Buyer Tip - Multiple Offers
In our highly active market, multiple offers are becoming common. This is when Sellers may find that more than one buyer is interested in a property.
This is a competing offer situation and creates unique conditions in a real estate transaction. Both sellers and buyers need to consider how to respond when presented with a competing offer situation. Working closely with your realtor will ensure that you understand the process.
The seller’s realtor is required to disclose the number of competing offers to all buyers who have submitted a written offer. However, the terms and conditions of each offer are confidential to the seller and their broker or salesperson.
Working with a Realtor
The seller’s realtor represents the interests of the seller in the transaction. The decisions about how offers are presented and responded to, as well as which offer is accepted, are made by the seller.
The buyer’s realtor represents the interests of the buyer in the transaction. The buyer makes the final decisions related to their offer, including the important decision of whether or not they want to participate in a competing offer situation.
In some situations, the realtor will represent the interests of both seller and buyer or multiple buyers. Consumers should seek guidance from their realtor if this situation arises.
Tips for buyers
In a competing offer situation, buyers may be tempted to offer more for the property than they planned to and/or remove conditions from offers that are intended to protect them.
Before participating in a competing offer situation, buyers should consider factors such as:
How much can the buyer afford to offer for the property and how much is the property worth? A high offer could enhance the buyer’s chance of success. However, it may not be the best long-term financial decision for the buyer. A competing offer situation does not necessarily mean that a property will sell for more than the asking price. Similarly, an offer that meets or exceeds the asking price will not guarantee that a buyer’s offer is accepted.
Buyers should be aware that pre-qualifying for a mortgage does not safely eliminate the need for a financing condition in an offer.
In competing offer situations, it can be tempting not to include a clause in an offer that makes it conditional on a home inspection. While your offer might be more acceptable to the seller, you may later learn that there are property defects, required repairs or needed upgrades that you weren’t aware of. In some cases, this can be expensive in the short or long-term. Foregoing a home inspection is a significant risk that a buyer needs to carefully consider.
If you have further questions please feel free to ask.