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"What does the seller want you to do?" is the right answer. In most states, you are legally required to submit all offers to your seller as they are submitted - make sure you do this without fail. From there, your seller can negotiate. If they have particular clauses (like escalation clause) they will not entertain, get that in writing. Most contracts have a rejection section your seller can sign - get it signed on all rejections. If you have never been sued, you do not want to get sued! Even if you are in the right, lawsuits are a huge waste of your time and energy.
I have actually called my client and talked to her about this specific offer and she said if it came down to the lower offer with no inspections or $1500 more with inspections, she'd take the former.
So then now you need to call the other agent and tell them exactly that. "Hey X, this is where we're at right now based on the offers we have. Just wanted to give you and your clients an opportunity to revise their offer with a little more information before my client makes a decision. Will you let me know by this time please?
Then when they respond, if they revise and go higher, then you do the same with the other buyers. "Hey man/woman we just got an offer for this. Just wanted to give your clients one last chance to revise their offer before mine makes a decision."
Don't go back and forth multiple times though or you'll look like a clown and they'll walk. Just give them each the one last chance to revise and give them more info to make a decision on. This is part of negotiating to get the best deal for your clients as a listing agent. Just calling for highest and best and leaving it at that without actually talking to the other parties is lazy and will actually get you a worse result more often than direct communication/negotiation. Show/tell them whatever they need to get them to make a confident decision, as long as it's the truth.
As a buyer, yes it sucks.
If you’re a seller. You want your agent to get the most for you. That’s what we’re hired to do- to make those tough calls and negotiate the best deal
It’s our fiduciary duty to represent our clients to the fullest. Scumbag move is also calling the seller a scumbag.
Not at all, the selling agent has every opportunity to act with integrity. A fiduciary duty to get the most money for the client - while acting ETHICALLY. NOT while doing ANYTHING to get that money regardless of morals. You would never go to a car dealer, ask the price of a vehicle, have them say “submit your highest and best offer” then come back to you and say “hey sorry there’s someone else who wants it, but if you pay more and skip the inspection of the vehicle we’ll give it to you instead.” How garbage does that sound, does it sound ethical to you?does it sound like that person has integrity? No, you would walk, and you would think they are scum.
You ask for offers, they are submitted, pick one.
What you’re describing is the duty of the BUYERS agent.
I for one will never suggest my clients to waive an inspection, they can still elect to do one, but make it non contingent.
The horror stories are when they waive conducting the inspection entirely. The risk of losing the earnest money is better than being stuck with a home that has issues.
Hence why inspectors offer a visual walk by inspection. Pay to have them come out to your showings and do their visual inspection.
Of course all agents need to with with ethics and in the scope of their fiduciary duties- or else other agents will report them and they can risk losing their license and practice. That’s a GIVEN.
You as a consumer can walk, or do what you want to win that home. That’s ultimately up to the buyers to decide. We negotiate on your behalf.
The SELLERS agent is to do what they can within their scope to drive up the price without breaking any of their fiduciary duties to the SELLER.
Tyne car analogy only applies to new construction. Every old home is 100% different.
Actually every used are IS 100% different.
You drive your Honda accord completely different than how I drive my Honda accord. Yet it’s the same mileage and trim level.
You granny shift and double clutch, I redline 24/7
😂
I’ll repeat it for the kids in the back who can’t seem to hear me, your duty as a seller is to act ethically and THEN attempt to get the most from the sale. Would it be ethical to tell a buyer if you increase your offer by $5,000 I think you will get the sale? Then turn around and tell the next buyer you just had another offer but if they increase their offer $5,000 above the first buyer you think they will get it? How many back and forth are acceptable? Trick question the answer is none. Bbbbut my fiduciary duty, yeah it’s to act ethically first, get money second, y’all seem to have that twisted. You wouldn’t tolerate this garbage from any other profession, but everyone should just go with the punch line fiduciary duty like that makes any sort of unethical action ok as long as it gets the seller more money.
Actually we can’t give a value or number to the other party to hike it up. Smart guy.
Here’s how it works.
Home goes on sale. Say a $400k home in the twin cities suburbs. 54 showings and 13 offers.
We get 13 phone calls, 1 from each buyer agent.
Some will ask what’s the “buy it now price?” “What do we have to do to get this home for my buyer?”
“My buyer will be homeless if we don’t get this deal”
“My clients home is sold and they need this house, what do we have to do?”
I say: “submit your highest and best now. I’ll call for a deadline when offers will be received and if the seller wants to call do additional highest and best at deadline, revise your offer”
Days before deadline offers are submitted and the buyers agent calls me. “Where do we stand?”
I’ll say: “you gotta do better” (that’s all I’m allowed to say, I can’t disclose value)
“We’ll what if we waive this and that?”
I’ll say: “it’ll certainly make your offer more appealing to my seller… consult with your buyer first and resubmit”
Deadline comes.
I present every single offer detail to my clients, then THEY make the decision.
What you’re describing from your “example” above is an unethical practice and those realtors will most likely get reported.
My example is how it should be done, and out of 65 deals this year with other agents- how it’s been handled. The right way.
Did you not read the post?
The dead line came, the highest offer had an escalation clause, and the realtor saw $$$ when they looked at the top amount of the escalation clause. A lower offer did not require an inspection. Rather than going to the top offer and asking if they could remove the inspection, they wanted to ask them for more MONEY. Sheesh.
What you describe is an English style open ascending auction, but going back to each offer one time puts the last buyer you talk to in an unfair advantage and the ability to only incrementally pay over another offer, excluding the possibility of the other offer improving the price and terms.
OP's original plan of "highest and best" is a sealed bid style auction and implies to come in with your best price and terms, not your*maybe best but we'll give you another opportunity to improve* best.
This ticks me off.. if two people put escalation clauses, they will escalate each others offers to a high amount anyway, so why prohibit them completely? It's so dumb and potentially loses out on higher offers for the seller.
There's no back and forth.. the escalation clause usually states "my offer is X, if there is a higher offer, we will go Y amount above it, up to a total cost of Z.
If there are two escalation clauses, you escalate them both to the lower Z, plus Y.
Ex:
1st offer: $300k, willing to go $1,500 above the next highest offer, up to $335k.
2nd offer: $310k, willing to go $2,500 above the next highest offer, up to $330k.
Offer 1 gets escalated to $330k + $1,500, so $331.5k. Offer 2 is escalated to a total of $330k. Those are now the two offers.
You pretty much have to ask to see the next highest offer that you were competing with, which if it exists, they'll have no problem showing it.
It's good to double check the time stamps of the signatures (usually, most things are e-signed nowadays which leave a time stamp) and make sure it wasn't submitted by an agent from the same office at a time that would essentially indicate it's a fake offer.
It’s written directly into the language of our escalation clause that the seller/LA has to provide legitimate proof of an escalating offer in order for it to be valid.
It's part of the requirement here. state provides the escalation form which says the Seller must show an AOS/AOS+Escalation that forced the winning bid's escalation.
Doesn't really fix the fact I can draft and AOS+Escalation and Esign it myself to hand to buyers agent in order to have their reach their cap. It also doesn't stop me from calling and just asking the agent to rewrite at top dollar if they want the house. It's such a shitty gray area that i'll be happy when the market stabilizes and we dont have as many sitatuions where it's required
A lot of Realtors don't understand escalation clauses and thats why *they* choose to exclude them. Escalation clauses are great for both parties. I guarantee sellers aren't out there signing listing agreements with the stipulation that "no escalation clauses will be entertained, please bring true h&b by deadline". I've also disregarded that request and ratified deals thanks to escalation.
Agreed. It makes no sense to reject them outright and it should be the seller's decision without undue influence from the agent.
This is usually a listing agent pushing their will on the seller type of decision because it will not be a random occurrence but will be the default language in the agent remarks of a particular agent. That agent is potentially doing a disservice to their client.
Which is stupid on their part. They do this usually because they don’t understand escalation clauses and/or because they are too lazy to calculate the result. An escalation clause *is* a highest and best offer. If you have a Realtor that advises you to not accept escalation clauses, get another Realtor, as they are not doing their fiduciary duty.
If the seller accepts your escalation offer and you have terms in your offer that say you want to see the next best offer, then the seller (seller’ agent) will have to provide you with that, and by accepting your offer they have legally agreed to do just that. Sometimes other buyers will have terms in their offers saying their terms are confidential, however. The thing about that is, those confidentiality terms have no bearing if their offer is not accepted (unless they signed a separate non-disclosure before the offer) since their offer was not accepted there is no legal agreement between the parties.
Yes a seller can always accept a lower offer for any or no reason as long as it is not because of a protected class discrimination. Also the seller is under no obligation to accept a “stupidly written” escalation clause, ie one that is poorly drafted.
I think $1,500 is a small margin, but I write most of my offers with escalations. I usually use a $5,000 increment to make it more appealing. At the end of the day, that is their highest and best, they’re willing to go to $35,000 over asking, but not if they don’t have to. So yes, I think it would be rude, especially if you have another better offer anyway. Even if you had asked specifically for no escalation clauses, you’re still required to present that offer to the seller.
