Homebuyer, "love letters" to Sellers, help buyers tell their personal story and elevate their offer to stand out to a Seller; these letters have been perceived to be especially important to Buyers when Buyers knew they’d assuredly be in multiple offer negotiations with a Seller. In the Fall of 2020, the National Association of REALTOR’s® issued a white paper (or legal briefing) to its members alerting us of the potential fair housing violation risk associated with home buyer letters to Sellers and, in effect, ending the process for educated REALTOR® professionals.
Why would a home buyer letter to a Seller be a fair housing risk? Buyers disclose personal information such as their family composition (think, whether they are expecting or how convenient the nearby school will be for their family), race (including a picture), religion (disclosing their delight about the nearby religious facility), age, gender, or national origin in those letters. All aforementioned factors are protected by Fair Housing and are
not to be considered by a Seller
when selecting their winning
offer. Suppose a REALTOR® participates in delivering, writing, or sharing a home buyer letter to a Seller. In that case, that agent may have participated in Fair Housing discrimination and be subject to a significant fine.
If you can’t write a homebuyer letter to the Seller to stand out, how do you become a successful buyer in this likely-to-be multiple offer market?
Sellers, just like buyers, have specific goals. Each offer might have some terms that greatly appeal to the Seller and others that are less desirable. With a
Multiple Counter Offer, the Seller can respond to each offer with the terms that appeal to the Seller, reflective to that Buyers offer. If the Buyer accepts the
Multiple Counter Offer presented to them by the Seller, the deal is not yet ratified. The Seller has to counter-sign to ratify a
Multiple Counter Offer. Remember, the Seller offered terms to multiple Buyers, who assumably all want the house. However, there is only one property to sell, so if every buyer accepted the
Multiple Counter Offer, the Seller would still have the opportunity to select their most desirable offer. The specific language from
The April 2019 Montana Association of REALTOR’s® Multiple Counter Offer form regarding the response process reads:
“Seller is also making a counter offer(s) to another prospective buyer(s) on terms which may or may not be the same as in this Multiple Counter Offer. Acceptance of this Multiple Counter Offer by Buyer shall NOT be binding unless and until this Multiple Counter Offer is subsequently re-signed by Seller, as set forth below, and the re-signed copy is delivered in person, by mail or electronic means to the Buyer or Buyer's Broker/Salesperson within the time specified ("Final Acceptance").”
Are there risks in using a Multiple Counter Offer for the Seller?
Yes. It is possible that all Buyers could elect to reject, or simply not respond to, the response drafted by the Seller for each Buyer, leaving the Seller with the property and no potential buyer.
Sellers may elect instead to work with their seemingly most substantial offer first, instead of executing a Multiple Counter Offer. When working with one offer at a time, Sellers select the offer they feel has the highest likelihood of success and the most desirable terms, leaving negotiations with additional buyers to be addressed later, if the need arises. This strategy renders the other buyers in-waiting, hoping for a chance to negotiate for that property, and assumes that the other buyers will, in fact, wait for their turn to negotiate.
Considering all the Seller’s choices, buyers must bring their strongest offer first, knowing that this offer may be their only chance to negotiate with the Seller. As mentioned before, buyers are dealing with "blue sky" when presenting their offer, of course considering what others may offer, and therefore each buyer must know their personal limit
is for this
property.
Each buyer’s tipping point is individual. Today, historic tools, such as your agent advocate identifying comparable sales for you as the buyer and using that data to help you outline the framework of an offer acceptable to you, are now just a reference point. No longer are they the litmus for a property's value. The bids set the market in multiple offers, and appraisers consider the pricing war a strong market indicator when appraising the property. Further, Sellers are unlikely to accept offers subject to contract price appraisal in an escalation situation as they likely have other options not subject to appraisal. So, today there is not the framework of historic sales to fence the Seller into considering historic sold data as a strong driver of what their property can, or should, garner today.
Through much of my career, similar Gallatin Valley properties (location, size, and finish) sold within about $10,000 of one another. We knew that homes in Bozeman statistically sold within 1%-3% of their asking price, or languished on the market if they were overpriced. In 2021 that framework seemed to dissolve. Brackets, or the range of sold values for similar properties, expanded to be greater than $100,000, and the old saying from Whose Line is it Anyway began to echo in in my head every time I evaluated sold data; “Welcome to Whose Line is it Anyway, where the show’s made up, and the points (insert: prices) don’t matter.”
