What the Multi-offer?!
What are multi-offers and are they legitimate?
When a property is in high demand the first to make an offer does not always win. While speed can be an advantage, it isn’t always – think of the guy on Facebook market place trying to low ball by offering “cash” for something that the seller knows is guaranteed to sell anyway…
For buyers, multi-offers are an unfortunate result of a competitive property market. There simply are not enough houses to meet demand at present.
What are multi-offers?
Multi-offer situations create a fair and transparent sales process where a property is in high demand – well at least in theory anyhow.
Aside from creating a level playing field for buyers, multi-offer situations are intended to drum up competition between buyers - remember, agents act for the seller!
Surprisingly, not all multi-offer processes are the same, there is no set ‘template’ and processes vary between agencies. Here is what you can generally expect:
1. The agent receives more than one written offer for the property;
2. The agent tells buyers that they are under a multi-offer situation, that buyers need to put their best foot forward and that they will not necessarily have an opportunity to negotiate directly with the seller. This technically starts a new sales process and any offers submitted before this process can be pulled and amended before presentation to the vendor;
3. The agent sets a deadline for offers to be received by them. Offers submitted under the multi-offer situation are not opened by the agent or presented to the vendor until after the deadline passes;
4. After the deadline passes, the agent presents all of the written offers to the seller who will usually choose to do one of the following things:
a. Accept one of the offers – game over unless your offer is accepted, then congrats!;
b. Negotiate with one of the offers – you are super close to owning your own home and are again able to negotiate without the stress of immediate competition. Our tip if you find yourself in this position is get an idea for what points the vendor wants to negotiate on and do everything possible to keep the process moving – act quickly and don’t give the vendor time (or reason) to reapproach other offers;
c. Negotiate with a select few offers if they are close – this happens quite often and in our experience it is surprising how close offers often are (very often within $1k to $10k). This situation is the last chance to get yourself ahead of the pack either by removing conditions or going up on price.
You are very close and need to think – ‘is there anything left’ and ‘how would we feel if we missed out by $1k, $5k, or $10k.
Keeping in mind that the Multi-Offer Form likely included some form of acknowledgement that the offer made is your “best offer”. With this in mind you are well within your rights to simply confirm your earlier acknowledgement remains accurate and consequently refuse to budge. But this approach tends to be a losing hand. If you can move then you probably should, even if only by $500 to $1k. For your information, we do not tend to see a huge amount of movement in this situation – often buyers will budge up by less than $10k (if at all).
If moving on price isn’t an option – you can also “move” by removing conditions or setting a favorable settlement date – look for anything that could make your offer stand out.
d. The vendor rejects all offers – the playing field is back to level and you can decide if you want to go in again at a higher price. We would be asking the agent for any indication of what the sticking points were if this happens.
Is the agent telling the truth and is the agent calling for multi-offers legitimate?
In our experience, the answer is yes to both – but here’s the catch: agents need to have received more than one written offer before starting a multi-offer situation. Likewise, an agent cannot move to a Multi-Offer scenario without more than one written offer simply because the Vendor has requested it.
It is worth asking the agent whether they have received more than one written offer when the multi-offer is called - if the other buyer interest is not an offer in writing, then it does not count. And the agent will remain obliged to present the offer within a reasonable time frame.
Despite what may seem obvious to buyers – it is uncommon for us to see agents pushing to sell properties at ‘all costs’. While this might seem counter-intuitive to buyers, it is the reality of working in a small region where reputation means everything – the incentive to do so simply is not there.
Above all else, agents are also professionally accountable to the REA and can get in big trouble for behaving unfairly – not saying that it has never happened, but just that we do not tend to see it.
Still have questions on the multi-offer process or wanting advice that is specific to your situation or home-ownership dreams?
Book a free one-on-one consultation with one of our home-buying experts. All of our consultations can be carried out in person or via Zoom and carry absolutely no obligations for you to engage with us – we will even throw in a free coffee if we meet in person.