multiple bid protocol

When multiple offers are placed on a listing at the same time, it is important to be fair and honest about the situation. "Bidding Wars" leave buyers with a bad taste in their mouth. While not everyone will leave the process happy, in the least, agents should maintain an orderly bidding process. Below are a number of ways a seller can handle multiple bids:

  • "Best and Highest": after two or more bids have been received, a seller may elect to go to a final round of bidding called "Best and Highest". This protocol calls for setting a short deadline for all bidders to submit their best and final offer. If new bidders enter the process before the deadline, they will be invited to submit a final bid. It is customary to accept one of the remaining bids after the deadline has passed after which all other bids will be held as back-up offers (even if a new and higher offer is received). The transaction would go into attorney review and no more showings would occur at the property.
  • Independent Counter Offers: a seller may choose to engage in price negotiations with multiple bidders simultaneously without each bidder privy to what is happening with the other bidder. In this scenario, the seller could make offers and counter offers with several bidders privately.  If a buyer's agent asks if there are other offers on the table, the listing agent must disclose the number of other offers and if any are in-house offers. He does not need to disclose how the seller is handling the other offers if the seller forbids it.
  • Cross-Bidder Counter Offers: a seller may choose to disclose another bidders offer to a competing bidder in order to motivate acceptance of a counter offer or to generate a higher bid.  The seller can do this with multiple bidders simultaneously without the bidders knowing how the other bidding process is evolving.
     

While it remains the seller's prerogative on how to handle each offer, our firm's policy will be to implement a "Best and Highest" round of bidding. This protocol is the most transparent and offers a degree of finality to the process in a cleaner and quicker way than does the other methods. This method also reduces the degree to which the losing bidders are alienated thus possibly preserving back-up offers if the winning bidder backs out of the deal. Until a transaction is out of attorney review, a seller retains the right to accept or reject other bids despite having already completed one of the above protocols. Agents are obligated to present all offers to their seller up until the title passes.