Multiple offer situations are quite different than regular negotiations between a single Buyer and Seller.
In a competitive market, it’s important that consumers prepare themselves for multiple offer situations. Why? So that they know what to expect if they find themselves competing for a property.
If you’re curious about the offer process or are currently looking to buy a home, read on to learn more about the basics of multiple offer situations.
What are multiple offers?
Multiple offers means that two or more Buyers have written an offer to purchase a subject property.
Agents and consumers alike will sometimes use terms such as “multiples” or “competing bids” to describe a multiple offer situation.
Do multiple offers always happen?
No, they don’t always happen; but, in hot markets with limited inventory, multiple offer situations tend to happen more regularly.
Multiple offers are a direct reflection of a three primary factors:
- The Subject Property – Is it unique? Is it in a desirable area? Is it priced well?
- Current Market Conditions – How many active listings are there? Are there other comparable properties? What are the current sales stats?
- Buyer Demand – Is it what a lot of Buyers are looking for? Are there few, if any, properties like it?
How do buyers know there are multiple offers?
Buyer’s agents and their clients are typically notified of the number of offers on a particular home.
In most instances, notifications are sent to agents who have (1) shown the subject property or (2) enquired directly with the agent for more information.
What are delayed offer situations?
In delayed offer situations, Sellers opt to review offers, if any, on a set date at a set time.
Commonly seen in active markets, delayed offers can generate multiple offer situations. For Sellers, this maximizes a home’s exposure and ensures that all interested groups get to schedule a viewing before the offer presentation date.
I’m ready to write an offer. What happens now?
In a multiple offer situation, you can expect the following:
- Preparation – Work with your agent to draft your offer (refer to my post on improving your odds of securing a home in a hot market)
- Send – Your agent will send your signed offer to the listing agent
- Presentation – The listing agent will review all offers with the Sellers
- Revision – If your offer is competitive, you may get the opportunity to amend or revise the price, dates, or subjects on your original offer
- Unsuccessful Offer – If your offer is not selected, the search continues!
If the Sellers decide to work with your offer:
- Negotiations – They will either accept your offer or send you a counter-offer with changes
- Accepted Offer – Once both parties agree on the terms of the contract, an Accepted Offer is in place
- Due Diligence – Did you write a conditional offer? If so, it’s time to work through your subjects (such as finalizing financing or having an inspection)
- Deposit – Typically, the deposit becomes due once a firm (i.e. unconditional) offer is in place. With a subject-free offer, the deposit becomes due and payable within a specified timeframe upon offer acceptance
- Await Completion – Leading up to the sale completion, each party will enlist the help of a lawyer to facilitate the sale.
Buying in a hot market?
Make sure to discuss the current market conditions and multiple offer situations with your REALTOR®.
It’s important to consider not only your offer price, but also your deposit amount, closing dates, subjects (if any), and acceptance time.
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