Let’s review how some listing agents have been handling their bidding wars in 2021.
- Ignored a $60,000 non-refundable deposit and took an offer that was $40,000 lower.
- Once they get to the highest offer, they insert their own buyer at the same price.
- Let an escalation clause determine the winner, and ignore the others.
- Counter for highest-and-best, then pick a winner before everyone responds.
- Not respond at all.
There are no rules. No guidelines. No laws.
The best our association can do is to issue a spreadsheet form.
Thus, anything goes.
Here’s how I handle it.
The home on Galena Canyon had originally listed for $1,599,000 and had 25 showings and six offers over the first weekend in March. We had three buyers (one was contingent) who were willing to pay around $1,750,000, so I asked the two non-contingent buyers to make their second highest-and-best offer to determine the winner – which they did, and $1,770,000 won it. I changed the list price in the MLS to $1,770,000, and marked it pending.
Last Friday morning, the buyer had an unforeseen glitch, and we fell out of escrow. We go back on the open market for Easter weekend, hoping for the best – knowing that the urgency is much higher when the listing is new and fresh.
I had added this to the confidential remarks:
Since we hit the market, these have happened: 16175 Deer Ridge 3,451sf closed for $1,775,000 on March 1st. 15288 Cayenne Creek 3,877sf closed for $1,800,000 on March 30th. 16342 Cayenne Creek 3,446sf pending, listed for $1,825,000. 9716 Wren Bluff 3,780sf pending, listed for $1,835,000. Plus Mark listed one for $2,795,000 around the corner. Built-in equity!
This time, we had six showings and three offers over list, which I thought was pretty good.
I had told the agents to make their highest-and-best offer, and while they were all competitive, I thought there might be more gas in the tank. So I politely asked all three to H&B again, and one emerged from the others by packing another $40,000 onto their first offer.
We are in escrow at $1,840,000, after starting at $1,599,000 a month ago.
Isn’t that the result you’d like to see for yourself, or someone you know?
It is not a given how listing agents handle a bidding war. Most agents just grab their favorite, and turn off their phone. You deserve better.
If you, or someone you know, is thinking of selling, I’d sure appreciate a call!
Sincere question…why did you change the list price after accepting the contract the first time around?
market is insane. Never seen anything like it. Not in 2004/2005.. not in 2012-2014.. never…
no appraisal /inspection contingencies?
@Andre
I was living/working in the SF Bay Area from 1998- 2003. No appraisal/contingencies were normal up there during this time frame. Those Bay Area buyers are now down here throwing their weight around.
Sincere question…why did you change the list price after accepting the contract the first time around?
Another agent had done the same previously and it helped with our pricing strategy. I thought our much-higher price would be good for other agents to know when working with their buyers and sellers.
If the price only goes over list by a few points, it probably won’t change much for others. But 10%+ over list is worth noting.
market is insane. Never seen anything like it. Not in 2004/2005.. not in 2012-2014.. never…
The only thing close was in 2009-2010 with our bank-owned sales. We would get 10-30 offers and most of them were cash. But it was a low-end investor market from $129k to $500k.
There aren’t as many cash offers now. Buyers are almost all owner-occupiers, especially at the higher price points.
How was 2009-2010 for you in Las Vegas?
Why would ask for highest and best and go back at them? I tell agents no games, come with your highest and best offer and we will choose the best offer for the seller at this day and time. No exceptions. I would be so pissed as a buyers agent being told to bring our highest and best and we were the highest only to get a call from you to sweeten the pot again after being told to bring my highest and best. Like you said no rules.
You should remove emotion. It’s just business.
Why would ask for highest and best and go back at them?
Thank you Bill for speaking up on behalf of the vast majority of realtors who wouldn’t even think of considering another method, and instead just stick to playing God so you get to decide the winner, and not the market.
I could explain it further and even give you my exact lines, but why bother?
Agree with you Jim. Sometimes when you are in unchartered waters you gotta be open to trying new things.
