Recently, I found myself discussing an offer with a buying client on a house that would likely attract a lot of bidders. “So when do we find out what all the other bids are?” the client asked. “You won’t,” I replied. Right then, it occurred to me that very few buyers are aware of the ins and outs of the offer process. Perhaps it’s because we realtors take for granted how complex a sale really is: We deal with these logistics several times a week, whereas the average buyer might only run the real-estate gamut once a decade. However nebulous it may seem, the procedure for reviewing bids on a home is fairly consistent, and every potential buyer should fully understand how it works.
Freehold homes in high-demand areas are listed for sale with a set offer date—the calendar cutoff by which sellers are required to review all the offers on their property. This stipulation is typically referred to as a hold back, which means the homeowner is effectively trying to bring all prospective buyers to the table at one time. Like it or not, we’ve existed in a seller’s market for a while now, so if you’re a buyer, you can’t expect to be the only interested party. This hold-back window typically lasts between six and eight days. If a house is listed for sale on a Tuesday, for example, chances are the offer date will be the following Monday, Tuesday, or Wednesday. The odd scenario has seen offers held back for as long as 19 days, but, in my opinion, this tactic drives buyers away. Such a protracted length of time could cool their purchasing desires, or simply give them the opportunity to find something else.
On the flipside, potential buyers can also choose to submit a bully offer, which, as the name suggests, means they don’t wait for the set offer date, and instead, send an attractive figure to the listing agent ahead of time—typically, the day the property hits the market. Bully offers must include exceptional compensation in order to be accepted by the seller because if they agree to its terms, the listing agent risks angering dozens of agents and buyers who actually adhered to the seller’s timeline.
Come offer day, each buyer’s agent has their client sign an offer, at which point the agent calls the listing brokerage to register it. Then they spend all day placing calls to the brokerage to inquire about how many others have been registered for the same home. As one would imagine, this makes for a long day for hopeful buyers; at noon, there could be one offer, but 11 more might come in by the time bids are being presented to the current owners (usually around 7 p.m.).
Most buyers’ agents will present their offer in person, though some elect to email it. (Sometimes, we agents are just too busy to attend.)
At no point are the terms or conditions of competing offers revealed by the listing agent to any of the buyer agents. (If a house is listed for sale at $599,900, and owners receive 12 offers, it’s up to the buyer and their agent to decide on a bid, even if they are running blind). There are usually a few throwaway offers—say, if someone bid in the low $600,000s on the example above.
The real wild-card aspect of the offer period is how the successful bid is selected. If given a dozen offers, a listing agent (and their client) may just accept the highest one. They might also send back the top four offers to see if they can improve, or they could decide to work with the top two, and pick a winner that way. What may seem like a straightforward buy, or a “one-shot deal,” as we agents say, may actually turn out to be a complicated (and possibly expensive) jockeying process for buyers.
In the end, only one buyer will go home happy at the end of offer night, forcing all the other unlucky bidders back to the drawing board. If you’re growing weary of the offer game, however, rest easy knowing that the ultra-busy spring market is almost upon us: The number of new freehold-property listings is always highest in April, May, and June.