Negotiating Tips: Why You Should Honor Your Verbal Offers
Too much of a good thing…
Sellers today often face an overflow of options, oftentimes even after they have accepted an offer. But it's essential for all of us that the real estate market retains its moral compass.
When I sold my own East Village apartment recently, I faced the same abundance of good news many NYC sellers receive these days: lots of interest, with six buyers quickly putting bids in, then racing to outbid each other. Once I had a very suitable candidate offer 10% over the asking price, above all other bids and at a level I was extremely happy with, I accepted their offer and sent out a contract.
Then, I experienced something that has become fairly common in today’s market: the other buyers kept clamoring, asking what they would have to do to outbid the accepted offer. I have to admit I was tempted—do I honor the verbally accepted offer, or see if I can get a few thousand dollars more?
It wasn’t a very hard decision. I had reached an agreement with the buyer, and even though we hadn’t signed on the dotted line just yet, I felt honor-bound to stand by that agreement. This is one of the traditionally accepted tenants of real estate: when you verbally accept an offer, you’ve committed to that buyer. But I too often see sellers committing to a buyer, then saying someone else is still in the mix.
It’s only human nature to be tempted by the possibility of “more.” But clients don’t always understand that real estate isn’t just transactional; it’s about creating a meeting of the minds.
As a broker, I work carefully and tirelessly to ensure that my sellers get the best possible offer from the most suitable buyer. The problem with backing away from an accepted offer is that you’re betraying that meeting of the minds. If you then accept another offer, there’s no guarantee that the new buyer is going to pan out (oftentimes they are desperate after being told someone else won, but may back out after they really think it through). Then you have to go back to the original buyer and they may be so peeved that they no longer want to work with you. In a way, it’s like gambling: It’s always tempting to double-down and see if you can’t get just a little bit more, but the smart move is often to walk away once you have what you came for.
Whenever I work with a new seller, I explain that while an accepted offer isn’t legally binding until the contract is signed, you really shouldn’t accept an offer if you have any intention of walking away from it. Similarly, while some buyers now bid on multiple apartments at the same time, then try to get out of the accepted offer on one of them, I advise my sellers to be up front and only pursue one property at a time.
Part of my job is to be the calming influence throughout the entire deal. Because of the level of mystique that hovers over every deal in this industry, buyers and sellers can lose sight of what’s practical and prudent, because they’re always wondering if the grass is greener. As brokers, it’s our obligation to push for the moral high ground when we advise our clients, and to demonstrate why taking that route is almost always the smartest best.
Look, I’m not going to pretend that there aren’t times when walking away from a deal makes sense. If a seller of mine has an offer accepted but someone else comes along with $100,000 more, they’re more than likely to think that’s worth risking the first deal—and our code of ethics compels real estate brokers to always act according to what our clients want us to do. But those rare exceptions aside, it’s important to understand that the real estate industry is built on trust and commitments.
We need to retain a moral compass, which includes standing by accepted deals—otherwise those commitments won’t mean anything anymore. In 99% of deals, this shouldn’t be an issue, because a good broker will make it easy for a client to accept the best offer from the best buyer, and remain confident that it’s the very best decision.