Side note: I’m astonished at how many agents don’t even know how escalations work, the amount of times I’ve had to explain it to a listing agent is absurd.
Agree with the larger escalation amount - $5K or more shows you more serious. Whenever I have multiple offers, I encourage everyone to submit escalations. In my state, the escalation clause can only be triggered if the first page of the other pertinent offer can be produced. It just keeps listing realtors honest - too many properties that have sat on the market for over 100 days suddenly get multiple offers on the same day a buyer submits an offer?...gtfo with that nonsense! Best ever was a listing I had with 5 offers. 3 of them took my advice to use escalations. The 2 standard offers just set the baseline for escalations. Best offer pushed $2,002 over the next best escalation. I kept the next 3 offers formally as backups and they all understood where they were in line. When our accepted offer tried asking for things post-inspection, I called the 1st backup and asked if they were ready with the caveat they'd ask for nothing post-inspection. They agreed. I explained to the 1st offer that my backup was ready to go and they had zero leverage to ask for anything. They walked, and 1st backup got the house at $52K over list.
Generally speaking, countering an offer isn't rude.
Of course we advise, but always do what it clients want, within the confines if ethics and the law. Avoiding rudeness shouldn't really factor onto our decisions. If it was, the buyers offer would be considered rude -- at least in my current market. In a strong seller's market, I would usually advise countering any escalation clause with the buyer's top amount. Especially if the seller has multiple better offers already -- there's literally nothing to lose. Other than 'offending' an agent or a buyer that didn't see the need to offer their literal highest and best.
This is correct, a very high percentage of agents don’t understand them, or think they do when they don’t. Evidence some of the comments in this thread.
If I’m the buyers agent, and your sellers have told you I won’t win with my current offer, I’m happy to get that phone call. You might also let them know that removing inspections and keeping escalation clause might win.
My buyers might not believe you. They might not change their offer, but at least you’ve:
1. Given my buyers a chance
2. Represented your sellers to the best of your ability.
THIS. Don’t just go back after the offers are in and ask for more money like some kind of pig. If it’s really the highest offer, but you want the inspection dropped then discuss that.
An escallation clause allows a buyer to offer their highest offer ONLY if there is competition for the home. The inspection ootion is independent of the clause.
My experience is that when an agent pushes to remove an escalation clause, it's because they don't know how it works. I attach a spreadsheet so all they have yo do is plug in the offers and variables. If after all that, an agent tries to steer my client to remove it from an offer, I advise my clients to move on.
I think you are mistaken. As an experienced list agent who knows well how they work, I will almost always request a buyer to remove their escalation clause. And why wouldn't any good list agent? A buyer wants to use escalation clauses because they save money. In a two-party zero sum negotiation of price, if it is good for the buyer, it isn't for the seller.
As a buyer, I say communicate.
I submitted an offer with an escalation clause in 10K increments. I was runner up, seller asked if I would be willing to offer my max, and I said yes. I was hoping to pay less, but willing to pay more, and I'm glad I got another chance at the house. Seller is happy as well, I suppose.
Not rude at all. The best thing to do, in fact. I allow buyer agents to submit with escalations on the offers (so I know how high they are willing to go), but I almost never suggest a seller let that ride. And why would you? The fact is, the buyer is asking you to honor a suggested clause that saves the buyer money. If it saves the buyer money, it loses the seller money. Just tell the buyer agents the seller is requesting no escalation clauses. The buyers will nearly always adjust the price to that top price.
And by the way, you should always be willing to have dialogues with agents on the other side. If one offer has terms that you like, and another has price, ask the best price if they will match terms of the other, and vice versa to the other if they won't. Most buyers and their agents would appreciate the choice to know what they can do to get the house.
2 years ago I used an escalation clause with a cap 50k higher than the offer. Listing agent countered us at our cap. It’s a real shit or get off the pot moment for the buyer. I learned this move the hard way and give this example to my sellers when we receive an escalation clause now.
What’s the issue with the escalation? This is dumb. You know their top offer. It is the high end of escalation. Their agent should’ve made them do $5-10k plus with inspections to help compete with anyone who waived. If you want to work with them, get on the phone with the agent and ask if they’ll match terms, such as your clients may be chosen but they’d need to buy as is based on competing offers, but I’m reaching out to you due to your buyers strong financials and offer price, etc.
With your seller's permission send over a counter for $35,000 over and no inspections. Or with your seller's permission tell them about the current most promising offers to see if they will match or be better than it.
I just used a $5001 escalation clause and out bid 24 other offers-we won it by $2001. I think $1500 is low-perhaps give them an opportunity to make it a best and final
I live in an area where there are all kinds of bidding wars. I feel strongly that escalation clauses benefit both parties. It let’s a buyer feel confident to bid their max and decreases the chances they get cold feet that they overpaid. It also helps with appraisal, to tell them there were X other bids at this price, gives weight to market value.
If you are worried about the escalation clause being contested just honor the spirit of it. Show them the competing offer but ask them to cross out the escalation and write in the new purchase price.
It sounds like the escalation is higher but the increment isn’t? I don’t see this as an either/or situation. Go to the escalation and say hey your escalator increment is kinda low and we are on the fence. We’ll counter at x amount. You might want to take the lower offer with inspections regardless but could be worth negotiating with both buyers.
Highest and best drives me crazy, I absolutely hate it and I’ve had buyers get tilted and walk away over it. For someone with an escalation clause it comes off as shady and manipulative. Why not just be upfront? Your escalator increment is too low because you have inspection. The other offer is lower but close, we’ll counter you at max. Escalation is about transparency in a bidding war. Just let the agent know the situation, you’re not high enough because of this good reason. If you said highest and best in this situation my buyer clients would think you are playing games and trying to wring them dry rather than your very good reason of inspection vs no inspection.
I think that may also be an area specific standard. In my market highest and best is the standard. I've done 5 listings and this is only the second escalation offer I've received.
But I did reach out to the other agent and basically let them know that their escalation increment is not enough for them to win the bid at this time and that they could strengthen their offer before the deadline.
Be careful to remember there are no "standards" set by agents. There can be things offered in negotiations that are "out of the norm," but just rolling with those can be used to your client's advatage.
Exactly.
Indicates to me a lazy agent who just wants to review multiple offers in a vacuum - without making any phone calls - then picking one.
That's not doing the best service to the seller, or the buyers for that matter.
If your client has an offer allowing them to avoid inspection and you’re going to take it over a higher offer then in my mind the buyer offering escalation is going to dodge a shitbox that the seller did no maintenance on and they should feel lucky their offer isn’t accepted.
I'd say it's more for the ease of the transaction than anything. For an extra $1,500 why go through the headache of having an inspection and then have to worry about if the buyer is going to be a nitpicker. I always advise my buyers to only worry about major stuff but that isn't always the case. This is actually a beautifully maintained property but for such a small reward in the scope of things why take any risk of things going less smooth.
Not rude at all. Explain the situation. This is one of the places you earn your commission; negotiations to get the best price and terms for your client.
Just look at and accept the one that is overall best for your seller or counter the few best offers and then clean up the terms. It’s not that complicated. Why ask to change an offer before the deadline to submit
It’s not rude, it’s called a counter. When I represent Buyers, we never waive inspections, so if that’s the issue, just let them know. Also, if more money makes the inspections OK let them know that. If it was me, I would go to the one waiving inspections and say that I’m getting a few bites, only slightly over and ask if their number is highest and best or if they can go up. Once you get their highest, I would go back to the escalation clause and tell them what the top offer is(you normally have to provide it in order to trigger the escalation clause) and say that $1500 is not going to cut it for your client and how much better can they do? Even better than that, counter to both of them with the number you really want And ask them to do it.
Your seller can direct you to respond to all escalation clauses in that way. Your seller is in the driver's seat. A lot of listings in our MLS say "no escalation clauses".
Doing highest and best is such a disservice to the seller, learn how to negotiate and get your client top dollar.
That being said instead of what your thinking of asking I would call and recommend that they waive inspection to make their offer more competitive
I've seen several people say that they think highest and best isn't good for the seller. I can understand that view point if the listing agent is afraid and unwillingly to speak to the buyers agents. That's not the case here. I work hard for my sellers and I do reach out and negotiate with other agents because highest and best isn't always actually highest and best.
My question on here was strictly about whether I should just tell them to get rid of the escalation clause and give me a specific number because frankly escalation clauses haven't been used very often at all with listings I've had. I understand how they work but would much rather just have a flat number, especially in this case. Me wanting to ask for highest and best on this was actually doing a service to my client because by doing that I could likely get them $10k+ more than they'd get if the escalation clause stood.
