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Multiple Offers, Counter Offers, and Multiple Counter Offers

I’m sure some of you are laughing at me and saying – “How out of touch is she? The real estate market is in the tank and you’re lucky to get an offer no less multiple offers”.  Well there are some areas and segments of the market where that applies, but we are seeing more and more markets where inventory is very low and buyers are gaining confidence.  In fact, I just spoke with an associate last night who invests in Las Vegas and he told me that inventories there have gone from 30,000+ to only 6,000 and everything has multiple offers.

So what happens when there are multiple offers? How do sellers deal with this and what can buyers expect?

Most of the time one offer doesn’t stand out so clearly that a seller will just accept it. The seller will give the other offers that are close an opportunity to better their offers, so that they can get the best price and terms. This is where a good broker can be of value, multiple counter offers need to be handled with professionalism that makes the experience fair yet competitive.

I said price and terms because many times price isn’t the only or most important factor.  Frequently when there are multiple offers one buyer may have the best price but not acceptable terms (e.g. a very long escrow or the purchase being contingent on the sale of their home); whereas another buyer may have desirable terms (e.g. all cash and a 15 day escrow) but the price is low.

So if the seller wants to counter both offers, what is the process?  Counter offer A will say something like “will accept offer at the stated price, with a thirty day escrow” and Counter offer B will say something like “terms are acceptable, with the price of XXX.”  Note that the counter offers don’t have to be the same.

This is a simple example; there could easily be more offers the seller would counter.  So with multiple counter offers how does the seller choose one? “Back in the day” the rule was: the first signed and accepted counter offer back would win.  Those were the days when you could find buyers and agents sitting outside the property waiting to sign and return the counter first.

In most states the system has been changed to accommodate multiple offers.  Two things are typically done:

1) A paragraph is added that reads “MULTIPLE COUNTER OFFERS: Seller is making a counter offer(s) to another prospective buyer(s) on terms that may or may not be the same as this counter offer.  Acceptance of this Counter Offer by Buyer shall not be binding unless and until it is subsequently re-signed by seller.”

2) Multiple Counter Offer Signature Line – this allows the seller to accept the counter offer.  The seller has made multiple counter offers but none are binding until the seller signs the second signature line.

Using these systems to handle counter offers and multiple offers can also back fire.  It is a risk.  Some buyers will say, “I don’t want to get into a bidding war,” and will drop out altogether.

The agent/broker has the responsibility to their client to get the best and highest offer for the property.

As the market continues to heat up and inventories stay low we could be seeing more and more of these multiple counter offers.  The smart investors will continue to look for ways of finding properties that won’t have this kind of activity. In the Professional Real Estate Investor Class we teach strategies of finding properties that aren’t on the market to eliminate this kind of competition.

Great Fortune

Diana Hill


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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