Multiple Offers and Asterisk Clauses

How to Go From Two (or More) Buyers to None

Multiple offers are popping up frequently enough in the Twin Cities these days that agents are dusting off their strategies, disclosure policies, etc. for dealing with same.

Or at least, Realtors who haven’t been in one in awhile (or ever).

Personally, I’ve been in three in just the last 3 months — once as a Listing Agent, and twice as a Buyer’s Agent (interestingly, in one of those, I only found out after the fact).

“Match and Raise”

One strategy sometimes employed by Buyers in multiple offers is what agents call an “asterisk clause.”

Instead of filling in a purchase price, the Buyer fills in an asterisk, with this phrase (or the equivalent) added in the margin:  ‘Buyer will pay $5,000 (or $10,000, or $200) over next highest offer.’

So, why do reputable agents (including yours truly) frown on such a tactic?

Because as often as not, it can backfire on the Seller, just as quickly leaving them with no offers.

Scenarios

That’s what can happen when one of the bidders greatly overshoots the other(s), and the Seller informs the “asterisk” Buyer that they just agreed to pay $5,000 more than that.

Rather than wildly overpay, such Buyers will typically find a way to walk — or renegotiate a much lower price after everyone else has.

Scenario #2:  everyone comes in with an “asterisk” offer.

Which leaves you . . . nowhere.

Because of these (and other) perils, most experienced listing agents handling multiple offers set ground rules that preclude asterisk offers.

See also, “After You . . . No, After You . . . No, After You.”



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