The 5 Common Un-Truths About Real Estate Offers8/22/2019
“I got 5 offers within the first 24 hours and all of them were over asking price!”
Have you heard stories lately of homes selling quickly above full price with multiple offers? That is the market we are currently in. While not every listing gets this kind of results, it is not uncommon for homes priced correctly in good condition in the average price range for our market. Many buyers have “lost out” on 4 or 5 homes before finally being the winning bidder on a home.
With activity like this, there is bound to be some confusion and frustration in the offer (bidding) process. Here are 5 common misunderstandings:
1. OFFERS SHOULD BE REVIEWED ON A FIRST-COME, FIRST-SERVED BASIS.
There is no rule or law that requires a seller to look at the first offer before others. It is actually the seller’s agent’s job to get the best offer possible no matter when it comes in. If an initial offer comes in and the agent or seller feel that a better offer may be coming, the seller has the right to wait any length of time for additional offers. Since most offers include a deadline for the seller to respond, there is a risk that a good offer will expire while the seller waits for better offers, but that is a chance the seller is open to take.
2. SELLER'S MUST RESPOND TO AN OFFER WITHIN THE DEADLINE GIVEN.
The deadline given in an offer does not “force” the seller to respond within a certain time period. It only gives the buyer the right to rescind their offer if the seller does not respond in time. This allows the buyer to move on and write offers on other homes without the risk of being under contract if a seller accepts their initial offer. If the seller does not respond within the given deadline, the offer is technically rejected.
3. IF THE SELLER RECEIVES MULTIPLE OFFERS, THEY MUST GIVE EVERYONE A CHANCE TO REVISE THEIR OFFER BEFORE CHOOSING ONE.
Typically, if a seller receives more than one offer, they will notify all potential buyers that they have until a certain deadline to modify their offer or confirm that they have submitted their “highest and best” offer. Once the deadline has passed, the seller selects which offer, if any, they want to accept or counter. While this is the typical response, it is not required. If the seller receives an offer they like, they may at any time accept it and move on with that buyer without giving other buyers the chance to improve their offer.
4. THE SELLER MUST ACCEPT THE BEST (HIGHEST NET) OFFER.
It is assumed that the seller is going to choose the offer that they feel is best. Confusion occurs, however, when we assume that the highest net offer is the best offer. There are many terms in an offer for the seller to consider besides price and net including
5. IF THE LISTING AGENT HAS THEIR OWN BUYER, THEY ARE NOT SUBMITTING OTHER OFFERS TO THE SELLER.
Let me just start by saying that withholding any offers from a seller would be against real estate law and our code of ethics and professional suicide. Our code of ethics says that we will put our client’s best interest first and that NO inducement, financial or otherwise, shall interfere with our responsibility to our client. A recent revision to our code also states that a selling agent can request a signed rejection of their offer. We always advise that you work with an agent you know, like and trust. Trust your agent to protect you and do what they can to assure that your offer was in fact submitted.If you don’t already have an agent, consider a Trusted Real Estate Advisor at RE/MAX Perrett Associates. Our production and reputation speak for itself.