Those that are buying a selling a home often think that this sort of property transaction is pretty straight forward and that the process in which it goes through is pretty much the same. In general, it is but every purchase and sale is unique and often there are some challenges that have to be dealt with. One that has become quite common is what happens when a house gets multiple offers. For the seller, this is good news but for the buyers, it can be a little overwhelming.
What Are Multiple Offers When Property Buying and Selling?
Some houses remain on the market a little longer than others. It means they are getting more exposure and they can end up getting two or more potential buyers putting in an offer to purchase it.
Different Variations of Multiple Offers
One version is when the house has been on the market for a while.
- Why the house has been on for a lengthy period of time then all of a sudden there are several buyers interested can happen for a few reasons such as:
- One real estate agent happens to have a few clients that are interested in this particular style or price of the home. Sometimes referred to as pocket buyers.
- There may have been an increase in homes being putting on the market in the area, and it’s attracting more interest buyers.
- Or it was just one of those things like “murphy’s law”.
Another version is a home goes on the market as a new listing. Within about fourteen days the house starts receiving several offers. Some of the reasons this happens are:
- It has the right price
- It has curb appeal
- It is in a good area
- It’s in good shape
Multiple Offers Between Agents
A third possibility is the agent selling has a potential buyer on the sidelines.
There are times when an agent who is selling the house will also have a potential buyer that is interested. But not ready to make an offer. Instead, they will ask the agent to notify them if an offer comes in. This potential buyer is called a “pocket” buyer. This means the listing may get the chance to present a better offer than the seller’s agent.
How Should The Seller Respond to Multiple Real Estate Offers?
When this first takes place it can bring quick relief to the seller who wanted to get the house sold quickly. It is soon realized that there are some potential issues that have to be dealt with here.
It means having to make a decision about which one the seller feels is going to benefit them the most. It can be based on:
- The price
- Any conditions that come with the offer
- The financing
- Closing date
How Should The Buyer Respond to Multiple Real Estate Offers?
Each buyer in this situation has now found themselves in a bidding war. Depending on how badly they want the house they make some hasty decisions. These should be avoided and thought should be given to.
- How much can they afford to increase their offer and stay safe financially?
- Is an increased offer going to comply with the pre-qualification of a mortgage they may have?
- Is the buyer thinking about waiving a home inspection in order to entice the seller?
Does There Have To Be Multiple House Disclosure?
Laws differ throughout the provinces when it comes to property transactions. In Ontario, the real estate industry is compelled by law to advise any potential buyers that there is a pending offer on a house that they are showing interest in. Beyond that, they do not give specifics such as the pending offer amount or other conditions. This information is kept among the seller, the buyers with the offers, and the agent.
Can The Seller Lie About Multiple House Offers?
The sellers’ agent is going to do everything possible to sell a listing. This is their job but the majority of them will do so with integrity as they also have a reputation to uphold. They can say whatever they like to entice a potential buyer but there will be repercussions if what is said is misleading or a falsehood. So in summary they could lie about multiple offers but it would be a bad practice to do so.
How Can Realtors Handle Multiple Offers?
The Respective Agents Should Clarify The Situation With Their Clients. The selling (listing) agent’s primary responsibility is to the homeowner selling. This means that the realtor has to take the time to explain fully what the multiple offer situation means. The bottom line will be that the seller is going to make the ultimate decision of which offer they are going to take. The home can only be sold to one buyer.
The buyer’s agent is responsible to the buyer. Their responsibility is to let their clients know that it’s the buyer’s agent that drafts the offers and offers advice.
Agents vs Agents
Now the two agents can work together to bring the best deal forward for their respective clients.
The buyer’s agents need to bring a clear summary of the offer. It is easier to review in a summary form compared to the official document.
A back up offer. Offers initially won in a bidding war can often fall through. For those buyers who lost out on the initial bid, they may want to stand by as a backup offer. With the seller’s permission, this may be possible.
Multiple offers can mean more than two agents being involved and it can get a little complex for everyone involved. If the realtors retain their professionalism and serve their clients well then multiple offers do not have to be a stressful situation and can provide an excellent buy and sale. With the exception of those who lost the purchase.