This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
Question: When making an offer to buy a home and the listing agent says that there is another bid in for the same home, can I get proof of that bid?
Answer: The short answer is no. There’s no way to get absolute proof of another offer (except when an Escalation Addendum is used, which I’ll address later), but there are strategies to help determine how legitimate the claim is.
There’s a myth that agents aren’t allowed to disclose the details of an offer to another agent when, in fact, it’s perfectly legal unless the seller declines it in the listing agreement (rare). When I’m told about another offer, my first reaction is to ask questions about the competing offer’s terms, how/when the seller will make a decision, and anything else that’s relevant to the offer. In most cases, I’m able to advise my client with a high level of confidence whether or not the other offer is legitimate and the appropriate response.
Here are a few factors you can look at to determine the likelihood of multiple offers:
- Days on Market: The highest chance for multiple offers is on/after the first weekend a property is listed, with the likelihood decreasing with each week that passes, and significantly after the first 3-4 weeks.
- Price: If you think the list price seems below market price, you’re probably not the only one. In some cases, agents price a home to encourage multiple offers. If the deal seems too good to be true, be prepared to compete.
- Rarity: The more rare the home is, the higher the likelihood of multiple offers. A 1BR/1BA 750sqft condo in Ballston for $425,000 is probably not going to generate competing offers, but a Lyon Village colonial with wrap-around porch, open floor plan, and 20,000 square foot flat lawn w/ privacy fence probably has a few buyers who have been waiting for 6-12 months for a home like that to hit the market.
Of course, multiple offers can come at anytime. I once had a listing that had one offer in over a year and then ended up with two offers on a random Monday. I couldn’t explain it and it was certainly an interesting conversation with the two agents who submitted offers.
Made up offers are a lot less common than you’d imagine because most agents understand how much riskier it is to negotiate using a fabricated offer instead of negotiating through strong counter offers and honest negotiations. The risk comes from the number of buyers who have no interest in getting involved in a competitive offer situation and will withdraw or stop negotiating when they find out about a competing offer. The risk of losing one legitimate offer to a fake one keeps most agents honest.
Escalation Addenda Work
If you doubt the merits of a competing offer, but want to keep yourself in contention if the offer is legitimate, an Escalation Addendum may be the best way to proceed. If the seller chooses to ratify your offer using an escalated sales price through the Escalation Addendum, they must provide “a complete copy of [the] other offer used to justify the escalated sales price.” For a more detailed explanation of Escalation Addenda, see my previous article for ARLnow.
Have you ever sniffed out a fabricated offer during the negotiation process? Have you ever incorrectly assumed an offer was fake and lost a home you really wanted?
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.