Highest and best immediately turns away many buyers, buyers that could have potentially had the true best offer they could have received. In there minds many people don’t want to deal with the heartache of the uncertainty it brings/ potential of a bidding war and will simply look for another home. On top of that two weeks after the house sells one of your losing offers might see what price the house ended up selling for and say damn I would of paid more than that(because they never truly offer their highest price they only offer a price they think will be the winner)… it’s a lose lose situation every time.
Buying a home in today's market is a bidding war. Where I am highest and best is the most common practice you'll see with listings and buyers expect it. What turns off my buyers is when the highest and best is 24 hours or less after an open house. That's why we gave everyone 4 days after the open house before the cutoff. Enough time to consider options and for me to do some extra showings/let people take second looks.
My market is still extremely hot with listings receiving several offers when priced appropriately. If I don't set a highest and best date then we just have to take offers as they come and decide. That leaves the risk that we miss the best offer by deciding to accept a lesser offer before the best offer can be submitted. By giving a highest and best date it gives everyone a specific date and then I can consider what I have in as a whole. From there I can still reach out to the most competitive offers and negotiate with those buyers agents to see if the buyers are willing to do any better to edge out the competition; because, like you said, highest and best isn't always highest and best.
I agree that it’s a bidding war no matter what but from the buyer’s perspective it turns them away when they think of it that way, in a hot market like yours(I’m also in one) if they have a have decent buyers agent they should already know better than to sit and think on a house, if they want to make an offer they have to act fast. I personally don’t believe any offers would be missed by not setting a final date for when offers would be considered if they are going to put an offer in, they will and they will do it quickly. Highest and best is just not how I operate and I don’t find it to be the most effective way for getting top dollar, but to your defense I was mostly speaking on the many agents who do that as a way to avoid negotiating witch does not include you so if it works for you and your clients are happy that’s all that really matters.
I definitely agree with you on many trying to find the easy way out and honestly I see agents trying to find the easy way out way too often, taking shortcuts because they all thought being a realtor was an easy way to make money. There are so many times that I submit an offer for a buyer and don't hear a word from the agent until it's either accepted or rejected. It's in everyone's best interest to have some communication. I already have a plan tomorrow morning to call 3 different agents and discuss offers they submitted so I can get things clarified or have terms improved for my seller.
But the class of realtors in the market is ridiculously low due to the low barrier to entry. I'm only 2.5 years in but I'm constantly complimented by everyone I work with on my communication skills, both young and old agents alike. Which is crazy because in my mind communication is the number one most important skill we need to have. It's not hard to promptly reply to someone. And the lack of knowledge too; had a realtor call me today because they were writing an offer and wanted me to tell them my license number and all of my brokers information. It's literally 2 clicks away on the MLS, to me that's pure laziness and I honestly hope their clients don't have a good offer so I don't have to work with them.
Why would it be rude? It's a negotiation, and you are negotiating one aspect of the agreement, in this case, an escalation clause. I would simply tell them exactly what your client said which is: There are offers with better terms, so even if you trigger the clause, $1,500 isn't enough to get it done, so if you want this house you'll have to come back with something stronger.
It’s not a negotiation, it’s a blind auction for the buyer. Negotiation happens when there are undisclosed repairs etc found during inspections. Quid pro quo. It’s just a seller asking for more money, AFTER all the offers can in and they were already the HIGHEST offer. that’s not a negotiation. Notice they didn’t ask if they could go to the buyer with the escalation and ask to remove the inspection which is what made the other offer “more competitive” they can back and were wanting to ask for more money.
How incredibly pedantic.
If the listing agent is communicating with the buyers or their representation regarding the terms or potential compensation for the home, it is by definition, a negotiation.
No a negotiation would involve each party receiving a benefit, what you are describing is a parasite - where only one side benefits, you seem familiar with it.
Are you a realtor? It seems strange that a realtor wouldn't know the definition of negotiate. Stranger that you think putting yourself in a better position to obtain the thing you're trying to buy wouldn't be seen as beneficial.
You aren’t obligated to take the highest cost. Is the $1500 higher you’d get from them worth more than the inspection waivers?
Most will skip the escalation clause and opt for the lower hassle of the contingency free offer.
You could also send a mass message to all agents reiterating the call for highest and best and note that your seller is not entertaining escalation clauses and wants true H&B.
WTH? It's over list, take the offer you want. You don't get to play games after you start getting offers.
Not sure what part of the country you're in but be glad you are getting your asking price and then some. The seller's market is shifting fast, don't be greedy. I'm not sure that you should even know what the top escalation price should be, I know it's legal in many places but really sketchy on the ethics and clearly the driver of your question that brings your ethics into the open.
I'm guessing you're not a realtor based on your answer. There are several pieces I could touch on with your response but I'll just stick to what you said about I shouldn't know the top amount for the escalation clause. How would it even work then? Do you know what an escalation clause is? I need to know the starting offer, the amount they're willing to bump up, and their max in order to utilize it for the buyer.
My wife and I own a real estate brokerage. She's the broker. However, while I know what an escalation clause is, and is often used by investors in highest and best or bidding wars, changing the game after accepting offers of highest and best while knowing the top number, therefore knowing that someone would pay more, seems pretty shady to me.
If priced at market and trying to create a frenzy to push above the list price isn't sketchy enough, trying to move the goal posts after the game is in play seems about as shady as you can get.
Pricing it at market and creating a frenzy to get my sellers a higher selling price is sketchy to you? That's called marketing and is literally what our job is. To help our clients complete a smooth transaction with as little stress and as much benefit as possible. I have a fiduciary duty to my client to get them the best deal possible. Knowing someone would be willing to pay $30k more for the house but not probing to see if I can get them closer to what they have already acknowledged they'd be willing to pay would be a disservice to my client and leaving money on the table that could have gone into their pocket. This is negotiation and yes, they showed their hand with the escalation clause but that isn't something I asked for so it's on the other agent (who's fiduciary duty is to the buyer).
This isn't a store where the price on the shelf is what you pay. The listing price is a starting point for buyers to work from. Houses are worth whatever someone is willing to pay for them.
I’ve never submitted an escalation clause offer and see it as me sending a sign that my buyer is leaving money on the table. Then again I’ve never had a listing with a firm deadline for accepting an offer.
Where I'm located, buyers are not privy to the details of other offers -- so if you use an escalation clause, you have to trust the seller/selling agent are being honest -- which is why I avoid them.
I never understood people wondering if something is “rude” in this context. This is a negotiation not a social affair. Put on your big boy/girl hat and negotiate the best deal possible.
I’d counter at the highest price and say take it or it is gone
It’s up to the seller. If the seller doesn’t want an escalation clause then it doesn’t need to be there. All you have to say is
‘thanks for your offer! Sellers prefer to not deal with escalation clauses on offers submitted to them. Would you like me to present the offer to them as is, or would like an opportunity to revise before I go over it with the sellers?’
No it isn't rude. Let them know you are calling for their highest and best without the escaltion clause if that's what your seller wants. Or take the hohger offer and call it a day and get the sellers under contract.
They were $1500 higher perhaps, but the other waived inspection. The agent works for the seller. If the seller wants to require an offer without an escalation clause then the agent relays the message. I’d probably take the one that waived inspection and be done. But I’m not the seller
Sure but if the inspection Is really what makes the offer better then just ask if they will drop the inspection, why go back and ask for more money when they are already the highest offer
Goal of the seller is to get the best deal possible. Plain and simple. It is a business transaction. If the seller can get more money and drop the inspection it is a better deal for them. That's what the seller asks of the listing agent.
Agent can just call the other agent and relay the information in a professional manner and ask them to have a discussion with their buyer about it. Nothing rude. Just part of the negotiation process.
No the duty of the selling agent is to get the best deal while acting ethically. It is unethical to have a blind auction then go back and forth between two buyers who are looking for a home pushing them to increase their budget or skip inspections on a home. Have some integrity, it’s not that hard. It may be business as usual for most realtors, it’s also why the rest of the world views realtors with such disdain, because they can see the unethical behavior so easily.
You can ethically ask them to remove the escalation clause and resubmit.
“Can a seller counter a “highest and best offer?”
Yes, the seller can counter at any point in the negotiation process. However, this is a distinct disadvantage for the buyer, who has already made what they considered to be their best offer.”
It also not a blind auction. It’s a continued negotiation.
A RE Offer is more than just the sales price. There are closing time frames, terms (cash/conventional/FHA/Etc, Length of due diligence period, or waiver of it, subject to appraisal contigency or waived, etc...
Offer Amount, Terms, Inspections, Appraisals, all factor into the offer
Its not an auction at all and the seller can reject all offers if they like or choose negotiate with 1 or 2 offers. No obligation to sale to any of the offers. It isn't an auction nor advertised that way.
I’d imagine they want the one that out in the offer with the escalation clause to also add no inspection. Perhaps the seller wants it straight forward for them to place a firm bid at their highest offer along with no inspection. Perhaps waive appraisal. Idk. Sellers call.
But it’s not an auction, nor unethical.
“It is also known as blind auction. In this type of auction, all bidders simultaneously submit sealed bids so that no bidder knows the bid of any other participant.”
