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There is a lot of talk amongst buyers, especially those who have made unsuccessful offers, about what actually happens in a multiple offer situation.
To get rid of some of the mystery, we first need to understand what a ‘multi-offer' situation is. When you have more than one buyer who would like to submit an offer on a property, the real estate agent has more than one offer to submit to a seller. All are given to the seller to look at, and they choose the best one.
Almost a ‘tender’ situation, the multi-offer process is taken very seriously, there is no ‘game’ playing or ‘mystery’ as some buyers may think. It ensures that everyone has an equal opportunity to be the successful buyer, because they are encouraged to put their best offer on the table. What might be attractive to the seller can vary, and the multi-offer allows the seller to pick the one that seems best to them. This might not always be the one for the highest money, it might be a lesser offer but from a buyer who already has finance and doesn’t have a house to sell.
Real estate agencies have strict criteria and processes to follow to ensure the best result is achieved without conflict. They should be able to guide potential buyers through the process without too much confusion.
All buyers who have registered interest in a property are notified to make them aware that a definite offer has been prepared for presentation. At that point any interested buyers will need to make a decision as to whether they would like to participate in the process.
A closing time and date for all offers to be signed and submitted to the real estate agency will be set and adhered to, with no exceptions. The time and date is discussed and set in conjunction with the seller. All offers are confidential and placed in a sealed envelope ready to be presented to the seller all at the same time. This is where the nerves kick in!
If you know the property you want is moving towards a multi-offer then you need to remember that time is of the essence! Submission deadlines can sometimes be short and leaving it to the last minute will only cause you stress or put undue pressure on your lawyer and wider support crew. Allow plenty of time for your lawyer to complete any legal homework on your behalf such as making sure the conditions you want are in the agreement, and making sure there’s enough time between signing and settlement to get all of the conditions met. You could do your homework before submitting the offer which might reduce the conditions you write into the offer, such as getting your lawyer’s advice on the agreement, doing a check of the title and even getting a building inspection, LIM, and finance approved before you submit.
Vendors love offers with the LEAST AMOUNT OF CONDITIONS. I am not recommending that you have no conditions in your offer, as conditions are inserted for your benefit and protection. However, I am saying that if you are able satisfy some or all of those conditions prior to submission, you have not only put a really favourable offer to the seller, but also kept yourself safe in the process!
Think carefully about the purchase price, the seller will always be attracted by the highest price and will ‘of course’ be thinking about which offer is MOST FAVOURABLE TO THEM. Don’t forget that you are not the only one submitting and your competitors have thought very seriously about their offer too and have made it as attractive to the seller as possible. You are always advised to put your best offer in! If you think that you are the only cash buyer, think again! All buyers’ personal information is kept confidential including their offer so you will never know who is your competition, the price they are offering and what position they are in when they make their offer.
Thanks Michelle Gyde for your wise words and providing more clarity to the multi-offer situation. Make sure you don't miss Michelle's previous guest blogs on enlisting a support crew when buying your first home and preparing to sell your property.
Disclaimer: The information on this page is general information only and must not be relied on as legal advice. Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies.
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