Is Your Real Estate Offer Confidential?

Multiple bids -- real estate offerQuestion: We made an offer on a home. The listing broker said there were three more offers and we would have to increase our bid. The other offers, like ours, were all cash. How do we know there was another bid or that it was higher? If we raise and win (or lose) can we require the broker to show the other offers?

Answer: As a bidder you want to pay as little as possible for the property while the owner – and the owner’s representative – want to maximize the sale price. Everyone gets that.

You have made an offer for the property and are now confronted with a situation where you are told that there are other and better offers, multiple offers, and therefore to get the property you must increase your bid. But you have not actually seen the other offers. If they are “higher” than your offer just how much higher are they? You don’t know. You also don’t know what other terms are involved so even with a price you are bidding blind.

Not unreasonably you want evidence that there are other bids. You do not want to overbid. However, think about it this way: Would you want another potential buyer to see YOUR bid?

This is a situation without a solution: If you don’t see other bids you may worry that you overpaid. If you are shown the other bids then the competing buyers may feel their bargaining position has been compromised. Moreover, even if you somehow were to see other bids you don’t know that the competing bidders have the capacity to conclude the transaction.

Multiple Bids and the Real Estate Offer

The National Association of Realtors explains that “purchase offers generally aren’t confidential. In some cases sellers may make other buyers aware that your offer is in hand, or even disclose details about your offer to another buyer in hope of convincing that buyer to make a ‘better’ offer. In some cases sellers will instruct their listing broker to disclose an offer to other buyers on their behalf.”

“Listing brokers,” says NAR, “are required to follow lawful, ethical instructions from their clients in the same way that buyer-representatives must follow lawful, ethical instructions from their buyer-clients. While some REALTORS® may be reluctant to disclose terms of offers, even at the direction of their seller-clients, the Code of Ethics does not prohibit such disclosure. In some cases state law or real estate regulations may limit the ability of brokers to disclose the existence or terms of offers to third parties.”

“You may want to discuss with your buyer-representative the possibility of making your offer confidential, or of establishing a confidentiality agreement between yourself and the seller prior to commencing negotiations.”

I disagree with the NAR policy.

I don’t want my offer shopped, I don’t want to give up a marketplace advantage, I don’t want people to know how I value the property, I don’t want competitors to understand all the details of my offer or to understand my finances, and I surely expect that any offer I make on a property in a traditional transaction is entirely confidential and will be disclosed only to the seller. Alternatively, in an auction all offers are public and therefore there’s a level playing field for all bidders.

In practice, I suspect, that a good answer goes like this: The property has a particular economic value to you. You should not bid any more than the property is worth for your purposes. If that means you lose the property – but don’t make a bad deal – that’s fine. There are other properties on the market and — as an all-cash buyer — you should have plenty of leverage to get the home you want.


Syndicated originally to newspapers nationwide by Content That Works; revised, modified, updated, and posted with permission.

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3 Comments on "Is Your Real Estate Offer Confidential?"

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  1. JC says:

    My family faced a similar situation a few years ago and my mother took the bait and definitely overpaid. The house was sold a few years later, with many needed repairs done, at a relatively large loss (this all occurred after the meltdown).

    We found out later that the seller’s agent (a formerly trusted family friend) had NO other offers. His excuse? “Your mother has plenty of money.”

    So, how to defend against unscrupulous brokers?

  2. c1ue says:

    It sounds attractive to automate the sales process, but there are such things are agents or brokers who provide value. A home buyer does not always know very much about the home or the area it is in – a good agent/broker can bridge this gap.
    Equally, automating the process is not going to fix the problems which can arise in a real estate transaction. Sellers can misrepresent, buyers can change their minds, either can change terms like ripping out appliances or asking for contingencies. A piece of real estate isn’t like a can of soup – no two are identical nor is the transaction purely financial.
    I don’t have a problem with having the automated option available, but potential buyers and sellers should be aware that it is by no means a panacea. For every unethical agent, there are at least as many unethical buyers or sellers – and automation isn’t going to fix that problem.

  3. s2kreno says:

    The solution is probably taking real estate agents out of the process. I don’t trust most of them any further than I can throw them. Research has shown that they often do not act in their clients’ best interest, and when they represent both buyer and seller it just gets worse.You could probably automate the whole thing. Have bidders get pre-approved for a mortgage and authorized to bid up to a specific limit, which is not disclosed to sellers. Put the sale online at whatever sale price the sellers want to begin with and have it drop by a pre-set percentage at prearranged intervals until a buyer bites. Sellers can put in reserve so price does not drop further than they want. Think of the money saved on both ends of the transaction.

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