Every real estate deal comes with its own set of challenges, and while it may be legal to put in multiple offers on homes, you will need to be careful as there are some issues you may run into by using this practice. Beyond the ethical considerations, there are also some legal issues that you will need to be wary of when submitting multiple purchase offers.
Consider every potential aspect of the deals before putting multiple offers out.
Legally, you can put offers on multiple houses, and it is a practice used in some areas more than others. It is a legal practice, but many REALTOR’s® may not utilize it as it is considered unethical.
If your offers are firm and irrevocable, you may find yourself in a bind where you legally need to purchase both properties. Adding in conditions can make your offer less desirable to the home seller as well, meaning that you have less of a chance to have a successful bid.
This article focuses on answering whether or not you can put offers on multiple houses and the potential consequences.
What Do You Mean By Multiple Offers?
In real estate, traditionally, a multiple-offer situation is when two or more home buyers submit an offer to purchase a property at the same time. This is a common practice and can result in a bidding war where the seller can choose the offer that is most appealing to them. A multiple-offer situation is when a considerable number of buyers submit offers to purchase a property at the same time. It’s the seller who decides the further approach. The listing REALTOR® can advise them on the best strategy.
For example, they can go with the “best” offer, inform potential purchasers about other offers, and invite them to provide the best possible offer, or counter one offer and put other offers aside while awaiting the counter-offer decision. The best offer for a seller may not be the one with the highest price; it is the one that is most appealing to the seller. This can often be the offer with the fewest conditions, which is essential to remember if you are making an offer with conditions (which are necessary if you are making multiple offers). The seller can also select the best offer and reject the others directly.
Note: If you want to become a power buyer with a strong offer, Sweetly’s Swift Sale may be right for you. Present a stronger offer by selling your home to Sweetly before purchasing your next home.
What is Making Multiple Offers as a Home Buyer?
If you’re a home buyer looking at multiple homes, it may be tempting to put in multiple offers on houses that suit your needs and budget. For example, you could put in a conditional offer on a second home with the caveat that your first offer doesn’t go through. However, your second conditional offer will be much less likely to be accepted and may not even be looked at because it is substantially less attractive to proceed with.
Every home seller has costs that they incur daily the longer their home stays on the market; it’s because of these costs that an offer with a chance of falling through is much less likely to be accepted.
Some examples of carrying costs would be:
- Additional mortgage costs
- Lawn snow
- Utilities
- The opportunity cost of being able to purchase their next home
If your deal has the potential to fall through, it could set back the process for a lengthy period of time, costing the home seller thousands. With this in mind, if you’re going to submit multiple offers, it is important to consider the type of housing market you are bidding into (hot or cold).
Can You Make Multiple Offers on Houses
No legislation has been passed preventing a buyer from submitting multiple offers on houses.
While legally, you can put multiple offers on different homes…but is it ethical? An offer to buy a home is a contractual obligation that should be taken very seriously as failure to purchase the home by the letter of the agreement may result in you needing to pay to back out or pay for the seller’s potential losses.
Here’s Why Not To Put Offers On Multiple Houses At Once
Following are some of the reasons why you should not put multiple offers on multiple houses at once:
Unethical Practice
Putting offers on multiple houses at once and intending to buy only one can be considered unethical. The seller is at a loss, and you, on the other hand, might lose trust in the market. As a one-time home buyer you may not need to worry about this. However, your REALTOR® may not want to engage in this practice.
Putting offers on multiple houses can increase your frustration if you keep putting in offers and losing them to buyers go with stronger, non-contingent offers.
Legal Issues
Putting offers on multiple houses is legal, however, you will need to follow your contract. Backing out of an offer because of a questionable contingency could result in a legal battle. If you back out for a poor reason, you may be on the hook for any potential losses the seller incurs. It is best to contact a real estate lawyer, or a competent REALTOR®, and understand the legal terms and conditions before putting offers on multiple houses.
Loss Of Money
While submitting multiple offers on houses, for your offer to be considered strong, you will have to deposit some token amount for each house. The larger your deposit, the stronger your offer will seem. If you intend to choose one house, you may lose the deposit on other houses if you write multiple offers.
