MULTIPLE OFFER SITUATIONS EXPLAINED

With the state of the market at the moment, one of the phrases that buyers hate to hear the most is the agent telling them that they already have an offer.

The reason that this process can be frustrating for the buyer is that the process can be different depending on the agent and the seller.

When there is a multiple offer situation there is a shift in favour of the seller as they are now in control.  They can determine how this process will play out.  They can simply accept the best offer and reject the rest or they can ask all the buyers to put their best offers on contracts and have those contracts submitted to the seller to consider and sign the offer they want to accept.

The Real Estate Institute of Queensland suggests in circumstances where an agent has received multiple offers from potential buyers, before the seller has executed a written Contract of Sale, it is recommended that the agent advise their seller client of the offers and discuss the following course of action as one method to handle a multiple offer scenario:

1. Advise the potential buyers that the seller has received other offers before they have executed a written Contract of Sale. In disclosing the existence of further offers, agents should be mindful not to disclose any details of the offers to the other potential buyers;
2. Approach the potential buyers and provide them with a timeframe within which to provide their best and final offer to purchase the property;
3. The offers are to be sealed and then presented to the seller;
4. If the agent has been instructed to advise the potential buyers to submit their best and final offer, it should be stressed to the seller that these offers should not be used as a means to commence further negotiations with the potential buyers; and
5. A written acknowledgement should also be obtained from the potential buyers that they have been informed of the multiple offers.

For the buyers it is important to realise in a multiple offer situation that you lose the ability to negotiate.  This is not the time to make a low offer, you need to jump straight to your highest offer.  Another important thing to consider is that it is not always the highest offer that is the most attractive to sellers.  Sellers will often go with the contract that is most likely to settle so more straightforward contracts would be viewed more favourably than complicated contracts.

In this market it is more important than ever to get as many of your ducks in row as you can before you go looking to purchase a property.  Accountants have always said cash is king and in this market buyers with cash in the bank are at a significant advantage to all other buyers.