How to handle multiple offers

Competition is where buyers make their most expensive decisions, usually in the last twenty minutes, usually for reasons that have nothing to do with the house.

Draw the line before you start

Run the comparables. Decide your number. Write it down. Then do not move.

The number is right when both of these are true:

• If I paid any more than this, I would feel I overpaid.
• If somebody pays a dollar more than me, I think they overpaid, and I am fine losing it.

If you cannot answer both before offers are presented, the process will answer them for you, and it will not answer them in your favour.

The whole design of a multiple-offer situation is to get everybody excited enough to bid against themselves.

How it actually moves people

It is emotion, and it works in five and ten thousand dollar increments. Once someone has decided this is their house, another $10,000 stops feeling like money and starts feeling like the difference between winning and losing. That is the moment the price runs.

I have watched the highest bidder in the room hear "do you have anything else in you, we're almost there" and raise against nobody. They were already first.

If you keep losing

Then something in the search needs to change, and it is worth being honest about which.

Often people are shopping above their budget and hoping negotiation closes the gap. It does not, not by the amounts people imagine. Sometimes they are pricing their own house optimistically and building the plan on that number. Either way the fix is the same. Look at what actually sold, adjust the search, and stop competing for houses that were never going to work.

From the selling side

I usually give a listing a week to ten days to breathe before an offer date. That is enough time for the people who are looking to see it.

Bully offers

It depends on the situation, and the two that follow show why. If we underpriced a listing that had gone stale and only three people have been through, an early offer worth taking is worth taking. If fifty people have been through and the offer date is Tuesday, we hold. The test is simple: is accepting it better for the seller than waiting?

When the offer date does not go your way

If we held for offers and three of them come in $50,000 below what we expected, that is not bad luck. That is the market telling us our number was wrong. Three separate buyers looked at the house, did their own work, and landed in the same place.

The right move then is to listen, not to hold out for someone who agrees with us.

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Written by Mike Elsey, Broker, Royal LePage Real Estate Associates, Brokerage. General information about the process in Ontario, not legal, financial, tax, insurance or inspection advice.