Multiple Offer Situations

Listing Agent FAQ

I received multiple offers on my listing and would like to summarize them when responding on behalf of my sellers. Is there a form to assist with that process?

Yes. The Multiple Offer Summary Template would serve that purpose. Please note that the form is available for optional use with the broker’s consent; the fields are not considered mandatory (with the exception of the seller’s signature); the form does not identify the offer accepted by the seller; the form may be shared with those who represented an offer as a summary of the competition; and the form may be shared with an appraiser as a reflection of the level of interest in the property.

In a multiple offer situation, is there a form that will assist the listing agent in communicating which offer was accepted?

Yes. The Multiple Offer Summary Template is available for optional use. It enables a listing agent to share a summary of all offers received with those whose offers were not successful. This information can be passed along to buyers to ease the sting of a rejected offer and shed some light on the competition.

Please note:

• The fields in the form are not considered mandatory, with the exception of the Seller’s Signature field. Please obtain the Seller’s Signature as evidence that the Seller has authorized the release of the information.

• The form does not identify the offer that was accepted by the seller.

• The form may be shared with appraisers as a reflection of interest in the property.

Buying Agent FAQ

How can the amount of commission to a buyer’s agent be reduced to make the buyer’s offer more attractive to a seller in a multiple offer situation?

In this instance, the buyer could offer to pay up to ____% of sale price to cover the seller’s closing costs, not to exceed $_______. This offer could be written into the purchase agreement. The buyer and the buyer’s agent would then have a separate agreement wherein a portion of the buyer’s agent’s commission would be rebated to the buyer at close to cover this expense.

Should Buyers Make Multiple Simultaneous Offers for Homes?

If you’re a homebuyer living in an area where sellers have the upper hand, you may experience repeated frustration from losing out to competitive buyers on the homes you want. In such situations, buyers may be tempted to make simultaneous offers on multiple homes in the hope that one will be accepted. But should you do that?

Legal Ramifications

Before you take the drastic step of signing offers for several homes, consult with a real estate attorney. While many people think it’s unethical to make multiple offers when you only intend to buy one property, it also may be illegal depending on where you live. A law in many jurisdictions that’s referred to as a “good faith and fair dealing covenant” could be broken if you make multiple offers at once, knowing that you cannot fulfill all those contracts if they were all to be accepted.

Your first protection should be legal advice from a reputable attorney, but if your lawyer gives you the go-ahead to make several offers at once, you also need to make sure those offers are made correctly:

• Provide separate deposits for each offer: You’ll need to provide an earnest money deposit with each offer which will then be put in escrow until your offer is accepted. You must write a separate check for each and be prepared to have enough cash available to cover each check because if you lose control of the multiple offer situation you could end up losing more than one deposit. You cannot simply photocopy the same check with each offer because this could invalidate every offer.
• Consider contingencies: The best way to make multiple offers would be to make them contingent on whether one of your other offers is accepted by another seller, but realistically no seller is likely to accept such an offer. However, if you don’t have any contingencies on your offer, you run the risk of having more than one offer accepted at the same time. In that case, each seller would expect to cash your deposit and to complete the sales transaction. If you fail to complete the transaction you can lose your deposit and perhaps face further legal and financial consequences from the sellers.
• Be considerate of sellers: If you make several offers and one is accepted, you should immediately notify each of the other sellers and revoke your offer so they don’t consider it valid. Timing is crucial in this type of situation because once a seller has signed off on your offer it’s considered a ratified agreement. It’s possible to have two of your offers accepted by sellers within a short period of time, which is where you run into trouble.

Alternatives to Multiple Offers

Rather than playing this risky game, you are better off competing in a seller’s market by making a solid offer—one-at-a- time—that meets all the seller’s needs, including the price and the preferred closing date. Your REALTOR® can help you find properties as soon as they are listed for sale so that you can be among the first to identify homes and areas that may have less competition. That way you can become a homeowner without taking the risk of making simultaneous offers.