I think people are missing the bigger story here though.
Either the seller’s left a lot of money on the table the first time or the market just jumped almost 4% in under 30 days and my money is on the later.
Mine too.
I had 4 pendings and 4 sales that I gave the appraiser today, and he said “no problem”.
He was an old guy too, and said he’s never seen anything like this.
But how about this comment.
He said he hasn’t had a problem bringing in an appraisal at the purchase price this year!
Why?
“Because there have been so many sales”.
We’re in that part of a frenzy where increasing sales help to goose the velocity – and prices can rise faster because there are more recent comps.
Jim: I’m not playing God just trying to understand your logic. You are also on the other side representing a buyer and ask the agent how he or she is going to handle multiple offers. They say bring your highest and best. I guess you did not say bring your highest and best and we will choose the best. You left it open to come back at them for more money even though they gave you their highest and best. There is a small risk the highest just cancels the offer, but probably not in this market. Fair enough. I guess you would be cool with the agent if the tables were turned and you were the buyers agent. Having to tell your buyers we were the highest but the agent asked all the offers one more time to submit the highest and best and we lost. Don’t get mad, I like your blog and what you have done for me. There is no right answer, ok back to my cave and I will read and not comment. Thanks
There is no right answer
I think there is. While I think my history as a REO listing agent allowed me to feel a similar environment previously, it is primarily due to getting my head caved in as a buyer-agent every day that gives me an appreciation of what should be delivered as a standard process.
Give me a clean shot at selling the home.
That’s all.
I go back to each agent and tell them to their face that they are going to lose. It’s out of respect. I want to give every agent a chance to make a living. If they can convince their buyer to pay more, than good for them – they are real salespeople who can demonstrate value. Their buyers wouldn’t pay it otherwise.
If they don’t raise their offer, then fine, and thanks for playing.
But if the thought of losing the house is unacceptable, then at least the buyer has a chance of doing something about it, rather than just receiving the Dear John letter and having no chance to respond.
It’s the main problem with the current environment.
Once an agent gets to play God and select the winner, it becomes addictive. It’s an ego boost. It feels like success.
Agents don’t have that happen much, so when falls in their lap, then it feels good, and they want more of it. Or they just get lazy and literally want to pick a winner and turn their phone off. I’m sure that sounds ridiculous to consumers who wonder what these agents do to make $25,000 to $100,000 commissions, but honestly I don’t get it either. They do what’s best for them.
People are probably aghast at the thought of me calling out the reality. But it is the truth, and all we need is to cause the agents (young or old) who want to compete in the future real estate environment to embrace auctions as the answer.
I know, it’s all I talk about. But auctions are the fairest way to sell real estate. I just want fair. For everybody.
You should remove emotion. It’s just business.
Yeah ok but when you devote 60 hours per week for 52 weeks every year to the cause, then it can get personal.
But I don’t think I get emotional here.
I’d like you to do business with me. I think it’s a fair trade. I will produce interesting real estate content to help educate you about real estate for the rest of my life in exchange for me helping you buy and sell real estate for a commission. You’re going to pay a commission either way, why not let me help you? At least I do something for you along the way. What do other agents do? Send you a mailer about their recent sale?
You should remove emotion. It’s just business.
I re-read this today, and agree with taking the emotion out of the process. It’s a little tricky because buying a home is known to be emotional, but the buying process doesn’t have to be.
You should remove emotion. It’s just business.
was in response to:
“ I would be so pissed as a buyers agent “
I kicked the crap out of that one, didn’t I?
JTW Auction Company.
Are sellers ready for that? Auction used to mean you were giving it away!
I need to work on the messaging.
I would market it as follows:
“We have the ability to sell your house the traditional way or auction way depending on the market conditions; it’s your choice and I will help guide you through the process.”
This market is an auction market. There is no debate about that. It’s a fact.
However, the auction market does not sit well with the pocket listing agents. I would sell against that. “Are you REALLY getting top dollar? The auction won’t lie. “