NOTE: The standard real estate contract put forth by AREA (Alberta Real Estate Associaton) states that the deposit is paid back to the buyer if they end the contract without removing conditions. If conditions are removed, then you may be on the hook for the deposit and additional damages.
Safeguarding Yourself When Placing Multiple Offers
Still willing to put offers on multiple offers?
Always Have Deposit Money Ready In Hand For Each Offer
It’s very crucial to keep the deposit money ready.
It’s crucial to prepare enough deposit amounts for each of the offers so that it covers the availed offer.
Immediately Notify Other Sellers If One Of Your Offers Is Accepted By A Seller
If one of the offers is accepted by anyone, then it’s crucial to notify the other sellers about it and rescind any outstanding offers.
Always Consider The Possibilities Of Having Multiple Offers Accepted
It’s important to consider what will happen if multiple offers are accepted. These are binding legal contracts and can have drastic monetary consequences if you are ill-prepared. It’s important to consider the possibility of having multiple offers accepted and mitigate the potential risk.
Make Sure Your Offers Are Conditional
As a real estate offer is a legal contract it is vital to make sure that you have a way out in the event that both offers are accepted. This means that your offers should be conditional so that you are protected from purchasing both homes. While some clauses such as ‘Pending Inspection’ may offer you some degree of ability to back out of a contract, it is in your best interest to be honest in your conditions to protect yourself from any legal issues.
Contingencies
Home Inspection Contingency
A home inspection allows the buyers to identify significant problems in a home before closing the deal. Many lenders won’t provide you with finances without a home inspection. When using an inspection contingency, buyers will keep a seven days window to leave the offer if there are problems in the house like damaged electrical wiring, insect and pest infestation, structural issues, mold, leaks, etc.
Other Contract Contingencies in a Home Purchase Contract
Contingencies are nothing but an allowance for homeowners. It provides a scope for the owners to terminate any contract without facing any legal issues or penalties. Additionally, it also assists the owners in getting back their deposit money within a short duration.
Common Contingencies in Home Purchase Contracts
- Pending Home Inspection
- Pending Appraisal
- Cost-of-repair
- Financing
- Mortgage
- Pending Sale
- Right to Assign
- Title Contingency
Learn more about Common Real Estate Contingencies.
Contingencies curtail risks for buyers. These can help protect a buyer in the event that, after due diligence, the property is no longer suitable to their needs or they are unable to get financing. Legally, real estate contingencies are well settled and can off substantial protection, if used properly. However, it should be noted again that some contingencies can make a deal unappetizing for the seller. The more restrictions on your home purchase, the less likely a seller will accept the deal.
Additionally, you must remember that your deal may be structured differently depending on the state of the market. In a hot market where there are multiple offers and homes are selling above asking, making an offer with no contingencies may be the only way you are able to purchase some homes.
In a cooler market, especially when a house has been on the market for a longer period of time, you may find a seller that is willing to work with a heavily-contingent purchase offer.
Sweetly’s Models
Sweet Sale
With the Sweet Sale, you get a Fair Price Cash Offer. It’s a fair offer that lets you sell without showings and choose your own moving day.
Start your sale with a Free, Fair Price Cash Offer, which remains open to you for 60 days. Activate our offer any time – even without listing/showing your home, or at some later date if your home isn’t selling. Compare our hassle-free, all-Cash offer to a traditional MLS® listing. Make an informed decision. Choose what’s best for you. Offers remain open to our customers for 60 days. Our offer is withdrawn if you list with an outside REALTOR®.
Listing With Confidence
A traditional listing allows you to test the market with your price. A listing with Sweetly comes with it’s own set of perks.
- Test the market with confidence, knowing you’ll have a Sweet Sale available if your home doesn’t sell.
Start with an fair price cash offer to know the current value of your home. Then, decide ‘how’ you want to sell, BUT before you do, you can shop at your pace to find the right house. Beat out any competing buyer because you won’t need a ‘condition of sale’ so your offers are stronger without spending extra money. Once you have a firm purchase you can sell your house to Sweetly on a day that works best for you.
