Weird multiple offer 'rules'

Went to put an offer on a property today. After three months on the market with barely a nibble I arrive at the designated time at agents office where it's casually mentioned that there's three other offers going in at the same time as mine.

Well I had expected a phantom buyer to be brought into the picture so I was prepared for it (though not quite to this extent!). Basically stood by the figure I had originally intended and said I wasn't going to try and compete with any offer I haven't seen on paper and that they are welcome to cover the buyers name if they showed me. They said no which was to be expected. Apparently this is illegal. I'm not sure if this is true or not.

What was curious however was that I said my initial offer was intended to provoke a counter offer and the response was that it would depend on which offer they decided to deal with as under Qld law in a multiple offer situation the vendor can only negotiate with one person at a time. I've never heard of such a law and to be honest this sounds like utter rubbish to me. If I were a vendor I would insist on being able to negotiate with several people at once if the opportunity presented.

So can any Qld agents confirm or deny if what I was told is true with respect to it being illegal to show evidence of another offer or the dealing with multiple buyers rule? I think it was either a negotiating ploy (which failed if it was) or it's a policy of this particular office (or group rather).

WHat total Bullsh!t.

Tell the agent that if they don't present your offer, you are going to go knock on the vendor's door. (If it's not owner occupied, PM me and I'll give you the owner's details).

Which group is it? I suspect I can guess...

asy

asy said:

WHat total Bullsh!t.

Tell the agent that if they don't present your offer, you are going to go knock on the vendor's door. (If it's not owner occupied, PM me and I'll give you the owner's details).

Which group is it? I suspect I can guess...

asy

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Hi Asy,

Somehow I knew you'd come to the rescue

They are still presenting my offer, in fact they seemed pretty positive on it even though it was apparently a lot lower than some of the 'others'.

I thought I would have to go to the owners myself so I've got their details but not necessary after all...

I'll PM you the name of the group. Anyone who particularly wants to know PM me and I'll let you know.

I can confirm that in WA you can only deal with one offer at a time. buyers find it hard to believe but the law is the law. the process is: present all offers, then the vendor picks the most appealling and negotiates with them.

Ausprop said:

I can confirm that in WA you can only deal with one offer at a time. buyers find it hard to believe but the law is the law. the process is: present all offers, then the vendor picks the most appealing and negotiates with them.

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That's the same here in Tasmania.

And to add to that, if we get multiple offers, there's no way we'd show the other prospective buyers the other offers or tell them what the other offers are.

We also have a form that we get all the buyers to sign with them acknowledging that they're in competition for the property. We find that it helps keep the whole process transparent.

As a salesman, I hate multiple offers and we avoid them if we can. Why? Once you have multiple offers there is always going to be a loser and the loser will always blame the agent, no matter how fairly you deal with all parties.

I'm the type of person who likes to get on with everyone and I don't like having people annoyed with me.

A little story....

Back in early 2003 just as the boom was starting to get in full swing, we'd had a property on the market for approximately 6 months. We'd shown quite a few through but no offers, probable because the property was (and still is ) on a main road (just 3 houses from where I live, hmmmm, maybe it was the neighbours )

The listing salesperson suggested we try another ad in the local RE guide after having not advertised it there for maybe three months.

The afternoon of the day the ad was in the paper I showed someone through. As we were leaving another salesperson from the office was showing someone through too. An hour later the buyers I was dealing with called back and made and offer. I called the listing salesperson to let her know. She informed me that she too had just received an offer.

Within another two hours all four of the salespeople in our office had received an offer on the property. We were all stunned wondering what the heck was going on. Sounds great but all of a sudden you have three buyers that miss out on the property and three salespeople that miss out on a sale. That's not so great but unfortunately unavoidable.

The vendors were of course quite happy.

Cheers

I can certainly understand them not wanting to show me other offers. It turns it into an auction scenario where best offers are not put on the table, only "good enough" offers.

Though I'd be interested to hear opinions on how, from a buyers perspective, one can distinguish a real offer from a phantom offer. I prefer to make offers in the mindset that there are no other offers regardless of whether I'm told there are or not and if I get trumped by another buyer so be it. At least that way I've avoided the possibility of having my price jacked up by an illusion.

Of course if I DID see evidence of another real offer and it was below my walk away price I would certainly use the opportunity to top it. With that in mind if the agent knew that was how I operate I think they would be missing an opportunity for a higher offer by not doing so...

yes but the wole point of only negotiating with one offer at a time is to prevent this auction process. The persons offer that you are topping may like to top you back - so with say 4 parties what a mess that could become. suddenly the sales rep is an unofficial auctioneer. When the agent says to you things like "do you want to make good your offer" or "put in your best offer", all you can really do is just that - put in your best offer.

