Getting your offer accepted in a multiple offer situation is a matter of smart negotiation combined with fortunate circumstances!
Fortunate circumstances refers to things that you don’t have control over, but that work in your favor. For example, if the seller wants as much money as possible and that’s all that matters, and if you are qualified to offer more money, then you win. Conversely, if you can’t offer more money, then no matter how much you want the house, the other guy who offers more money wins. (Unfortunate for you, fortunate for him.)
But, there is still a lot of room for negotiation.
The buyer and seller seldom negotiate directly with one another in real estate these days. Instead, they rely on their agents to stand in for them, like champions doing battle for their kings. The agents are go-betweens. They discuss terms with their own clients, then negotiate those terms with the other agent. A good agent will “spin” the terms to have certain effects on the other party. Agents instinctively know this is happening, but some are better than others at using that knowledge.
Basically, negotiation means arguing back and forth until you either find a meeting point, or one of you walks away. If you want to increase the odds of winning against competing offers, understand the following negotiation points and work them in your favor. If you are not involved personally in the negotiation, then at least understanding these points can help you discuss strategy with your own agent, who will be standing in for you. Buying (and selling) a home is a team effort between you and your agent.
1. Prioritize Ideal Outcomes
For each important issue—price, closing date, down payment amount, repairs, terms, and
possession—the seller has an ideal outcome that they want.
A buyer’s agent needs to do all they can to identify the hierarchy of those ideal outcomes.
For example, if possession date is at the top of the seller’s list, the buyer has the chance of
putting their offer in a better position if they offer a longer possession date, even if they
offer the same price as other offers.
In most cases, there is a combination of ideal outcomes in play. If price is the most
important outcome, but the seller also does not want to do any repairs—they just want to
walk away—then adding a clause that says the buyer won’t ask for repairs may put their
offer over the top.
Common ground is the place where your interests overlap. The more your agent can find
the seller’s ideal outcomes, the better you can evaluate if you are comfortable meeting
those ideals. You’d hate to lose a deal because you didn’t know the seller wanted
something that you were perfectly happy to offer.
Unfortunately, the seller’s agent will sometimes stay mum and not offer the information
that you need. If the seller or seller’s agent will not share the ideal outcomes, then your
agent can’t give you the information—they just don’t have it. Working with an agent who
is experienced in negotiation increases your odds of getting the right information to help
you find common ground.
2. Don’t Shoot From the Hip
In a competitive market, prices can quickly climb beyond what makes sense for the
marketplace. The sense of panic grips buyers and they feel a sense of urgency. There is
nothing wrong with urgency, as long as they can afford it and are not simply panic buying.
If you already know that competing offers are common in your marketplace (ask your
agent), then you might want to consider identifying properties that are listed UNDER your
top price. For instance, if you are qualified to buy up to $357,000, you might want to cap
your search at $350,000 or less, leaving room to bid up by another $7,000.
3. Use Emotions Wisely
When making a real estate offer, emotions can either help or hurt your chances of getting
your offer accepted. If you are emotionally invested in a property—if you “love” it—you
should let the seller know how much you love it. After all, they loved the home, too. They
want it to go to someone else who loves it and will fit into “their” neighborhood. The best
way to show them your love is to write a short letter to the sellers telling them about your
family and why you want the home.
If the property is an investment property, then how much you love the house may not
make any difference. You can still write a letter. Spin that letter to show the investor how
you value the home as an investment in your family and future. It might not make any
difference, but on the other hand, it won’t have any negative effect—so you might as well
write the letter.
Emotions between agents are a factor, too. When confronted with an unhappy or
aggressive agent (whether that’s their personality, or a strategy), a more passive agent
may start to cave in or encourage their clients to change their offer.
When your agent understands that emotions can be used strategically, they can use
emotions to their advantage, and they can avoid being manipulated by emotions.
4. Watch Out for Fake “Auctions”
Fake auctions are a form of pre-conditioning…getting people to think a certain way before
they make an offer. A seller might say to his agent, “Tell everyone that I’m not budging on
price.” The seller is trying to condition the buyer to offer more before even making an
The most common form of pre-conditioning is the fake auction. That’s when the listing
agent tells potential buyers that they have already received offers, or that they have an
offer “coming in.” Whether or not there really is another interested buyer, this is a setup
to hurry you into a decision or to get you to improve your offer.
