18 Jan When agents sit on offers – Brett Warren
Brett Warren, as a buyer’s agent, has to work with agents representing the seller. He explains how he protects from having the seller or the sellers agent sit on his offer.
Kevin: Brett Warren is my guest.
Brett, I’m keen to ask you, in your time as a buyer’s agent, you obviously have to work through seller’s agents. These are agents who’ve listed a property for sale. That’s largely how you come across a lot of your stock. How do you stop a seller or a seller’s agent from sitting on an offer when you make an offer?
Let me paint the picture here. You make an offer and then you don’t hear back from the seller – or in this case, the seller’s agent – for some time, because they’re probably sitting on your offer and may be shopping it around, or that’s a suspicion you may have.
Brett: Yes, absolutely. Selling agents are experts at this. We have to remember they’re actually working for the seller, so they want to try to draw that process out. Particularly in a rising market, all it takes is another offer and the game changes.
As a buyer’s agent, they’re the conduit to the seller, so you obviously have to treat them with respect and build strong relationships with them, be upfront, be honest, even though they may not be the same for you all the time. But if you’re upfront and honest, it makes things a lot easier when they communicate with the seller. And rather than them sitting on that offer, you want to try to create a little bit of urgency.
Kevin: How do you go about doing that?
Brett: There are a number of ways. Inserting clauses or deadlines and things like that into the contract. You may be looking at other properties on the weekend. If we’re offering on properties midweek, we’ll always say we want an answer within 24 or 48 hours – that way, if we’re successful, great; if we’re not, then we’ll go and look at other properties – so they get the idea that we’re not going to hang around for three or four days through the weekend, through two other open homes, for them to make up their mind what they want to do.
You have to take control of that situation and turn the situation around and put the pressure back on the seller. Just let them know very clearly – whether it’s with a clause or whether it’s through verbal communication – that you’re not going to be hanging around for two or three days waiting for them to make up their mind while the offer is being shopped around and things like that.
Kevin: When we use the term “being shopped around,” it is illegal for an agent to talk to another buyer and say, “Well, I have an offer from this buyer and the offer is this,” and give them all the terms and conditions. That’s gazumping, and that is illegal.
Brett: Absolutely. But what isn’t illegal is the multi-offer scenario. Sometimes all it takes is another person or persons to come into the game. And you have to put your best foot forward. In that situation, you just have to be very comfortable with what you’re going to pay.
In some cases, people can get very carried away with emotion in a rising market if they’ve missed out three or four weeks in a row and things like that and can sometimes pay fairly well over. So, you just have to be very comfortable with your offer and understand that that could happen.
Kevin: I think there’s a great lesson for buyers, too, in understanding that they may have been looking around for some time, a property might have been on the market for quite a long time, and then all of a sudden, it becomes attractive because it may have been overpriced, the market might creep up, and then all of a sudden, it becomes an attractive property for you, bearing in mind that it may also become a very attractive property for someone else, so you’re likely going to be in competition.
Kevin: When you’re told that there’s someone else interested, how do you know that it’s a fact?
Brett: Generally, the agent should provide you with a statement to say, “There’s another offer. Do you understand there’s another offer and you have to put your best foot forward?” A lot of the time, that doesn’t happen, but if you have a strong relationship with an agent – either way – you just have to be very comfortable with what your offer is and understand that this is your final shot, your last chance at getting it. That’s the hard part. Auction is a good thing; you can kind of see people and be $1000 in front, but sometimes you could be $10,000, $15,000, or $20,000 apart. You just don’t know.
Kevin: I guess when an agent does give you a statement – it’s called a multi-offer situation – it’s a declaration, and you can take it as fact that there is another offer on the table. If an agent comes to you and says, “Look, we’ve had someone coming back for a second inspection,” that’s nothing. That’s not a bird in the hand; that’s just a bird in the bush. They may or may not make an offer. So, don’t be threatened by that.
But certainly if you get a multi-offer declaration, that’s something you need to take seriously.
Brett: Yes, absolutely. If you’ve been getting the runaround by an agent and they’ve been doing that to you, and they do say, “Look, there’s another offer,” I probably wouldn’t be putting my best offer in until I actually had that form in my hand.
If you trust the agent, you’ve worked with them before, and they’ve told you there’s a multi-offer, and you went to the open home and there were 20 other people, then chances are there is.
But if you’ve seen the property at some stage and you’re not sure whether the agent is legitimate or not, you can ask them to provide you with a multi-offer form. We’ve done that before. We’ve called them out, and that sometimes hasn’t been forthcoming.
Kevin: You know full well then that there is no other offer.
Brett: That’s it.
Kevin: Another piece of advice, when you do get that form, make sure you read it carefully, because you’re going to find that in that form, you may not have the opportunity to come back. In other words, they’ll ask you to put your best and final offer in. And believe me, if that’s what they ask you to do, that’s what you need to do.
Brett: Absolutely. And like I said before, though, make sure you communicate well with the agent, because we’ve actually been successful in multi-offers before with a lower price point but we’ve understood the seller’s circumstances. They may have wanted a longer settlement to move out, or they may have wanted a shorter settlement or a rent-back period.
We’ve been successful by $10,000 or $15,000 less just by giving them what they want. And that’s important to build that relationship and understand exactly what they want.
Kevin: Having a relationship with the agent so you can actually say, “Look, I know we’re in competition now. What is it that I can do in this offer that will make it more appealing?” Forgetting price for a moment, because it’s not always about price. That’s the point you’ve just made. But when you have that relationship with the agent, you can ask those kinds of questions.
Brett: Yes, definitely. Absolutely. And that’s what you need to understand if you’re buying in those kinds of areas. You need to understand the agents, how they work, and how they communicate.
Kevin: Great. Very good advice, Brett. Thanks for that.
Brett: No problem.
Kevin: Brett Warren, of course, is a buyer’s agent, and he’s with Metropole Properties in Brisbane.