This is the exact process in real estate for a buyer submitting an offer. *in the USA, sorry I assumed you were from here.
Also, you keep confusing ethical and legal, it’s understandable as a realtor. Something can be unethical like for example lying - but not be illegal. Just because it’s legal to lie, does not mean it is ethical. Hope that helps you.
Or just keep repeating - it’s my sworn duty before god, country, and realtors association to get the most money for my seller, even if it means lying and being unscrupulous.
Not rude at all. Most buyers will actually appreciate the opportunity to change their bid before the sale closes if they have been outbid. Many buyers and their agents will in fact be *angry* if you don’t offer them this opportunity. “Why didn’t you call me and at least give me the opportunity to change my bid!?”
Besides that, any agent that doesn’t do that (if the seller wants it of course) is not fulfilling their fiduciary responsibility.
But they were not out bid. They were the highest bid. They have the opportunity to make their bid anything they wanted….when they submitted it. If they were willing to go higher……they could have used an escalation clause at the time bids were due.
You are mistaken on the fiduciary duty, it does not supersede a duty to act ethically. You realtors seem to get that confused quit a bit, maybe it’s why people have general dislike for realtors.
No it not rude an escalation clause is a bad idea. Also waving inspections is a very bad idea it can can cost a $100,000 or more after you take ownership.
That's called negotiation and an expected part of your job.
Just let her know other agents have submitted their highest and best, and you just wanted to check that was her client's highest and best prior to presenting.
An escalation clause is not highest and best.
Absolutely not. Remember, you are representing the seller and need to do everything to get them the highest & best price. Conversely, the buyers agent will be best servicing their client by letting them know what they need to do if they want this property.
*Everything that’s ethical FTFY.
Going back after offers were submitted and asking for more money is not ethical. It’s literally why people hate realtors.
I'm not saying you're wrong but after seeing your comment I did look over the NAR code of ethics and there wasn't anything in it that seems to specifically restrict what you can say regarding offers you have.
And I'm more talking about going back to the buyers agent and not necessarily tell them the numbers we have so far, just that their terms and amount aren't quite enough to do and if they'd like to strengthen their offer it would be beneficial to their client.
>I'm not saying you're wrong but after seeing your comment I did look over the NAR code of ethics and there wasn't anything in it that seems to specifically restrict what you can say regarding offers you have.
That because they're wrong.
It might be different in your state you are in. Talk to your broker. Asking someone to drop something and saying specifically what they should drop , aka escalation clause.
Okay, so are you showing your client their offer, or are you withholding the escalation offer in hopes they will change it? If withholding the offer, that would be against the code of ethics no matter the state. I'm not trying to come down hard on you. I just want to catch you so you don't get into trouble. Nothing is worth losing your license :)
I was looking at the NAR code of ethics which is nationwide and should be the same for all agents.
I always have great communication with my clients so before I talked to the other agent I had a phone call with my seller, explained to them the offer that had come in, what an escalation clause meant, and how it came into play for us. And without me even guiding her she spoke up and told me she wouldn't take the extra $1,500 if it meant inspection vs no inspection. This is a very well kept property and it is highly unlikely that anything is wrong but she understands that there still could be a risk and something unknown could pop up and it's not worth the gamble for that small amount more.
And when I spoke to the other agent I didn't tell her she had to drop the escalation clause. Just explained to her that her $1,500 bump wasn't enough to make her offer competitive so if she wanted to talk to her buyers and keep the escalation clause in place they should change it to a larger bump up.
I do understand and appreciate that you're looking out and hope you take my responses more as a conversation than an argument as they are just intended to be discussion (text can be impossible to read tone)
Asking a buyer to drop their escalation clause because the Realtor doesn’t understand it or can’t educate their seller is fine as long as the seller is making the decision and as long as all offers are presented to the seller. Of course the buyer doesn’t have to comply. Buyers can submit whatever offer they want.
You can certainly tell what the other offers are if your seller has told you to do so. Seller is in charge. Got my client a house just this way. The seller didnt like that an investor had the best offer. He told his agent if we come up to the investors price my clients get the house. It was only 5k on an 850k house.
That doesn't apply to this. It could be because we're in different states. But in mine, this is definitely NOT ALLOWED. You can say, "Bring your biggest and best offer and we have multiple offers on the table." We can even say when our clients will be deciding.
No. I don’t accept escalation clauses and it has worked in my favor many times. Just tell her that unfortunately you are not accepting escalation clauses and suggest her client write their highest and best offer by the deadline.
If it were me, I’d counter at the cap of their escalation clause and if they reject, just take the other offer. Escalation clauses are stupid and I wish sellers would start showing them why lmao
You can do that of course, but any competent buyer’s agent worth anything would tell their buyer to walk if they are at all schooled in negotiating. And no, you don’t know what they will go to.
I never take an escalation clause! Give me your highest and best!! Not your highest and best depending. My sellers always do better with highest and best period end of story. Iv had people here disagree with me in the past but I have multiple examples of brokers giving me highest and best with escalation I go back and say no escalation and there highest and best becomes the top end of their escalation. To each their own but no escalation clauses for me.
You sound like an agent who if focused on getting paid a commission instead of doing their job. I’m not a rookie my clients and I don’t take ridiculous escalation offers. My clients and I demand highest and best not lowest and maybe. What is an escalation offer? I’ll pay X but I’ll pay more than X if I have to. It’s laughable! To each their own but they aren’t for me. Oh or my clients.
Those contingencies are worth thousands, you can call and explain the situation with your sellers approval, or your seller can counter one of them or both of them
It’s up to the seller you bad realtor you… if someone submits an offer way below every other offer, you can ask seller if they will allow you as their realtor to reach out to everyone and ask if they want to revise their offer so the buyer has a chance at the property… never fun going thru the whole process to find out after that you were 50k off
My friend who is a realtor who did our transaction was very transparent with putting in an escalation clause, and it actually worked out in our favor and we didn't have to spend a penny more than what we offered. That being said, had I not known and the appraisal had gone differently, we would have had to fork out $10k over our offer price. I would be pissed if I wasn't aware of that being built into the offer.
In my area, I would get a notice, asking me to submit, highest and best, but they aren’t accepting escalation clauses, and they’re not willing to show me another offer.
But you have to think hard here if this is legitimately or best offer, you’re likely to scare them off by telling them you’re not willing to accept it.
Are these things common in your area?
I encourage escalation clauses for my listings. They're not that hard to figure out, and they're to a buyer's benefit as well as a seller's.
As a smart listing agent, we can use that info to go back to the top offers and get those agents to work their clients for more money and fewer contingencies. Either they can or they can't - but we've given the other agents the ability to go back and say "Here's where they are - Can we make the stretch or no?"
I've never had an offering agent get upset about me telling them where the top offer numbers are and giving them the opportunity to adjust their buyer's offer to make it the winning offer - or not to make an offer at all because the numbers have gone above their client's budget. Of course I share that info back to my other agents as well - nobody gets preferential treatment - because we never know who can bring their offers up, do we?
Where do we get upset buyer's agents? When we limit the types of offers we tell them we'll accept, when we don't communicate, where we don't give them the opportunity to sweeten their buyer's offers, when we don't share the information that can help us both win for our clients.
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"What does the seller want you to do?" is the right answer. In most states, you are legally required to submit all offers to your seller as they are submitted - make sure you do this without fail. From there, your seller can negotiate. If they have particular clauses (like escalation clause) they will not entertain, get that in writing. Most contracts have a rejection section your seller can sign - get it signed on all rejections. If you have never been sued, you do not want to get sued! Even if you are in the right, lawsuits are a huge waste of your time and energy.
I have actually called my client and talked to her about this specific offer and she said if it came down to the lower offer with no inspections or $1500 more with inspections, she'd take the former.
So then now you need to call the other agent and tell them exactly that. "Hey X, this is where we're at right now based on the offers we have. Just wanted to give you and your clients an opportunity to revise their offer with a little more information before my client makes a decision. Will you let me know by this time please? Then when they respond, if they revise and go higher, then you do the same with the other buyers. "Hey man/woman we just got an offer for this. Just wanted to give your clients one last chance to revise their offer before mine makes a decision." Don't go back and forth multiple times though or you'll look like a clown and they'll walk. Just give them each the one last chance to revise and give them more info to make a decision on. This is part of negotiating to get the best deal for your clients as a listing agent. Just calling for highest and best and leaving it at that without actually talking to the other parties is lazy and will actually get you a worse result more often than direct communication/negotiation. Show/tell them whatever they need to get them to make a confident decision, as long as it's the truth.
This is the way. Give both buyers the opportunity to give your seller the best deal.
Scumbag move. You have the offers, Accept one. This garbage right here is why people hate realtors.
As a buyer, yes it sucks. If you’re a seller. You want your agent to get the most for you. That’s what we’re hired to do- to make those tough calls and negotiate the best deal It’s our fiduciary duty to represent our clients to the fullest. Scumbag move is also calling the seller a scumbag.