It’s your agent’s responsibility to get as much information as possible about the situation.
But that doesn’t mean they will be able to get any information. The truth is that a seller’s
agent is not obligated to tell if they do or don’t have offers. They are not obligated to tell
you how much those offers are for. They have no obligation to you or your agent
whatsoever, other than to not lie.
We assume that means they are telling the truth when they say they have offers. We also
assume it’s the truth when they say they might have an offer coming in. After all, “might”
is just a possibility—and there’s always a possibility of an offer coming in. A good agent
will listen between the lines and try to understand as much about what’s not being said as
what’s being said.
5. Watch for the Monkey on Your Back
Some negotiators have the irritating habit of handing their problems to you so that they
become your problems. This is the “monkey on their back” that they want you to carry
around for them. For example, the seller might say, “I have to get $480,000 or I can’t
move. I’ll have to stay here. The person who offers me that amount is the winner.”
This is used tactically to force a buyer to raise his offer price. Whether or not the seller
can or can’t move is not your problem. He’s trying to make it your problem. Here is what
you or your agent can do: Sound concerned and say, “I can see how that could be a
problem. Does that mean the seller would rather not see our offer if it’s below that?”
The “monkey” has been returned and they have to make a choice. If the objection is
genuine and they really can’t sell for less than $480,000, the buyer will either have to find
another property or raise their offer.
6.Watch for Nibbling
When an agreement between buyer and seller seems likely, a seller might suddenly say,
“Oh, I didn’t intend to include the hot tub.” Or “I don’t think we should do the termite
treatment.” The buyer is so eager to get the house that they will agree to these little
“nibbles.” In fact, the buyer may have to agree to the nibble in order to win the house in a
competing offer situation.
It’s important for your agent to recognize the nibble and be prepared to let you know it’s
just that. Rather than feeling upset about the added requirement, you can see it for what
it is—a final play. Accept the final play, and you have the deal. Don’t accept the final play,
and you may still have the deal. If you don’t want to accept the nibble, then ask your
agent to firmly state that the nibble wasn’t part of the seller’s listing, and that it would be
best to just go with the offer as written. That will tell you how important the nibble is to
the seller. The critical thing is to not get angry or defensive now. Just deal with the
nibble—either accept it, negotiate it away, or walk away from the deal.
7.Watch for Good Cop/Bad Cop
As a real estate agent, you have to be very aware of this one. Agents often use their client
as either the good cop or bad cop. For instance, if the buyer makes a fair offer, the listing
agent can say, “Wow, my seller was pretty mad about this. Let’s see if we can bring his
energy down. Why don’t you bring me your best offer and I’ll see what I can do.”
The best way for your agent to counter this is to put the monkey back on the other
agent’s back. “I’m sure he was upset. I suspect the seller wants to continue the
negotiation, though, right? Now, I have a serious buyer who wants to pay a fair price for a
house. Why don’t you see what the seller is willing to counter them at before we tear up
8.Avoid the Vice
A common technique used by savvy negotiators when presented with an offer is to say,
“You’ll have to do better than that to get your offer accepted.” The most powerful way of
dealing with that kind of comment is for your agent to ask them to be more specific. “Oh,
could you be more specific about what you mean?” This will give your agent more
information and help them determine if the comment is true or just a play to get a higher
offer for the seller.
After all, the comment isn’t a lie. It’s not saying there is an offer. If there really is an offer,
then the seller is obligated to show that offer to the buyer after making an offer. Your
agent can write that demand into the agreement. Of course, your agent probably
wouldn’t want to put it in writing, because it might seem aggressive to the sellers.
Instead, your agent will most likely handle it by talking it through with the seller’s agent
before you make your offer.
None of these strategies is an “ace in the hole.” You and your agent can increase your odds of getting your offer accepted by
understanding negotiation strategy. But in the end, the only thing that may matter is meeting as many of the seller’s ideals as
possible. If they need a high price, AND they need to stay in the home for a month after selling, AND they need to keep the
hot tub, then giving them all that increases the chances of you getting your offer accepted. In this case, your agent simply
needs to gather as much information as possible by asking the right questions. If the seller’s agent is reluctant to talk, then
you may only have the option of guessing.