Actually, being in Qld, I don't understand this process of dealing with one offer at a time. If an agent presents me as a vendor, buyer 1's offer, and I don't accept it, then negotiations are over, and so is that contract/offer.

The potential buyer has to change the price on the contract to make another offer, which means it is a new contract, and a new different offer, isn't it?

Therefore, as soon as buyer 1's offer is rejected by the vendor, then the agent can immediately present an offer from buyer 2. Why should a vendor have to wait around for buyer 1 to come up with a better offer??? And how long should he wait, before he can consider an offer from buyer 2.

To my mind, this dealing with one offer at a time is gobbledegook, and has no bearing on real life scenarios, and could never be enforced....but I stand to be corrected.

BTW, it's my experience with REAs in Qld that they won't take an offer to a vendor in any form apart from a signed contract, which becomes binding when the vendor countersigns.

thefirstbruce said:

BTW, it's my experience with REAs in Qld that they won't take an offer to a vendor in any form apart from a signed contract, which becomes binding when the vendor countersigns.

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TFB

Interesting how different people do things differently. I've never put an offer in writing in Q'land unless I've had verbal acceptance.

See Change

Of course if I DID see evidence of another real offer and it was below my walk away price I would certainly use the opportunity to top it.


Bweed,
imho,
sounds like the normal setup R/E sales people use, its about time to be
Firm with the agents,you should only make one offer on paper then tell
the agent to have the vendors sign at the price they want,at least that
sets the price in place if its too high, Walk,and start again if you can
not buy 20% undervalued in Brisbane then the price is still too high..
good luck
willair..

see_change said:

TFB

Interesting how different people do things differently. I've never put an offer in writing in Q'land unless I've had verbal acceptance.

See Change

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Maybe I should tell REAs I come from NSW and that I am not prepared to sign a contract until I get a verbal acceptance.
Were your verbal offers made remotely from Sydney, or while you were up here in person?

The trouble the REAs get is that if a buyer makes a verbal offer, and the vendor accepts, then buyers have a habit of revising their initial offer down, in the belief that the vendor is desperate. I can see the sense of only accepting offers on contracts. I'd hate to know my contract offer is competing against a stack of verbal offers.

Actually, all this REA in the middle stuff, and not knowing what to trust, just drives home the advantages of two parties negotiating directly with each other.

I couldn't think of a worse situation than the 2 parties negotiating with each either directly, hence why just about every owner-sell system fails. if I were buying or selling I would much prefer to have some poor sucker in the middle running around at my beckon call.

we have had discussions before about verbal offers. it sounds as tho QLD is similar to WA. In WA, if it isn't written it aint an offer, end of story. talk of 'verbal offers' etc is just banter and negotiation and means nothing. which is why an agent that gets involved in negotiating verbals is just asking for trouble.

all this talk though is of how things SHOULD be done. in practice anything and everything is going on out there and the things I see make me shudder.

thefirstbruce said:

Actually, all this REA in the middle stuff, and not knowing what to trust, just drives home the advantages of two parties negotiating directly with each other.

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Absolutely. Our group went down this road unintentionally on our last purchase and it's amazing how quick and efficient the whole process can be when both parties desire the same outcome and the REA stumbling block is removed.

We were somewhat fortunate in that the REA fell off a ladder and was in hospital for 3 days, completely removed from the picture. That allowed myself and the wily old Vendor to thrash out the deal over 2 hours with the assistance of a fax machine. But what a harrowing 2 hours. Was mentally and physically exhausted at the end of it. But...earnt more in that 2 hours than my first 3 years out of university as an engineer, so well worth it.

When the REA was discharged, the vendor informed him the deal was done. He was more than happy with his 55K commission earnt whilst on his back laid up for doing nothing at all. Glad we didn't have to pay for that 'service'.

Sometimes, extra benefits come your way by removing the REA. In our case the Vendor graciously became our Mentor and things have certainly looked up with his array of knowledge and 45 years experience in the heavy industrial sector. Our next major deal will involve purchasing another small slice of his massive portfolio - I think he'll ditch the REA this time.

thefirstbruce said:

Actually, being in Qld, I don't understand this process of dealing with one offer at a time. If an agent presents me as a vendor, buyer 1's offer, and I don't accept it, then negotiations are over, and so is that contract/offer.

Therefore, as soon as buyer 1's offer is rejected by the vendor, then the agent can immediately present an offer from buyer 2. Why should a vendor have to wait around for buyer 1 to come up with a better offer??? And how long should he wait, before he can consider an offer from buyer 2.

