BIDDING WARS

Thanks to today’s strong real estate market, both home sellers and home buyers can expect to face multiple offer situations.

Sellers love multiple offers because they push up home prices. Buyers hate them for the same reason. Both sides wonder how they can come out ahead in these intense negotiations.

Here’s some savvy advice to help you triumph whether you’re trying to sell your home for top dollar or buying the home of your dreams.

ADVICE FOR BUYERS

Ways to Sweeten Your Purchase Offer

QUESTION: How can I make my offer more attractive to the sellers?

ANSWER: Offer the highest price you can. Get pre-approved, not just pre-qualified, for your mortgage and attach a copy of the pre-approval letter to your offer.

Make as large a down payment as you can and provide documentation showing the source of your down payment (e.g., a bank statement).

If your current home is in escrow, provide information about that transaction. Avoid unnecessary contingencies. (Waiving your inspection or financing contingency can make your offer attractive, but it’s foolish.)

Tip: If the equity in your current home is the source of your down payment, make your offer contingent on obtaining financing, but not on the sale of your home.

If your home doesn’t sell, you won’t have the down payment and you’ll be able to get out of the deal under the financing contingency, says Bob Stallings, broker/owner of Re/Max Real Estate Specialists in Long Beach.

Finally, include a personal note about why you want to buy the home. All else being equal, some sellers are influenced by these letters.

Why Lips Are Zipped Over Rejected Offers

Q: My offer didn’t prevail in a multiple offer situation. Can I find out why?

A: Neither the sellers nor their agent is obligated to reveal any information about the decision.

As a courtesy, agents frequently will point out shortcomings of a rejected offer, but without disclosing details of the accepted offer.

“Until a transaction is closed, it’s crucial that everything remain unknown in case that property has to come back on the market,” explained Carole Geronsin, an agent with Prudential California Realty in Anaheim Hills.

“I just sold a property where [the buyer was making] a relocation transfer. A week and a half later, the company decided they were not going to transfer that executive. What would have happened if I had gone around saying, ‘It sold for this amount’? You can’t do that.”

If It’s Already in Escrow, It’s Probably a Bad Bet

Q: Can I submit an offer on a home in escrow?

A: Yes, but agents say you would be wiser to move on to another home, particularly if there are formal backup offers. Even if your offer tops the accepted agreement, the sellers would have great difficulty canceling the escrow.

Dual Agency Depends on Ethical Agents

Q: I want to buy a home I saw during an open house. I don’t have an agent. Can the seller’s agent write my offer, or should I get another agent to represent me?

A: Any situation in which the buyer and seller are represented by the same agent or two agents in the same brokerage company is called a “dual agency.” Dual agency is legal, if it is disclosed.

In a dual agency situation, the agent can’t tell you how low a price the seller will accept, nor can they tell the seller how high a price you will pay.

If there are competing offers, the brokerage manager might be on hand when the dual agent presents the buyer’s offer.

“More [companies] seem to be using that practice just to make sure everybody feels they’ve been dealt with fairly,” said June Barlow, general counsel of the California Assn. of Realtors. “Technically, that broker still represents both parties and the price competition rules still apply.”

Whether you should agree to a dual agency is a tougher call when there are multiple offers than it is when yours is the only offer.

“I’ve seen agents write two or three offers on one house,” Stallings said. “If you are dealing with an honest, ethical real estate agent, you are going to be dealt with fairly and it’s not going to be any different than having multiple offers from different agents.”

Making Certain Your Bid Was Received

Q: My agent says the sellers are getting multiple offers and accepting them only by fax. How can we be certain my offer was considered?

A: The temptation to suppress a buyer’s offer can arise when there is an in-house offer (one from a buyer who is represented by the seller’s agent or another agent from the same brokerage) competing with an outside offer (one from a buyer represented by a different brokerage).

Even though an in-house offer nets a double commission for the brokerage (and sometimes the agent), the agent must present all outside offers to the seller.

Failure to present an offer is a very serious ethics violation. The only exception occurs when the seller specifically declines to consider an offer, perhaps because an offer is being negotiated or the home is already in escrow.

If you suspect your offer hasn’t been presented, your agent can request a written statement from the seller acknowledging your offer. If the written statement is not provided, your agent can call the other agent’s broker or manager.

Leave Deal-Making to the Agents

Q: Can I knock on the sellers’ front door and tell them personally why they should accept my offer instead of the other offers they received?

A: If you happen to meet the sellers during a scheduled showing, go ahead and compliment whatever you like about their home. Resist that urge to pound on the front door, however. This tactic works occasionally, but many sellers strongly dislike having their privacy invaded.

Realtor Judy Sheller, of the Bizzy Blondes team with Re/Max Westside Properties in Culver City, recalled one instance when an infuriated seller actually ripped up an offer from an intrusive buyer.

The agents involved in the deal won’t be too thrilled with your behavior, either.

No Need to Hover While Awaiting Word

Q: Should I wait outside the home in my car while my offer is being presented, so I will be able to respond right away?

A: Years ago, when a seller countered more than one offer, the buyers’ agents would rush the counteroffers to the buyers to get their signature, then race back to the seller’s home or the seller’s agent’s office. Whoever returned first with a signed document would win the race and open escrow. To improve their chances, buyers would wait in their cars outside the home while the offers were being presented to the seller. That way, they could sign any counteroffer and be the first to return it.

New provisions in counteroffer forms have eliminated this silliness by stating that no counteroffer is in effect until it is signed by the buyer and accepted by the seller.

This practice allows the seller to wait until all the counteroffers have been returned before making a decision.

