After experiencing at least half a dozen multiple offer situations in just one week, I can definitely say that multiple offer situations are in the seller’s best interest. On the other hand, they can be very painful for the would-be buyers, and for salespeople representing buyers who did not win the multiple offer bids. Mind you, I was in both the above situations lately.
When there are multiple offers on a property, it is not uncommon for the property to sell for more than it’s list price.
As a general rule, sellers of real estate who list their property for sale are not obliged to sell, even if a buyer offers them the exact price and terms that they have indicated are acceptable. Sellers of real estate always have the right to change their mind about selling their property right up to the offer accepting stage.
MULTIPLE OFFERS AND THE SELLER
Well-priced listings in a hot market, may trigger multiple offers for the sellers. The seller in a multiple offer has many choices:
a. Accept one and reject the others;
b. Counter one of the offers and reject the others;
c. Reject all offers, sending them back to the buyers for improvement;
d. Counter one offer and hold on to the other offer(s) pending a response from the buyer bringing the counter offer; or
e. Hold on to one or more offers while sending the other offer(s) back to the buyers for improvement.
In multiple offer situations, it is standard practice to keep the details of each bidder’s offers confidential from other bidders. This “blind” bidding process is in contrast to the “open” bidding process such as live auction, where bidders are aware of competing bids and can tailor their bids accordingly.
MULTIPLE OFFERS AND THE BUYER
In a “seller’s market“, buyers often find themselves in a bidding wars. As a buyer you should be aware of the following:
a. Real estate can sell for more than the list price,
b. Sellers can refuse a full-price offer, and
c. In multiple offer situations, properties often sell for more than the list price.
In a hot market, buyers may find that every good property is attracting more than one offer, most of which will be unconditional offers. It is in their best interests not to rule out homes that attract more than one offer.
It is true that even in multiple offers scenario the buyers may be able to buy the property on terms acceptable to them. An informed buyer should be aware of the above seller’s options when receiving multiple offers.
Buyer Tips when bidding in a multiple offer situation:
Be readily available on offer-presentation day to respond quickly in the event that the seller counters his/her offer back or sends all offers back for improvement.
Get pre-qualified for the needed financing. Even if the financial institution approves you for mortgage loan, such approvals typically are conditional upon the property appraising at a value equal to or greater than the price paid and, may still be subject to other qualifications.
It may be an option for buyers to get a professional home inspection report “prior to” the presentation of their offers. That way they can go to the table with a good idea of the property’s strengths and weaknesses, while avoiding the need for a deal-killing inspection condition. Pre-presentation inspection is a possibility. Most sellers will permit these inspections if asked as it shows that the buyer is serious and already has some money invested in the property. Also, some sellers may already have an inspection report available.
Buyers should know that the standard practice in multiple-offer situations is for the listing broker and the seller to conduct a “blind” bidding process; as buyers they will never know what the other offers were. If the buyer is successful, he/she will never know how much more he/she offered than the next-best bidders.