To my mind, this dealing with one offer at a time is gobbledegook, and has no bearing on real life scenarios, and could never be enforced....but I stand to be corrected.

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Hi TFB and All

Rather than correct you, I’ll just clarify it.

Having all offers presented and negotiating with one buyer are two different things.

Take the case in my earlier post. When we’re aware we’re in a multiple offer situation, we get all offers signed without telling the other salespeople in the office what the offers or the conditions, if any, are. We then put them in a sealed envelope and give them to the manager.

The manager then accompanies the listing agent to oversee the presentation of the offers. The reason he goes is so that, once again, everything is transparent. It stops the listing agent trying to influence the vendor into taking one offer over another. This way all the salespeople know they’ve been fairly dealt with. Imagine if the salesperson had one offer from their own buyer and one from another salesperson. Which offer do you think they’re going to be favouring to be accepted?

Once all offers have been opened and presented, that’s when the vendor can only negotiate with one at a time. Imagine that he says to the salesman, go back to all four and tell them I’ll accept $XXX,XXX and all four buyers accept. ROT ROHHHH!!!!!!!!!! Under the laws of offer and acceptance, the vendor has agreed to sell to all four!!! How do you get out of that one???

Hence the reason why you can only negotiate with one at a time… and it’s up to the vendor to decide which to negotiate with.

Hope that clarifies it.

Cheers

thefirstbruce said:

Actually, all this REA in the middle stuff, and not knowing what to trust, just drives home the advantages of two parties negotiating directly with each other.

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Interesting comments about dealing directly.

Most of us here are here because we’re investors and interested in all things property related and have been or hopefully will be involved in plenty of transactions.

Remember though that a lot of people only buy or sell two or three times in a lifetime and have no business sense whatsoever.

They don’t feel comfortable dealing directly with buyers or sellers and want the comfort of a middleman to do the job for them.

Dazzling, with a 55K commission, it doesn’t sound like the purchase you made is your everyday, run of the mill investment property either. If the agent was being paid a 2% fee, that’s a $2,750,000 property. IMO, that sort of situation is totally different and it may be more appropriate to be dealing with or at least talking to the vendor.

Cheers

Dazzling, it doesn’t sound like the purchase you made is your everyday, run of the mill investment property

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G'day SOS...agreed...but then it depends on what you mean by "run of the mill", it was actually a titch on the smaller side for the area we bought in...maybe you mean by some other general criteria ?

IMO, that sort of situation is totally different and it may be more appropriate to be dealing with or at least talking to the vendor.

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Why ?? I take from that, that as properties become more expensive, REA's become irrelevant or at least inappropriate ?? I'd like to hear your reasons behind your opinion ?? I know a few REA's who would maybe disagree with your opinion, especially as their very very comfortable livelihood depends on it.

Dazzling said:

Why ?? I take from that, that as properties become more expensive, REA's become irrelevant or at least inappropriate ?? I'd like to hear your reasons behind your opinion ?? I know a few REA's who would maybe disagree with your opinion, especially as their very very comfortable livelihood depends on it.

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I didn't say that you shouldn't use an agent. If I was paying that much for something, I'd like to be talking to the vendor to ask the more detail questions about a property. That's all.

Cheers

Sultan of Swing said:

Remember though that a lot of people only buy or sell two or three times in a lifetime and have no business sense whatsoever.

They don’t feel comfortable dealing directly with buyers or sellers and want the comfort of a middleman to do the job for them.
Cheers

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Agree that many feel uncomfortable negotiating directly, or don't want to bother with the time or effort.

However, I think vested interests (REAs) have done what all professions do over time, and that is progressively build up a veil of complication delivered in a foreign language of acronyms, that aims to make Mr and Mrs Average feel incompetent at doing the negotiations themselves. Gee, all professions and trades are guilty of this. Lawyers are probably the worst. And what comeback have you got when they screw things up?

I even had a hairdresser tell me I couldn't get as good a result cutting my own hair with a number 7 comb on electric clippers!!!! Then what about the computer industry! Techies used to make out that fixing computers was a seriously complex affair, until 12 year olds cottoned on.

I think a lot of educated people are very happy to start challenging conventions that cost a lot. And with the advent of private sale websites, RP Data, this forum, and many well written books on the matter, I think it is getting easier and easier for vendors and buyers to agree on fair market value.

I have read several articles in the last 12 months by well respected REAs, who admit private selling will escalate and there will be a cullng of REAs. I don't expect we shall ever see the end of REAs, but certainly private selling is a trend that many are prepared to have a go at. Just as many are happy to book airfares online, rather then use a travel agent, something Screw Turner of Flight Centre has been slow to come to grips with.