Ala Carte Disclosure vs. “All or Nothing”
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
Unlike, say, Minnesota’s mandatory Seller Disclosure, home sellers in multiple offers have complete discretion over whom they tell.
To be sure, the default is telling everyone: the more Buyers competing for a home, the higher the price (at least usually).
That’s why Edina Realty’s standard listing contract states that listing agents (representing Sellers) will inform Buyers of the existence of multiple offers unless the Seller explicitly directs them not to.
Opting NOT to Disclose Multiple Offers
Why would a Seller instruct their agent not to disclose multiple offers to a Buyer?
I can think of at least three situations:
One. The listing agent knows one of the Buyers is already at the top of their price range. If they’re told they have competition for the house, they’re likely to drop out.
Two. One of the Buyers has made a preemptively high offer. When there’s a clear winning offer already on the table, the most expeditious path can simply be to take it, before they change their mind!
Three. One or more of the Buyers has previously made insultingly low (lowball) offers and is (still) well below the asking price.
Even if such a Buyer will now raise their price in competition, at least some Sellers would rather sell their home to another Buyer.
Note to prospective Buyers: a) selling a home can be emotional; and b) yes, Sellers can and do decide who to sell their homes to ” and who not to ” every day (they just can’t illegally discriminate).
So, how do the above factors play out in the typical multiple offer scenario?
At least in my experience as a listing agent, at least 90% of the time, my clients’ preference is to tell all prospective Buyers of the existence of multiple offers.
See also, “Getting the Edge in Multiple Offers“; “Why Smart Listing Agents Defer Discussing Multiple Offer With Home Sellers”; and “What Buyers’ Agents in Multiple Offers Should Always Ask the Listing Agent.“