Multiple Offers…What Will You Do?
Your Realtor has driven you around for miles. You have searched and searched for that perfect abode and there it is, like a castle sitting on a cloud. Your Realtor puts together the paper work required to make an offer. You sign the documents. Give a copy of two checks, one for escrow money and another for an option period. Your Realtor rushes to get the offer to the Seller’s Realtor and oh no! There are two more offers on the property ahead of yours. Dreams of sitting by the poolside of your new home dashed! Unfortunately, that is today’s housing market. With a lack of inventory and a plethora of Buyers, when a good home is released you can expect multiple offers. What happens next?
The Seller’s Realtor can only do one of two things. Tell you there are other offers or not tell you there are other offers. The choice is up to the Seller. However, the Seller’s Realtor must give that same information to all perspective Buyers. A Seller cannot give you the price of the highest offer because it would create a bidding situation and since Realtors do not have an auctioneer’s license it is against the law. The Seller has four options in this situation:
- He can accept one offer and simply ignore the rest.
- Reject all submitted offers.
- Counter one offer and ignore or reject the others.
- Send TAR form 1926, Seller’s invitation to Buyer to Submit New Offer to each buyer.
The first two options are easy. Accept only one and reject the others or reject them all. The Seller must not negotiate on more than one offer at the same time for the same home since you cannot sale that home to more than one Buyer at a time. The Seller’s Invitation to Submit a New Offer form is a great solution for the Seller if he/she receives multiple offers that are all too low, with the form the Seller is rejecting all offers however the Seller is also giving the Buyer a chance to submit a realistic price that the Seller can consider. The downside to this approach is rejecting all offers. Some Buyers will walk when rejected. The Seller can break off negotiations at any time up to when the offer becomes an executed contract. Today’s Buyers must be willing to come to the table with good offers however. There is a balancing act for both the Seller and the Buyer. If the offer is too high and the Seller accepts the offer, there is a possibility that the appraisal will be too low. If that is the case then both the Buyer and the Seller has another problem. Buying in today’s market is tricky yet with interest rates still historically low and the threat of rising prices in the future now is the time to buy. The Buyer must be prepared immediately to place an offer on the home they want before someone else snatches it away. Happy house hunting and see ya down the road!