Rejected Repeatedly: Who’s to Blame?

Q: I have lost seven homes in multiple offer situations. Should I blame my agent?

A: The answer depends on why your offers weren’t accepted. “Buyers always jump to the conclusion that it’s the agent’s fault,” Sheller said. “If you’re writing offers on houses in the $350,000 range, and all your offers are for $300,000, you’re not going to get those houses. You need to be realistic.”

On the other hand, your agent needs to know how to operate in this market. “I have been in transactions where had an agent been more savvy and more aggressive, the client would have gotten the property,” Geronsin said.

She recalled one situation when a buyer’s agent called her after the seller had accepted another offer and said his buyer wanted to bid higher.

“I said, ‘I told you we had multiple offers and you had to come in with your best price. You didn’t do it. Now it’s too late.’ That is the fault of the agent,” she said.

Good Timing, Pricing Are the Strongest Bait

Q: How can I make sure my home will attract multiple offers?

A: Hit the market at the right price and, assuming your home is in good condition, multiple offers should come in.

“Sellers see [home prices] are going higher, so they want to go a little higher. Sometimes it works and sometimes it doesn’t. You can end up having to wait for the market to catch up with you,” Stallings said.

Tip: Make sure your listing agreement states that your agent will put your home in the Multiple Listing Service within 24 hours. Some agents will hold a home off the MLS for a day or two in hopes of selling it to a buyer they, or their office, represent. Putting the home in the MLS as soon as possible is in the seller’s best interest because the home then will be exposed to a much larger number of potential buyers.

Greed Isn’t Pretty--and It’s Risky, Too

Q: Do I have to accept the offer with the highest price?

A: No. If you prefer a lower-priced offer, perhaps with a better qualified buyer or more attractive terms, you can accept that offer instead. Or you can give counter-offers to one or more of the buyers.

Caution: If you reject a full-priced offer, you may owe your agent a full commission even if you don’t sell your home.

Being greedy can backfire. Realtor Rae Wayne, the other half of the Bizzy Blondes team, said one seller instructed her to tell all the buyers’ agents that offers would not be considered until the property had been on the market for one week, unless the offer was full price or better.

One agent asked to submit an offer right away, but the sellers, who were hoping for multiple offers, insisted on waiting. A week later, that agent was still the only one ready to submit an offer. “The seller said to me, ‘What if we plan a party and nobody comes?’

“I said, ‘That’s the risk you took when you didn’t want to look at this offer four days ago,’ ” she said.

If you delay, anything can happen, including the buyers losing interest or offering a lower price.

The Pros and Cons of the Fax-Only Option

Q: My agent says I should receive all my offers by fax, rather than having the buyers’ agents present the offers. Is that OK?

A: Some agents recommend the fax-only option. “Very few agents who do a lot of business will [present offers] anymore,” Geronsin said. “Before, everyone would meet and the agents would tell all about their buyers, then everyone would wait while the seller made a decision.”

If there are multiple offers, the fax-only practice is a time-saver for you and the agents.

However, the jury is still out on this practice.

Said Stallings: “I wonder [whether] the sellers are getting the full picture of the buyers, unless there is a cover letter telling them about the buyers’ qualifications.

“It’s hard to really understand [the offers] and make a clear decision. I’m a strong believer that it’s best for both sides to have the offers presented, so the seller can ask the buyers’ agents questions about the buyers.”

Tip: You might want to receive all the offers by fax, then have the top offers presented. Either way, you, as the seller, make the rules.

Consider All Offers, Regardless of Origin

Q: One of the buyer’s agents is from the same brokerage company as my agent. Should I give extra consideration to this “in-house” offer?

: No. All offers should be evaluated equally based on the net price and terms.

“We often have offers on our own listings and the sellers don’t pick ours,” Sheller said. “If my own offer is marginal and the other offer is good, the last thing I want is for my seller to be mad at me. I’m going to look for the best offer.”

Tip: Some brokerages give the seller a commission break for an in-house transaction. This concession is known as a “variable commission” or “listing broker advantage.” It should be discussed in advance and disclosed through the MLS.

Step Carefully Amid Multiple Counteroffers

Q: Can I counter more than one offer?

A. Yes. However, if you accidentally accept more than one offer, you could be legally obligated to sell your home to two buyers.

For safety’s sake, use a standard counteroffer form that says the counteroffer isn’t accepted until it is signed by the buyer and subsequently accepted by you.

No Going Back After You’ve OKd an Offer

Q: Can I back out of my escrow with buyer A and accept a new, higher offer from buyer B that my agent just received?

A: Trying to back out of an escrow is extremely unwise because an accepted purchase offer is a legal contract and the buyer (or seller) can take action to enforce it.

“Legally, once you have signed and agreed to the offer with buyer A, you can’t get out of it,” Wayne said.

“Your only hope would be that the buyer does an inspection and makes a bunch of requests. You flatly refuse everything and perhaps the buyer walks away.”

Who’s at Fault When Buyers Stay Away?

Q: My home has been on the market for four weeks, but I haven’t received any offers. Is this situation my agent’s fault?

A: If you ignored your agent’s advice about pricing your home or making any repairs, it’s not really reasonable to blame the agent for the dearth of offers.

However, if the home is priced right and in good condition, you’ll want to have a frank conversation with your agent and take corrective action.

Never sign a listing agreement with a term of more than three months. As a last resort, you can ask your agent’s sales manager to help resolve any complaints.

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Marcie Geffner is a Los Angeles-based freelance writer. She can be reached via e-mail at mgeff@worldnet.att.net.