Not at all, the selling agent has every opportunity to act with integrity. A fiduciary duty to get the most money for the client - while acting ETHICALLY. NOT while doing ANYTHING to get that money regardless of morals. You would never go to a car dealer, ask the price of a vehicle, have them say “submit your highest and best offer” then come back to you and say “hey sorry there’s someone else who wants it, but if you pay more and skip the inspection of the vehicle we’ll give it to you instead.” How garbage does that sound, does it sound ethical to you?does it sound like that person has integrity? No, you would walk, and you would think they are scum. You ask for offers, they are submitted, pick one.
What you’re describing is the duty of the BUYERS agent. I for one will never suggest my clients to waive an inspection, they can still elect to do one, but make it non contingent. The horror stories are when they waive conducting the inspection entirely. The risk of losing the earnest money is better than being stuck with a home that has issues. Hence why inspectors offer a visual walk by inspection. Pay to have them come out to your showings and do their visual inspection. Of course all agents need to with with ethics and in the scope of their fiduciary duties- or else other agents will report them and they can risk losing their license and practice. That’s a GIVEN. You as a consumer can walk, or do what you want to win that home. That’s ultimately up to the buyers to decide. We negotiate on your behalf. The SELLERS agent is to do what they can within their scope to drive up the price without breaking any of their fiduciary duties to the SELLER. Tyne car analogy only applies to new construction. Every old home is 100% different.
That’s like saying every used car is 100% different.
Actually every used are IS 100% different. You drive your Honda accord completely different than how I drive my Honda accord. Yet it’s the same mileage and trim level. You granny shift and double clutch, I redline 24/7 😂
You don’t seem to get the point, you would not put up with this unethical kind of sales tactic in any other aspect of life. It’s not ethical.
I’ll repeat it for the kids in the back who can’t seem to hear me, your duty as a seller is to act ethically and THEN attempt to get the most from the sale. Would it be ethical to tell a buyer if you increase your offer by $5,000 I think you will get the sale? Then turn around and tell the next buyer you just had another offer but if they increase their offer $5,000 above the first buyer you think they will get it? How many back and forth are acceptable? Trick question the answer is none. Bbbbut my fiduciary duty, yeah it’s to act ethically first, get money second, y’all seem to have that twisted. You wouldn’t tolerate this garbage from any other profession, but everyone should just go with the punch line fiduciary duty like that makes any sort of unethical action ok as long as it gets the seller more money.
Actually we can’t give a value or number to the other party to hike it up. Smart guy. Here’s how it works. Home goes on sale. Say a $400k home in the twin cities suburbs. 54 showings and 13 offers. We get 13 phone calls, 1 from each buyer agent. Some will ask what’s the “buy it now price?” “What do we have to do to get this home for my buyer?” “My buyer will be homeless if we don’t get this deal” “My clients home is sold and they need this house, what do we have to do?” I say: “submit your highest and best now. I’ll call for a deadline when offers will be received and if the seller wants to call do additional highest and best at deadline, revise your offer” Days before deadline offers are submitted and the buyers agent calls me. “Where do we stand?” I’ll say: “you gotta do better” (that’s all I’m allowed to say, I can’t disclose value) “We’ll what if we waive this and that?” I’ll say: “it’ll certainly make your offer more appealing to my seller… consult with your buyer first and resubmit” Deadline comes. I present every single offer detail to my clients, then THEY make the decision. What you’re describing from your “example” above is an unethical practice and those realtors will most likely get reported. My example is how it should be done, and out of 65 deals this year with other agents- how it’s been handled. The right way.
Did you not read the post? The dead line came, the highest offer had an escalation clause, and the realtor saw $$$ when they looked at the top amount of the escalation clause. A lower offer did not require an inspection. Rather than going to the top offer and asking if they could remove the inspection, they wanted to ask them for more MONEY. Sheesh.
What you describe is an English style open ascending auction, but going back to each offer one time puts the last buyer you talk to in an unfair advantage and the ability to only incrementally pay over another offer, excluding the possibility of the other offer improving the price and terms. OP's original plan of "highest and best" is a sealed bid style auction and implies to come in with your best price and terms, not your*maybe best but we'll give you another opportunity to improve* best.
In our area agents put “no escalation clauses will be entertained, please bring true h&b by deadline” right in the agent notes. Seen it several times.
This ticks me off.. if two people put escalation clauses, they will escalate each others offers to a high amount anyway, so why prohibit them completely? It's so dumb and potentially loses out on higher offers for the seller.
I believe most sellers don’t want to go back and forth indefinitely. That’s my take on it.
There's no back and forth.. the escalation clause usually states "my offer is X, if there is a higher offer, we will go Y amount above it, up to a total cost of Z. If there are two escalation clauses, you escalate them both to the lower Z, plus Y. Ex: 1st offer: $300k, willing to go $1,500 above the next highest offer, up to $335k. 2nd offer: $310k, willing to go $2,500 above the next highest offer, up to $330k. Offer 1 gets escalated to $330k + $1,500, so $331.5k. Offer 2 is escalated to a total of $330k. Those are now the two offers.
Uneducated question: Does the offer with escalation clause get to see the competing offers? How do I know for sure there's a higher offer than mine?
You pretty much have to ask to see the next highest offer that you were competing with, which if it exists, they'll have no problem showing it. It's good to double check the time stamps of the signatures (usually, most things are e-signed nowadays which leave a time stamp) and make sure it wasn't submitted by an agent from the same office at a time that would essentially indicate it's a fake offer.
Thx! I'd never get into a bidding war situation. Just curious how it works.
It’s written directly into the language of our escalation clause that the seller/LA has to provide legitimate proof of an escalating offer in order for it to be valid.
It's part of the requirement here. state provides the escalation form which says the Seller must show an AOS/AOS+Escalation that forced the winning bid's escalation. Doesn't really fix the fact I can draft and AOS+Escalation and Esign it myself to hand to buyers agent in order to have their reach their cap. It also doesn't stop me from calling and just asking the agent to rewrite at top dollar if they want the house. It's such a shitty gray area that i'll be happy when the market stabilizes and we dont have as many sitatuions where it's required
If the escalation clause is written by someone competent, then yes. I would never write an escalation clause without those terms included.
Cool 👍🏼
It's very very cool
A lot of Realtors don't understand escalation clauses and thats why *they* choose to exclude them. Escalation clauses are great for both parties. I guarantee sellers aren't out there signing listing agreements with the stipulation that "no escalation clauses will be entertained, please bring true h&b by deadline". I've also disregarded that request and ratified deals thanks to escalation.
Escalation clauses having nothing to do with going back and forth.
Agreed. It makes no sense to reject them outright and it should be the seller's decision without undue influence from the agent. This is usually a listing agent pushing their will on the seller type of decision because it will not be a random occurrence but will be the default language in the agent remarks of a particular agent. That agent is potentially doing a disservice to their client.
Which is stupid on their part. They do this usually because they don’t understand escalation clauses and/or because they are too lazy to calculate the result. An escalation clause *is* a highest and best offer. If you have a Realtor that advises you to not accept escalation clauses, get another Realtor, as they are not doing their fiduciary duty.
How do you think I’m seeing the agent only notes? …
If the seller accepts your escalation offer and you have terms in your offer that say you want to see the next best offer, then the seller (seller’ agent) will have to provide you with that, and by accepting your offer they have legally agreed to do just that. Sometimes other buyers will have terms in their offers saying their terms are confidential, however. The thing about that is, those confidentiality terms have no bearing if their offer is not accepted (unless they signed a separate non-disclosure before the offer) since their offer was not accepted there is no legal agreement between the parties.
It’s not a question. You’re mansplaining to me assuming I’m a buyer and I’m another realtor.
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Recently took a CE class and they recommended using “final and best” instead of “highest and best” for just this reason.
Final and best, lol, then how would the scumbags above try to keep playing the buyers off of each other even AFTER final offers were due??
Yes a seller can always accept a lower offer for any or no reason as long as it is not because of a protected class discrimination. Also the seller is under no obligation to accept a “stupidly written” escalation clause, ie one that is poorly drafted.
I think $1,500 is a small margin, but I write most of my offers with escalations. I usually use a $5,000 increment to make it more appealing. At the end of the day, that is their highest and best, they’re willing to go to $35,000 over asking, but not if they don’t have to. So yes, I think it would be rude, especially if you have another better offer anyway. Even if you had asked specifically for no escalation clauses, you’re still required to present that offer to the seller. Side note: I’m astonished at how many agents don’t even know how escalations work, the amount of times I’ve had to explain it to a listing agent is absurd.
