How Can Two Offers on a Listing Happen at the Same Time?
Question: How Can Two Offers on a Listing Happen at the Same Time?
A reader asks: "My wife and found the perfect home to buy. This listing was for sale for six months with no takers. So, we made an offer just below the asking price. Then, the listing agent called our agent to say she has received another offer from another buyer. Is she lying to us to try to get the seller more money? How can two offers on a listing happen at the same time? We think something is not right."
Answer: Two offers on a listing -- even on an overpriced listing that's been on the market for a very long time -- is a common occurrence. It's not unusual for a seller to receive more than one offer, known as multiple offers, but as a buyer, it's a tough spot to find yourself in.
I'm also sorry that somebody else wants to take your house away from you, and I can understand how frustrated you must be feeling.
It's an odd phenomenon that a home can sit on the market for months and months without any offers, but the minute an interested buyer comes along, so do a handful of others.
Here are a few ways that two offers on a listing can happen:
Agent Incentive for Multiple Offers
First, realize that while the agent has a legal and very important fiduciary responsibility to the seller to obtain a higher price, that higher price won't put a lot more money into the agent's pocket. Many agents just want the listing sold at an acceptable price to the seller.
Here's an example:
- The list price is $200,000.
- The listing broker's commission is 3% or $6,000.
- The listing broker gives half of that, $3,000, to the listing agent.
- If another buyer offers to pay $205,000, the listing agent would earn only an additional $75.
Two Offers on Dated Listings
Inventory, that is, active listings for sale, changes constantly. When inventory falls, that drives up the competition for the remaining homes on the market. Homes that buyers passed up last month could turn into hot commodities this month because the selection is low.
Your parameters for a property search most likely will easily match those of more than one buyer. In other words, you're all looking at homes at the same time with the same set of criteria, so you're touring the same homes.
If you really want a home, odds are several other buyers will want it as well. That's a good reason to act swiftly and not "sleep on it" overnight, because when you do, another buyer can step in and snatch it away from you.
Two Offers on New Listings
New listings attract a lot of attention within the first several weeks of coming on the market. Interest tends to wane after that period and showings will decline.
Most multiple offers happen on newer listings with fewer than 14 days on market. If the home has curb appeal, is priced right, in good condition and located in a desirable neighborhood, many buyers will want it.
- Submit an offer quickly.
- Don't give the seller more than 24 hours to respond.
- Allow your agent to accept delivery of the offer for you.
- Do not give the seller a reason to make a counter offer.
Two Offers Between Listing and Selling Agents
Sometimes the listing agent has a "pocket" buyer, that is a buyer who has instructed the agent to call when another offer arrives. In this instance, the listing agent might share details of the first offer with this buyer so the buyer can write a better offer than yours. Your agent should ask the listing agent if the other offer is from that agent's buyer because it could make a difference.
- Your offer could be less than the second offer. You might want to consider increasing your offer.
- If your offer is not less, the listing agent can increase the seller's net proceeds by reducing the listing agent's portion of the commission. Some MLS note if the commission is variable in the listing. Ask your agent to check and take that into consideration when determining your offering price.
- The listing agent might make the second buyer appear stronger because the listing agent knows more about that buyer than you. Write a letter telling the seller about yourself, and include it with the offer.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.