We’ve Got Two Offers! OK…What do we do now??

In our current inventory deprived market, property is coming on the market one at a time and there are buyers waiting for the next one to appear.
A couple of hundred Realtors have created searches to automatically notify buyers when a new listing appears.  That’s why it’s not unusual to have an offer on a property in only a couple of days, often sight unseen by the buyer.
So the chance of having multiple offers is once again very good.  
As a seller receiving two offers or a buyer who made one of them, what are your rights and responsibilities?
The first thing all parties need to know is that it’s no longer a negotiation, it’s an auction.  offers web
Buyers: your broker should be aware that there is another offer unless the seller has told his broker not to reveal that information.  That rarely happens and there is really no good reason to keep multiple offers secret.  Transparency and disclosure is the best policy.  But the choice is the seller’s to make… in writing.
So as one of multiple buyers, you need to quickly decide how much you want this specific property.  If the answer is “a lot” your only real option is to immediately make the cleanest full price offer you can.  You probably won’t know if the other offer is clean and for cash or has contingencies for a loan or sale of another property, if it’s close to full price or way low.
If you’ve been waiting for a specific neighborhood and maybe have lost out on other properties, it’s time to do what it takes to get the property you want.  Or if it’s just too expensive and you aren’t that excited about buying anyway, it’s time to change your priorities.
Sellers: it’s your call on how to handle the offers.  You may negotiate with the first buyer in, the best offer in, or ask all buyers for their highest and best offer.  Just don’t get too uppity with multiple buyers, they might all just get mad and go away.  And whatever you do, don’t counter to both buyers at once.  If they both accept you’ve sold the same property twice.
The most transparent and straight-forward way to proceed is to tell buyers where the bidding stands.  That way all buyers can make a fully informed decision to change their offers or to decline to participate.  Either way, no one can say they were mislead or didn’t have all the facts.
When the parties feel they have been deceived or manipulated, the odds of legal trouble – justified or not – rise exponentially.
And this is a small town.  Buyers, sellers (who may not be leaving town) and Realtors may have to live and interact with all these parties for a long time.
Multiple offers are a complex, emotional and demanding situation that takes skill and diplomacy to negotiate successfully.  You need a Realtor who has seen multiple offers many times before, and who can successfully finish the transaction with a minimum amount of drama.

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