With Nashville area sales up 25 percent and growing, the multi-offer scenario has become more prevalent in Nashville real estate circles. It’s a trend normally reserved for a frenzied market, but it has emerged as this market fights its way out of the doldrums that have dominated the past four years.

There are varying philosophies regarding buyer and seller representation in cases in which the seller receives more than one offer on the property. While usually experienced during the first day that the home is on the market, it could also follow a significant reduction in price or an extraordinary announcement, as was the case when Saturn announced its move to Spring Hill.

From the seller side, it is exciting and frightening and must be handled judiciously as the entire slew of suitors could evaporate as quickly as they appeared. The Realtor enlisted by the buyers and the sellers must disclose agency, which is the result of the Spring Hill sales extravaganza when sellers often thought the real estate agent that delivered the offer was their real estate agent, only to learn that the agent was the buyer and had another offer for the same property for hundreds of thousands more.

Flipping was not a new development.

So, when both sides have representation, it is beneficial to the buyers and sellers in that both sides can follow the rules.

On occasion, the Realtor, when he hears of the potential of multiple offers, can alert the other agents (representing potential buyers) that they need to bring their “highest and best” offers. This can prove dangerous as there are no offers in his possession, and many buyers have some interest in the house but do not want to pay the list price and are not amenable in participating in a bidding war. This strategy could alleviate the situation immediately, as there may be no offers forthcoming.

Some feel a better approach is to await all offers, then send them back to the drawing board for their highest and best. One reason this is considered better is that the buyers have at least gone through the exercise of writing the offer and the earnest money check so that they have an emotional and psychological investment in the property. However, once the offers are retuned, many will never return.

One approach that is not as exciting for sellers is to choose the best offer and work with those buyers. Sellers feel that they are losing their advantage and that an auction atmosphere is beneficial to them. Choosing the offer with the best terms and price and trying to improve upon that can have better results in an unstable market, which is what our area now has.

Sale of the Week

As the market is shifting with the increased activity, a new tradition is started here. One sale each week will be tracked in order to identify trends in a particular market. This week the property is unit #1207 in the Terrazzo. This unit was closed on April 4, 2010 for $251,000. On May 5, 2011, it was sold and closed with a price of $274,000. Then, last week, the same unit closed for $305,000.

Richard Courtney is a real estate broker with Pilkerton Realtors and can be reached at Richard @richardcourtney.com