I've always wondered what really happens after a REALTOR specifies a cut-off time for offers and multiple offers come in, particularly in today's apparently scorching hot market, where 10+ offers are supposedly more common than in years past. How transparent is the process to all offerors? How does the counter-bidding process work? Do all offerors have a chance to stay in the game? How much time is given to put in a new offer? Does it turn into an auction?, etc.
This is how things works for the most part....
i/ Property is listed on a Thursday, open house Saturday/Sunday and offers to be presented at 6 pm Sunday or Monday, for example.
ii/ Offers are typically emailed to listing REATLOR® before that time and listing REALTOR® presents all the offers to the seller. Sometimes the buyer's REALTOR® presents his or her offer at the seller's home with a picture of the young family that is making an offer....emotional appeal only works if the offer is the best offer
iii/ In theory everyone submitting offers should be aware of how many other offers there are; in reality offers are not being sent in until 5:55 pm for example. I am finding the market right now is so crazy that there are TYPICALLY more offers when it is all said and done than was anticipated. So no, it isn't completely transperent because you could call listing REALTOR®at 5:50 and she has 4 offers, you send in yours, but by 6 pm she has 8 offers and a 9th REATLOR is presenting his or her in person. Often things are so crazy listing REALTOR® simply does not have time to call everyone back as each additional offer comes in last minute especially when you get into 10+ offers (yes, there are properties with 10+ offers).
iv/ Typically when you have 5+ offers (usually over asking) seller does not engage in counter-offer negotiations. The best offer is accepted as is I would say 90% of the time; therefore, as a buyer you need to put your best foot forward right away as you probably will not get a counter offer. For example, if asking price is $749,000 and seller has offers of $775,000 - $800,000 and $851,000 seller will just take the $851,000. They are typically not going to call back the $775,000 or $800,000 asking $860,000.
It is not an auction!
This is a great personal example. Earlier this year my clients offered on an expensive property $50,000 below asking. There was a competing offer (only one competing offer) and that party offered well over $100,000 above asking. If it wasn't for my clients below ask offer the other party could have bought the house for asking price; however, they incorrectly assumed my clients offer was above asking.
Personal advice: Don't try to outbid everyone blindly because you will get fried playing the guessing game.
On a side note a LOT of buyers are making unconditional offers right now so if you have subject to financing/inspection, etc. and there is 5 plus offers and 3 plus are unconditional your conditional offer is going into the trash bucket right off the bat.
I do not like unconditional offers (I am very pro inspections, oil tank scans, video camera inspection of drain tiles, etc.) but reality is often right now buyer has no chance with a conditional offer.