I’ve seen multiple real estate agents recently boasting about how fast they sold one of their clients’ homes. In several cases they were bragging about a market time of only 2-3 days. Each time, I roll my eyes and wonder how exactly that agent thinks this satisfies their fiduciary duty to their client – the obligation every agent has to act solely in the best interests of their client. There is a strong argument to be made that says this practice is contrary to and violates that very obligation. Here’s why…
We’re in a very strong seller’s market right now. The demand for housing far outweighs the supply in our current market conditions. Soliciting offers is EASY right now! Vetting those offers and soliciting the right, best offer is a little harder and definitely takes a little more time.
Let’s ask a question – If you only have a property on the market for 2-3 days, what are the odds that the best, most qualified, highest-paying buyer is going to even see your listing? Yes, we have very efficient methods of alerting our clients to new inventory on the market as it becomes available. But people have lives too. Who’s to say that the best buyer isn’t out of town, or has work commitments, occupied with guests, sick, or…??? I can think of a multitude of other reasons that the perfect buyer might not get the chance to see your house. So, what’s the rush? I don’t care if you have 5 good offers. The agent’s job is to get you the BEST offer. And if leaving the property on the market is in the clients’ best interest, then without question, this is the course of action that should be pursued. Is it really in the client’s best interest to forego another $10k or $20k or more? Of course not! Isn’t an extra few days worth it to the client? Of course it is!
Frequently, the agent’s motivation and recommendation to accept a quick offer is based on the agent’s desire to get paid sooner. After all, an extra $10-$20k isn’t really going to affect the agent’s commission in any substantial way so they just aren’t motivated to negotiate hard on your behalf. Or even more likely, they just don’t know how.
We recommend having the property on the market for at least 7-10 days. If you activate your listing on a Friday morning and let it run through the following weekend (9 days later), you’ll substantially increase your odds of giving all the best buyers an opportunity to tour the property and make an offer. An agent that follows this strategy will never be accused of not fulfilling his fiduciary duty to his clients. An agent that doesn’t should be seriously questioned.
The only argument I’ve heard against this strategy is, “We might lose one of our good offers if we wait too long”. Highly unlikely – especially in today’s strong seller’s market. If you have your strategy in place and set the buyers’ expectations properly, its easy to keep them interested. When a buyer’s agent calls to discuss submitting an offer (as they always do) just tell them to make sure the expiration date on their offer is 10 days from their submission date as no decision will be made until that time. You’ll then have plenty of time to solicit the best offer possible.
So about this “best offer”, how exactly do you know you have negotiated the best offer possible for your client. First, DO NOT respond to any offers with a counteroffer that ask the buyers to “submit their highest and best offer“. Talk to your attorney. This is just a vague suggestion with no definitive terms. THIS IS NOT A COUNTEROFFER. Read the article “The Problems with the Highest and Best Counteroffer”. A counteroffer spells out the specific terms and conditions the seller wants. A counteroffer has all the terms well defined without ambiguity. Instead, I would argue that, once you receive an offer at least at your list price, you tell other prospective buyers what your highest offer is and truly create an auction environment. After all, isn’t doing so in the clients’ best interests? Having prospective buyers blindly guessing the offer price of other offers and bidding against themselves makes no sense at all. It’s just frustrating for the buyers, their agents and does nothing to further your goals.
I don’t know where the notion came from that says this practice is “illegal” but it is not. I would recommend explaining the strategy to the seller client and getting their approval. It should be easy to explain to them how this will truly be in their best interests. Creating that auction environment will save all parties lots of time and frustration and surely succeed to help solicit the real highest and best offer. Follow this formula and you’ll know you aren’t walking away too soon and not leaving anything on the table.