When Competing it’s Important to Make Your Best Offer
Recently we had three offers to present to the seller of one of our listings. As required in Ontario, our salesperson informed all buyers, through their sales representatives, of the following:
- The number of competing offers (in this case three), and
- That one of the buyers was represented by another salesperson within our brokerage.
So each buyer, through their REALTOR®, was given the opportunity to make their best offer. On presentation, the seller had the following three typical choices:
- Accept the best offer with respect to price, terms and closing date,
- Counter one of the offers or
- Reject all three.
Seller was also informed of a fourth option.
He could request that all three buyers improve their offers before deciding which offer to accept or deal with. About this option, Mr. Joe Richer, the Real Estate Registrar of Ontario has stated, “Sometimes a seller will give one or more buyers a chance to ‘improve’ their offer, but you may get only one chance.”
This alternative, however, comes with a risk.
One or more buyers could decide to opt out of the competition. In turn the remaining buyers would again have to be informed of the number of offers left standing. In this case, if two of three were to opt out of the competition, the remaining buyer would have to be informed that he is no longer competing, which could offset his comeback to the seller.
Losing out often leads to frustration and misunderstanding.
In today’s seller’s market, competing offers are common, and since a house can only be sold to one buyer, it can cause frustration for those who lost out. It can sometimes result in misunderstanding regarding the rules of the game for buyers and even their representatives, especially when they have lost out before. In this case, the seller decided to accept the best of the three offers, and one buyer’s agent got upset. She adamantly argued that the seller was obliged to ask all buyers to improve their offers. This is clearly not the case. As mentioned, this is an option and where she got this information is a mystery.
Arguing about nonexistent rules won’t change matters.
The buyer’s salesperson continued to argue her position with the listing agent’s broker of record. To no avail, the broker made numerous attempts to make her understand that only the seller chooses how to respond. No rules exist obligating the seller on how to treat offers after presentation.
Seldom does a seller use the “improve your offers” approach. The best offers are usually already on the table. This salesperson should have stressed to her buyer that, because he might not get a second, he should make his best offer at the outset.