As the real estate industry raises its overall standards of professionalism, most agencies have introduced more transparency to their processes of handling offers from multiple buyers. This is great news if you are buying an investment property or home in Melbourne, Victoria.
In this article we will share the most common practices of handling offers in the Melbourne real estate market and regional Victoria.
If you are a DIY property buyer this information is crucial for you to understand if you want to buy property in a timely manner, giving you your weekends and ensuring you don’t miss out on ideal properties.
How agencies used to handle multiple offer scenarios
The biggest challenge buyers face when attempting to buy a home that is sought after by multiple buyers is navigating a “multiple offer situation”. In a multiple offer scenario, several sales agents within an agency could be assisting a buyer to make an offer. If the agent’s buyer is the ultimate purchaser, the sales agent will earn the sales commission.
Once upon a time this structure within an agency would lead to agents attempting to get an offer accepted without anyone else knowing there was an offer on the table. If you were the buyer with the sales agents trying to get your offer accepted before anyone else could know about it, you would end up the lucky buyer. But if you happened to be dealing with a different sales agent, too bad. Your opportunity to buy the property would be lost.
Every agency deals with multiple offers in a different way
In a strong property market there will be multiple buyers at play. Here are some of the ways a multiple offer situation may be handled.
First in – best placed in the negotiation process
In a first in, best placed negotiation, all buyers submit their offer by a set time. The agent might disclose all the other offers to the first person who offered, allowing them an opportunity to review and change their offer if they want to.
Not all agents will disclose the offer amounts, so it is important to be clear about the state of play.
In a first in, best placed negotiation, all buyers submit their offer by a set time. The first person that offered may get a second opportunity to review their offer once all offers are in. But no other buyers will get that chance. You won’t always know what the competing offers are but you may get the final right of reply once other bidders have put their best foot forward.
The best and highest offer
Without knowing the other bids, each party is given the chance to present their best and highest offer by a certain day and time.
There are a few different endings to the best and final offer scenario.
- The agent will present all the offers and the vendor will select one offer they want to pursue.
- The agent will take the best offers, go back to each one and ask if it is their best and final or if they want to review their offer. (All the top offers will get this same chance)
- The agent will take the 2-3 best offers, go back to each person disclosing all other offers, allowing each person to offer more until they reach a final amount that no-one else is prepared to exceed.
Essentially, best and final doesn’t always mean best and final. It is important for you to be aware of this when faced with this scenario.
Dealing with only one buyer
In a fast upward moving market it is rare for an agent to only deal with one buyer, however it does occasionally still happen.
In this scenario a buyer will place an offer and it will be presented to the owner. The owner may counter the offer and negotiations begin over the following hours until a conclusion is reached.
24 hour opportunity
If a buyer comes forward with an offer, some agencies have an office policy that requires the agent to alert all other agents within the office that an offer has come in for the property. Each agent will have 24 hours to make contact with their own buyers and see if any want to also make an offer. If another buyer wants to make an offer they will be required to submit it by the 24 hour deadline.
Occasionally there are no other offers. Sometimes more offers will be made by the 24 hour mark and one of the above scenarios will play out.
Auction Twist
In a scenario where multiple offers are at play, an agency might determine that a last minute auction is the fairest way to handle all the offers. If this is the case you will be called to attend an auction that day or evening.
Having all your due diligence completed is vital in order to participate safely and covering your risk.
Understanding how an agent will handle your offer is crucial to ensuring you don’t get blindsided in the midst of negotiations.
Don’t be surprised if you get a call stating there are other offers on the table. Whilst this can be a common bluff used by sales agents in quiet times, this is also a real and common occurrence in a strong market. It is important that you learn to differentiate between a bluff and a genuine scenario.
If you don’t enjoy dealing with sales agents and hate the thought of negotiating, hiring an advocate to represent you.
Using an advocate will give you clarity and a sense of control in the process. Buyer advocates are used to dealing with varying offer scenarios and can place you in a strong position by tailoring a negotiation strategy that best suits the agent and the situation.
If you would like help to negotiate a property call us today for an obligation free consultation and customised quote.
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