readily apparent to the untrained eye.