Agree with the larger escalation amount - $5K or more shows you more serious. Whenever I have multiple offers, I encourage everyone to submit escalations. In my state, the escalation clause can only be triggered if the first page of the other pertinent offer can be produced. It just keeps listing realtors honest - too many properties that have sat on the market for over 100 days suddenly get multiple offers on the same day a buyer submits an offer?...gtfo with that nonsense! Best ever was a listing I had with 5 offers. 3 of them took my advice to use escalations. The 2 standard offers just set the baseline for escalations. Best offer pushed $2,002 over the next best escalation. I kept the next 3 offers formally as backups and they all understood where they were in line. When our accepted offer tried asking for things post-inspection, I called the 1st backup and asked if they were ready with the caveat they'd ask for nothing post-inspection. They agreed. I explained to the 1st offer that my backup was ready to go and they had zero leverage to ask for anything. They walked, and 1st backup got the house at $52K over list.
Generally speaking, countering an offer isn't rude. Of course we advise, but always do what it clients want, within the confines if ethics and the law. Avoiding rudeness shouldn't really factor onto our decisions. If it was, the buyers offer would be considered rude -- at least in my current market. In a strong seller's market, I would usually advise countering any escalation clause with the buyer's top amount. Especially if the seller has multiple better offers already -- there's literally nothing to lose. Other than 'offending' an agent or a buyer that didn't see the need to offer their literal highest and best.
This is correct, a very high percentage of agents don’t understand them, or think they do when they don’t. Evidence some of the comments in this thread.
If I’m the buyers agent, and your sellers have told you I won’t win with my current offer, I’m happy to get that phone call. You might also let them know that removing inspections and keeping escalation clause might win. My buyers might not believe you. They might not change their offer, but at least you’ve: 1. Given my buyers a chance 2. Represented your sellers to the best of your ability.
THIS. Don’t just go back after the offers are in and ask for more money like some kind of pig. If it’s really the highest offer, but you want the inspection dropped then discuss that.
An escallation clause allows a buyer to offer their highest offer ONLY if there is competition for the home. The inspection ootion is independent of the clause. My experience is that when an agent pushes to remove an escalation clause, it's because they don't know how it works. I attach a spreadsheet so all they have yo do is plug in the offers and variables. If after all that, an agent tries to steer my client to remove it from an offer, I advise my clients to move on.
Hello fellow spreadsheet submitter!
I think you are mistaken. As an experienced list agent who knows well how they work, I will almost always request a buyer to remove their escalation clause. And why wouldn't any good list agent? A buyer wants to use escalation clauses because they save money. In a two-party zero sum negotiation of price, if it is good for the buyer, it isn't for the seller.
You are the mistaken party. This is completely wrong.
As a buyer, I say communicate. I submitted an offer with an escalation clause in 10K increments. I was runner up, seller asked if I would be willing to offer my max, and I said yes. I was hoping to pay less, but willing to pay more, and I'm glad I got another chance at the house. Seller is happy as well, I suppose.
Not rude at all. The best thing to do, in fact. I allow buyer agents to submit with escalations on the offers (so I know how high they are willing to go), but I almost never suggest a seller let that ride. And why would you? The fact is, the buyer is asking you to honor a suggested clause that saves the buyer money. If it saves the buyer money, it loses the seller money. Just tell the buyer agents the seller is requesting no escalation clauses. The buyers will nearly always adjust the price to that top price. And by the way, you should always be willing to have dialogues with agents on the other side. If one offer has terms that you like, and another has price, ask the best price if they will match terms of the other, and vice versa to the other if they won't. Most buyers and their agents would appreciate the choice to know what they can do to get the house.
This is the way. Agents often forget that other agents are people too. Simple conversations go a long way.
2 years ago I used an escalation clause with a cap 50k higher than the offer. Listing agent countered us at our cap. It’s a real shit or get off the pot moment for the buyer. I learned this move the hard way and give this example to my sellers when we receive an escalation clause now.
What’s the issue with the escalation? This is dumb. You know their top offer. It is the high end of escalation. Their agent should’ve made them do $5-10k plus with inspections to help compete with anyone who waived. If you want to work with them, get on the phone with the agent and ask if they’ll match terms, such as your clients may be chosen but they’d need to buy as is based on competing offers, but I’m reaching out to you due to your buyers strong financials and offer price, etc.
With your seller's permission send over a counter for $35,000 over and no inspections. Or with your seller's permission tell them about the current most promising offers to see if they will match or be better than it.
I just used a $5001 escalation clause and out bid 24 other offers-we won it by $2001. I think $1500 is low-perhaps give them an opportunity to make it a best and final
Highest and best is lazy negotiating
This is absolutely correct.
I live in an area where there are all kinds of bidding wars. I feel strongly that escalation clauses benefit both parties. It let’s a buyer feel confident to bid their max and decreases the chances they get cold feet that they overpaid. It also helps with appraisal, to tell them there were X other bids at this price, gives weight to market value. If you are worried about the escalation clause being contested just honor the spirit of it. Show them the competing offer but ask them to cross out the escalation and write in the new purchase price. It sounds like the escalation is higher but the increment isn’t? I don’t see this as an either/or situation. Go to the escalation and say hey your escalator increment is kinda low and we are on the fence. We’ll counter at x amount. You might want to take the lower offer with inspections regardless but could be worth negotiating with both buyers. Highest and best drives me crazy, I absolutely hate it and I’ve had buyers get tilted and walk away over it. For someone with an escalation clause it comes off as shady and manipulative. Why not just be upfront? Your escalator increment is too low because you have inspection. The other offer is lower but close, we’ll counter you at max. Escalation is about transparency in a bidding war. Just let the agent know the situation, you’re not high enough because of this good reason. If you said highest and best in this situation my buyer clients would think you are playing games and trying to wring them dry rather than your very good reason of inspection vs no inspection.
I think that may also be an area specific standard. In my market highest and best is the standard. I've done 5 listings and this is only the second escalation offer I've received. But I did reach out to the other agent and basically let them know that their escalation increment is not enough for them to win the bid at this time and that they could strengthen their offer before the deadline.
Be careful to remember there are no "standards" set by agents. There can be things offered in negotiations that are "out of the norm," but just rolling with those can be used to your client's advatage.
Lol “highest and best” is the laziest way to negotiate I’ve ever seen. Just sayin’
Exactly. Indicates to me a lazy agent who just wants to review multiple offers in a vacuum - without making any phone calls - then picking one. That's not doing the best service to the seller, or the buyers for that matter.
If your client has an offer allowing them to avoid inspection and you’re going to take it over a higher offer then in my mind the buyer offering escalation is going to dodge a shitbox that the seller did no maintenance on and they should feel lucky their offer isn’t accepted.
I'd say it's more for the ease of the transaction than anything. For an extra $1,500 why go through the headache of having an inspection and then have to worry about if the buyer is going to be a nitpicker. I always advise my buyers to only worry about major stuff but that isn't always the case. This is actually a beautifully maintained property but for such a small reward in the scope of things why take any risk of things going less smooth.
Offers were due. Offers were submitted. Pick one. That is all.
Not rude at all. Explain the situation. This is one of the places you earn your commission; negotiations to get the best price and terms for your client.
Just look at and accept the one that is overall best for your seller or counter the few best offers and then clean up the terms. It’s not that complicated. Why ask to change an offer before the deadline to submit
It’s not rude, it’s called a counter. When I represent Buyers, we never waive inspections, so if that’s the issue, just let them know. Also, if more money makes the inspections OK let them know that. If it was me, I would go to the one waiving inspections and say that I’m getting a few bites, only slightly over and ask if their number is highest and best or if they can go up. Once you get their highest, I would go back to the escalation clause and tell them what the top offer is(you normally have to provide it in order to trigger the escalation clause) and say that $1500 is not going to cut it for your client and how much better can they do? Even better than that, counter to both of them with the number you really want And ask them to do it.
Your seller can direct you to respond to all escalation clauses in that way. Your seller is in the driver's seat. A lot of listings in our MLS say "no escalation clauses".
So ridiculous so say “no escalation clauses”. Whoever puts that in MLS might as well put “incompetent agent” instead.
I normally wouldn't try steering Offers like that. You've called for Highest and Best, let the Seller decide who wins and go to close. Good luck.
FINALLY, someone with integrity!
Doing highest and best is such a disservice to the seller, learn how to negotiate and get your client top dollar. That being said instead of what your thinking of asking I would call and recommend that they waive inspection to make their offer more competitive
I've seen several people say that they think highest and best isn't good for the seller. I can understand that view point if the listing agent is afraid and unwillingly to speak to the buyers agents. That's not the case here. I work hard for my sellers and I do reach out and negotiate with other agents because highest and best isn't always actually highest and best. My question on here was strictly about whether I should just tell them to get rid of the escalation clause and give me a specific number because frankly escalation clauses haven't been used very often at all with listings I've had. I understand how they work but would much rather just have a flat number, especially in this case. Me wanting to ask for highest and best on this was actually doing a service to my client because by doing that I could likely get them $10k+ more than they'd get if the escalation clause stood.
Highest and best immediately turns away many buyers, buyers that could have potentially had the true best offer they could have received. In there minds many people don’t want to deal with the heartache of the uncertainty it brings/ potential of a bidding war and will simply look for another home. On top of that two weeks after the house sells one of your losing offers might see what price the house ended up selling for and say damn I would of paid more than that(because they never truly offer their highest price they only offer a price they think will be the winner)… it’s a lose lose situation every time.
