The first thing buyers probably want to know is why we have so many multiple offers, when the real estate market doesn't seem overheated? The answer is that consumers today know the market very well, often as well as their agents do. They have been to many open houses and/or showings, and they have a sense of how quickly a home will sell. We advise sellers, in the pursuit of a high selling price, to price their homes in the sweet spot--i.e., where the buyers will perceive that they need to make a good offer right away, if they want to get that house. Since many properties on the market are overpriced, those homes priced aggressively stand out, and buyers know that.
So, here we are. We have a new listing, priced to sell, and three different sets of buyers have made offers. What do we do now? The most important realization for most people is that the seller is in control. The agent advises, but there is no law on how to handle multiple offers, so s/he can accept any of them, ask for each of them to present a new offer, or simply state what they would take, and sign with the first party who agrees. If I am allowed to give advice, I tell people to negotiate with one party at a time (especially since the only real danger in multiple offers is that the seller might inadvertently accept more than one, or the buyer might have offers accepted on more than one home, if they are not paying attention to the details). It might be the highest price, but it's also possible that it's the cleanest offer with the fewest contingencies, an offer without a mortgage requirement, or an early closing date. If you are the buyer, then, you should make the cleanest offer that you possibly can.
Many times the agent asks each of the bidders to come in with their "highest and best" offer. In that case, I tell people to offer the highest price that they would be sorry not to have bid, if someone else got it for that amount. That means, of course, that buyers shouldn't be sorry if they went as high as they could afford to go. In a multiple offer situation, buyers should not expect, however, to be able to renegotiate much, if at all, after inspections. When there's another buyer, or buyers, in the picture, the advantage here goes to the seller. Also, in a multiple bidding environment, you should not count on a Hubbard clause to win the bid, since a clean offer will almost always beat it.
The last important note to strike is that it's very common for buyers to doubt that other offers exist, or that they are being treated fairly. Agents, in my experience, don't lie about other bidders, nor do they do anything that would interfere with the seller getting the best offer (which may, of course, not be the highest in dollar terms). Most Realtors are very careful to give the same information and opportunity to all parties, since we are bound by the Code of Ethics to treat all parties fairly, and to act in the best interest of our client. No one is happy to lose a bid, but it can happen under the best of circumstances, and buyers should learn from any mistakes (like delaying), and move on.
For Sellers: Price to sell, and be fair to everyone. Don't be greedy.
For Buyers: Do your homework ahead of time--know your limits and your preferences. Act quickly!
