Friday, March 23, 2007

In The Catbird's Seat (...on the Sell Side)

I look at the Multiple Offer as being a home team advantage for the Seller in any Real Estate transaction. And it's because of this 'advantage' that the Listing Agent is not only obligated to lend expert advice to his client but obliged to set forth some negotiation ground rules to the other parties involved--i.e. the multiple Buyers making the offers. It's tricky enough when one or more of the parties do not have Buy Side representation but what happens when one of the offers is from the Listing Agent himself--placing him in a Dual Agency situation and a Multiple Offer? (ironically, most of my 'M.O's' have involved female Agents but allow me to use the masculine he/him/his throughout the rest of this post. I'm having a difficult enough time keeping each paragraph in the correct tense!)

Read on as I lay out for you some basic (written and unwritten/spoken and unspoken) 'rules' of the game. If there is ever a time for a Realtor to stay 'on the beam' and 'inside the box' it is when the 'Big M.O.' comes into play. (see my previous post)

Rule 1. The Listing Agent Represents The Seller and while obligated to lend advice to his client, he must ultimately conduct the negotiation as 'he is instructed to,' within the Realtor Code of Ethics and of course, the Law. (Yes, someone could end up in court if dirty doggery comes into play). And do remember, sometimes the Agent is just the 'messenger.'

Rule 2. The Listing Agent Must Let All Parties Know How He Will Be Conducting The Negotiation. Communicate the rules and most importantly, follow them. If everyone is getting a second 'go round' to re-group and re-submit a Highest and Best offer, then be true to your word as a Listing Agent. If for any reason another round is necessary then be fair and above board to all parties involved.

Rule 3. Do Not 'Counter Offer' Anyone. The advantage of being in this M.O. situation (on the List Side) in the first place is you are the only party who knows the details of all the deals. I believe it's best to keep it simple and let everyone come back with their Best. I'll usually advise everyone involved that a third and final round may be necessary and I communicate this as soon as I know for sure that more than one party is making an offer. If negotiation has already begun with one party and in the midst of counter-offering another deal comes in, and if the Seller hasn't accepted and Signed the first contract, then its back to square one. The last counter-offer is generally taken 'off the table' and the 'Highest and Best' rules come into play. If you aren't familiar with what I'm referring to, then read this paragraph again. Everybody hates it when this happens but its the Seller who's in control of the deal at this point.

Rule 4. The Listing Agent Should Be Forthcoming If He Also Represents One Of The Buyers. Dual Agency is an acceptable practice in the state of Illinois but must be followed to the letter of the law. If not, double dirty doggery is sure to follow. Just imagine if one of the deals in the paragraph above belonged to another Buyer of the Listing Agent. Let's just leave that tricky adjunct for another days writing.

Rule 5. Be Timely. None of the parties should be dragging their heels if they are truly serious about getting the deal done. Again, the List side should convey an approximate time when their final decision will be made and the accepted contract 'signed off ' on. Any offer that comes in after a signed contract must be considered a 'Back-Up Offer' only and subsequently dealt with by the Seller's attorney. Oh...and by the way; an offer is in writing. And Signed. And generally with 'Consideration' ($$$ in the form of an initial earnest money check made payable to the Listing Office)

Rule 6. No Contingencies Please. If you are unsure what this means then you definitely aren't 'as smart as a 5th Grader...' And I mean that in the nicest of ways. Pour yourself a glass of wine and go to my Archives.

Rule 7. Don't Grab With Both Hands. Think back to high school English class and the short story, In the Catbird's Seat. The Seller is always in the 'catbird's seat' when a multiple offer comes into play. Be grateful. It's your best chance of getting full price and possibly more. Just don't get greedy and blow the deal up when you are enjoying the 'home team advantage. Remember, in the catbird seat or not...the property still has to appraise.

image by vinylpulse

Geno Petro

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