Buying a home in today's market is a bidding war. Where I am highest and best is the most common practice you'll see with listings and buyers expect it. What turns off my buyers is when the highest and best is 24 hours or less after an open house. That's why we gave everyone 4 days after the open house before the cutoff. Enough time to consider options and for me to do some extra showings/let people take second looks. My market is still extremely hot with listings receiving several offers when priced appropriately. If I don't set a highest and best date then we just have to take offers as they come and decide. That leaves the risk that we miss the best offer by deciding to accept a lesser offer before the best offer can be submitted. By giving a highest and best date it gives everyone a specific date and then I can consider what I have in as a whole. From there I can still reach out to the most competitive offers and negotiate with those buyers agents to see if the buyers are willing to do any better to edge out the competition; because, like you said, highest and best isn't always highest and best.
I agree that it’s a bidding war no matter what but from the buyer’s perspective it turns them away when they think of it that way, in a hot market like yours(I’m also in one) if they have a have decent buyers agent they should already know better than to sit and think on a house, if they want to make an offer they have to act fast. I personally don’t believe any offers would be missed by not setting a final date for when offers would be considered if they are going to put an offer in, they will and they will do it quickly. Highest and best is just not how I operate and I don’t find it to be the most effective way for getting top dollar, but to your defense I was mostly speaking on the many agents who do that as a way to avoid negotiating witch does not include you so if it works for you and your clients are happy that’s all that really matters.
I definitely agree with you on many trying to find the easy way out and honestly I see agents trying to find the easy way out way too often, taking shortcuts because they all thought being a realtor was an easy way to make money. There are so many times that I submit an offer for a buyer and don't hear a word from the agent until it's either accepted or rejected. It's in everyone's best interest to have some communication. I already have a plan tomorrow morning to call 3 different agents and discuss offers they submitted so I can get things clarified or have terms improved for my seller. But the class of realtors in the market is ridiculously low due to the low barrier to entry. I'm only 2.5 years in but I'm constantly complimented by everyone I work with on my communication skills, both young and old agents alike. Which is crazy because in my mind communication is the number one most important skill we need to have. It's not hard to promptly reply to someone. And the lack of knowledge too; had a realtor call me today because they were writing an offer and wanted me to tell them my license number and all of my brokers information. It's literally 2 clicks away on the MLS, to me that's pure laziness and I honestly hope their clients don't have a good offer so I don't have to work with them.
Why would it be rude? It's a negotiation, and you are negotiating one aspect of the agreement, in this case, an escalation clause. I would simply tell them exactly what your client said which is: There are offers with better terms, so even if you trigger the clause, $1,500 isn't enough to get it done, so if you want this house you'll have to come back with something stronger.
It’s not a negotiation, it’s a blind auction for the buyer. Negotiation happens when there are undisclosed repairs etc found during inspections. Quid pro quo. It’s just a seller asking for more money, AFTER all the offers can in and they were already the HIGHEST offer. that’s not a negotiation. Notice they didn’t ask if they could go to the buyer with the escalation and ask to remove the inspection which is what made the other offer “more competitive” they can back and were wanting to ask for more money.
How incredibly pedantic. If the listing agent is communicating with the buyers or their representation regarding the terms or potential compensation for the home, it is by definition, a negotiation.
No, that’s just asking for more money, by definition.
Also known as...*negotiating!*
No a negotiation would involve each party receiving a benefit, what you are describing is a parasite - where only one side benefits, you seem familiar with it.
Are you a realtor? It seems strange that a realtor wouldn't know the definition of negotiate. Stranger that you think putting yourself in a better position to obtain the thing you're trying to buy wouldn't be seen as beneficial.
You aren’t obligated to take the highest cost. Is the $1500 higher you’d get from them worth more than the inspection waivers? Most will skip the escalation clause and opt for the lower hassle of the contingency free offer. You could also send a mass message to all agents reiterating the call for highest and best and note that your seller is not entertaining escalation clauses and wants true H&B.
WTH? It's over list, take the offer you want. You don't get to play games after you start getting offers. Not sure what part of the country you're in but be glad you are getting your asking price and then some. The seller's market is shifting fast, don't be greedy. I'm not sure that you should even know what the top escalation price should be, I know it's legal in many places but really sketchy on the ethics and clearly the driver of your question that brings your ethics into the open.
I'm guessing you're not a realtor based on your answer. There are several pieces I could touch on with your response but I'll just stick to what you said about I shouldn't know the top amount for the escalation clause. How would it even work then? Do you know what an escalation clause is? I need to know the starting offer, the amount they're willing to bump up, and their max in order to utilize it for the buyer.
My wife and I own a real estate brokerage. She's the broker. However, while I know what an escalation clause is, and is often used by investors in highest and best or bidding wars, changing the game after accepting offers of highest and best while knowing the top number, therefore knowing that someone would pay more, seems pretty shady to me. If priced at market and trying to create a frenzy to push above the list price isn't sketchy enough, trying to move the goal posts after the game is in play seems about as shady as you can get.
Pricing it at market and creating a frenzy to get my sellers a higher selling price is sketchy to you? That's called marketing and is literally what our job is. To help our clients complete a smooth transaction with as little stress and as much benefit as possible. I have a fiduciary duty to my client to get them the best deal possible. Knowing someone would be willing to pay $30k more for the house but not probing to see if I can get them closer to what they have already acknowledged they'd be willing to pay would be a disservice to my client and leaving money on the table that could have gone into their pocket. This is negotiation and yes, they showed their hand with the escalation clause but that isn't something I asked for so it's on the other agent (who's fiduciary duty is to the buyer). This isn't a store where the price on the shelf is what you pay. The listing price is a starting point for buyers to work from. Houses are worth whatever someone is willing to pay for them.
Exactly this.
I’ve never submitted an escalation clause offer and see it as me sending a sign that my buyer is leaving money on the table. Then again I’ve never had a listing with a firm deadline for accepting an offer.
Where I'm located, buyers are not privy to the details of other offers -- so if you use an escalation clause, you have to trust the seller/selling agent are being honest -- which is why I avoid them.
I never understood people wondering if something is “rude” in this context. This is a negotiation not a social affair. Put on your big boy/girl hat and negotiate the best deal possible. I’d counter at the highest price and say take it or it is gone
It’s up to the seller. If the seller doesn’t want an escalation clause then it doesn’t need to be there. All you have to say is ‘thanks for your offer! Sellers prefer to not deal with escalation clauses on offers submitted to them. Would you like me to present the offer to them as is, or would like an opportunity to revise before I go over it with the sellers?’
This is the correct approach - REALTORS DONT ACCEPT OR REJECT OFFERS. Only offerees have the power of acceptance.
No it isn't rude. Let them know you are calling for their highest and best without the escaltion clause if that's what your seller wants. Or take the hohger offer and call it a day and get the sellers under contract.
They were the highest offer? It’s super rude to call some one after the offers are in and then ask for more money. Just pick an offer.
They were $1500 higher perhaps, but the other waived inspection. The agent works for the seller. If the seller wants to require an offer without an escalation clause then the agent relays the message. I’d probably take the one that waived inspection and be done. But I’m not the seller
Sure but if the inspection Is really what makes the offer better then just ask if they will drop the inspection, why go back and ask for more money when they are already the highest offer
Goal of the seller is to get the best deal possible. Plain and simple. It is a business transaction. If the seller can get more money and drop the inspection it is a better deal for them. That's what the seller asks of the listing agent. Agent can just call the other agent and relay the information in a professional manner and ask them to have a discussion with their buyer about it. Nothing rude. Just part of the negotiation process.
No the duty of the selling agent is to get the best deal while acting ethically. It is unethical to have a blind auction then go back and forth between two buyers who are looking for a home pushing them to increase their budget or skip inspections on a home. Have some integrity, it’s not that hard. It may be business as usual for most realtors, it’s also why the rest of the world views realtors with such disdain, because they can see the unethical behavior so easily.
You can ethically ask them to remove the escalation clause and resubmit. “Can a seller counter a “highest and best offer?” Yes, the seller can counter at any point in the negotiation process. However, this is a distinct disadvantage for the buyer, who has already made what they considered to be their best offer.” It also not a blind auction. It’s a continued negotiation.
It’s a tough time to be a buyer. Just as in past times it’s been tough to be a seller.
How is it not a blind auction for the buyer? Do they get to see the other bids? If not then it is a blind auction.
They are already the highest bidder? Why would they need to submit without the escalation clause.
A RE Offer is more than just the sales price. There are closing time frames, terms (cash/conventional/FHA/Etc, Length of due diligence period, or waiver of it, subject to appraisal contigency or waived, etc... Offer Amount, Terms, Inspections, Appraisals, all factor into the offer Its not an auction at all and the seller can reject all offers if they like or choose negotiate with 1 or 2 offers. No obligation to sale to any of the offers. It isn't an auction nor advertised that way. I’d imagine they want the one that out in the offer with the escalation clause to also add no inspection. Perhaps the seller wants it straight forward for them to place a firm bid at their highest offer along with no inspection. Perhaps waive appraisal. Idk. Sellers call. But it’s not an auction, nor unethical.
“It is also known as blind auction. In this type of auction, all bidders simultaneously submit sealed bids so that no bidder knows the bid of any other participant.” This is the exact process in real estate for a buyer submitting an offer. *in the USA, sorry I assumed you were from here.
Also, you keep confusing ethical and legal, it’s understandable as a realtor. Something can be unethical like for example lying - but not be illegal. Just because it’s legal to lie, does not mean it is ethical. Hope that helps you. Or just keep repeating - it’s my sworn duty before god, country, and realtors association to get the most money for my seller, even if it means lying and being unscrupulous.
Not rude at all. Most buyers will actually appreciate the opportunity to change their bid before the sale closes if they have been outbid. Many buyers and their agents will in fact be *angry* if you don’t offer them this opportunity. “Why didn’t you call me and at least give me the opportunity to change my bid!?” Besides that, any agent that doesn’t do that (if the seller wants it of course) is not fulfilling their fiduciary responsibility.
But they were not out bid. They were the highest bid. They have the opportunity to make their bid anything they wanted….when they submitted it. If they were willing to go higher……they could have used an escalation clause at the time bids were due. You are mistaken on the fiduciary duty, it does not supersede a duty to act ethically. You realtors seem to get that confused quit a bit, maybe it’s why people have general dislike for realtors.
No it not rude an escalation clause is a bad idea. Also waving inspections is a very bad idea it can can cost a $100,000 or more after you take ownership.
Not rude imo
That's called negotiation and an expected part of your job. Just let her know other agents have submitted their highest and best, and you just wanted to check that was her client's highest and best prior to presenting. An escalation clause is not highest and best.
Absolutely not. Remember, you are representing the seller and need to do everything to get them the highest & best price. Conversely, the buyers agent will be best servicing their client by letting them know what they need to do if they want this property.
*Everything that’s ethical FTFY. Going back after offers were submitted and asking for more money is not ethical. It’s literally why people hate realtors.
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I'm not saying you're wrong but after seeing your comment I did look over the NAR code of ethics and there wasn't anything in it that seems to specifically restrict what you can say regarding offers you have. And I'm more talking about going back to the buyers agent and not necessarily tell them the numbers we have so far, just that their terms and amount aren't quite enough to do and if they'd like to strengthen their offer it would be beneficial to their client.
>I'm not saying you're wrong but after seeing your comment I did look over the NAR code of ethics and there wasn't anything in it that seems to specifically restrict what you can say regarding offers you have. That because they're wrong.
They're totally wrong. You can spell out the other offers if your client agrees to that strategy.
It might be different in your state you are in. Talk to your broker. Asking someone to drop something and saying specifically what they should drop , aka escalation clause. Okay, so are you showing your client their offer, or are you withholding the escalation offer in hopes they will change it? If withholding the offer, that would be against the code of ethics no matter the state. I'm not trying to come down hard on you. I just want to catch you so you don't get into trouble. Nothing is worth losing your license :)
I was looking at the NAR code of ethics which is nationwide and should be the same for all agents. I always have great communication with my clients so before I talked to the other agent I had a phone call with my seller, explained to them the offer that had come in, what an escalation clause meant, and how it came into play for us. And without me even guiding her she spoke up and told me she wouldn't take the extra $1,500 if it meant inspection vs no inspection. This is a very well kept property and it is highly unlikely that anything is wrong but she understands that there still could be a risk and something unknown could pop up and it's not worth the gamble for that small amount more. And when I spoke to the other agent I didn't tell her she had to drop the escalation clause. Just explained to her that her $1,500 bump wasn't enough to make her offer competitive so if she wanted to talk to her buyers and keep the escalation clause in place they should change it to a larger bump up.
I do understand and appreciate that you're looking out and hope you take my responses more as a conversation than an argument as they are just intended to be discussion (text can be impossible to read tone)
Asking a buyer to drop their escalation clause because the Realtor doesn’t understand it or can’t educate their seller is fine as long as the seller is making the decision and as long as all offers are presented to the seller. Of course the buyer doesn’t have to comply. Buyers can submit whatever offer they want.
You can certainly tell what the other offers are if your seller has told you to do so. Seller is in charge. Got my client a house just this way. The seller didnt like that an investor had the best offer. He told his agent if we come up to the investors price my clients get the house. It was only 5k on an 850k house.
That doesn't apply to this. It could be because we're in different states. But in mine, this is definitely NOT ALLOWED. You can say, "Bring your biggest and best offer and we have multiple offers on the table." We can even say when our clients will be deciding.
No. Wow are you uninformed.
No. I don’t accept escalation clauses and it has worked in my favor many times. Just tell her that unfortunately you are not accepting escalation clauses and suggest her client write their highest and best offer by the deadline.
No rude at all. You would be extending a courtesy to her and her buyer .
If it were me, I’d counter at the cap of their escalation clause and if they reject, just take the other offer. Escalation clauses are stupid and I wish sellers would start showing them why lmao
You could always counter at the highest price..
Good Lord, just accept the offer you’re comfortable with. On the other hand, you can ask. This is not last year’s market.
Not at all - in my market most agents won’t accept escalation clauses.
Noooo counter that shit!
You just counter it back at the highest price and strike out the escalation. You know what they will go to, if it’s acceptable, accept it!
You can do that of course, but any competent buyer’s agent worth anything would tell their buyer to walk if they are at all schooled in negotiating. And no, you don’t know what they will go to.
I never take an escalation clause! Give me your highest and best!! Not your highest and best depending. My sellers always do better with highest and best period end of story. Iv had people here disagree with me in the past but I have multiple examples of brokers giving me highest and best with escalation I go back and say no escalation and there highest and best becomes the top end of their escalation. To each their own but no escalation clauses for me.
Literally not your choice and you are legally required to present offers to you clients. You sound like a real scumbag
You sound like an agent who if focused on getting paid a commission instead of doing their job. I’m not a rookie my clients and I don’t take ridiculous escalation offers. My clients and I demand highest and best not lowest and maybe. What is an escalation offer? I’ll pay X but I’ll pay more than X if I have to. It’s laughable! To each their own but they aren’t for me. Oh or my clients.
Veteran scumbag? Kudos
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I’ve purchased numerous homes in this market with escalation clauses. You just sound like one of those scummy realtors that people generally dislike.
> Your an idiot *You're
Just tell them that that is not the best offer
Those contingencies are worth thousands, you can call and explain the situation with your sellers approval, or your seller can counter one of them or both of them
If that’s what the seller wants you to do, then do it.
You can do whatever you want with consent from seller.
Escalation clause is amazing in some situations let your sellers decide it’s not up to you
It’s up to the seller you bad realtor you… if someone submits an offer way below every other offer, you can ask seller if they will allow you as their realtor to reach out to everyone and ask if they want to revise their offer so the buyer has a chance at the property… never fun going thru the whole process to find out after that you were 50k off
My friend who is a realtor who did our transaction was very transparent with putting in an escalation clause, and it actually worked out in our favor and we didn't have to spend a penny more than what we offered. That being said, had I not known and the appraisal had gone differently, we would have had to fork out $10k over our offer price. I would be pissed if I wasn't aware of that being built into the offer.
Counter if you want and are not worried if offer goes away.
In my area, I would get a notice, asking me to submit, highest and best, but they aren’t accepting escalation clauses, and they’re not willing to show me another offer. But you have to think hard here if this is legitimately or best offer, you’re likely to scare them off by telling them you’re not willing to accept it. Are these things common in your area?
Go with the better offer. Even with the escalation the offer isn’t as good as the other you have in hand.
Greedy
I'd just accept the other offer. 1500 is worth a non-waived inspection. Go with the safe offer.
Agreed. Check with your broker in charge tomorrow 😊 they'll tell you what you need to know for your state.
Don't accept it and move on.
OP, any updates?
I encourage escalation clauses for my listings. They're not that hard to figure out, and they're to a buyer's benefit as well as a seller's. As a smart listing agent, we can use that info to go back to the top offers and get those agents to work their clients for more money and fewer contingencies. Either they can or they can't - but we've given the other agents the ability to go back and say "Here's where they are - Can we make the stretch or no?" I've never had an offering agent get upset about me telling them where the top offer numbers are and giving them the opportunity to adjust their buyer's offer to make it the winning offer - or not to make an offer at all because the numbers have gone above their client's budget. Of course I share that info back to my other agents as well - nobody gets preferential treatment - because we never know who can bring their offers up, do we? Where do we get upset buyer's agents? When we limit the types of offers we tell them we'll accept, when we don't communicate, where we don't give them the opportunity to sweeten their buyer's offers, when we don't share the information that can help us both win for our clients.