First, let’s define a multiple offer. It is a situation in which more than one buyer is interested in a property and offers the seller an Agreement of Purchase and Sale which includes price, inclusions, terms, closing date, conditions, etc.
Working with multiple offers is a very emotional process for both buyers and sellers, but for very different reasons. You may have been in a position as a buyer when your offer isn’t the only one on the table. In Ontario, if there is more than one offer on a property, the listing salesperson must disclose the number of competing offers, however they cannot divulge the price, terms or conditions on any other offers.
If you’re a buyer, consider these options:
- Pricing. This is the first thing people think of in any offer situation, but it’s extra stressful now. Your best price is certainly the route most buyers would take. Consider, however, what the property is worth. If your offer is accepted with an inflated price, you may have issues getting financing – no lender will give you money if they can’t make it back in the case of power of sale or foreclosure. Also know that offering the asking price – or more than the asking price – does not guarantee your offer will be accepted.
- Home Inspection. You may be tempted to not include a clause in the conditions requiring a home inspection. Indeed this is your decision, but just be aware that if there are problems later in the house you will be responsible for them. This is a big risk that you have to very carefully consider.
- Financing. Removing the financing condition is an immense risk. Don’t forget that pre-qualifying for a mortgage doesn’t guarantee that you will be approved. The lender still has to assess the property as well as your most current income and credit rating. Again, this is your decision as a buyer, but if you don’t get financing after the offer has been accepted, you’re still responsible for buying the house!
If you are in a seller’s position, your emotions are no doubt different than the buyers’! You are probably excited at the fact that you get to choose the best offer out there, and you are in the position of power. You still have some very tough decisions to make, but talk to your REALTOR about all the options available to you.
If you’re a seller, consider these options:
- Accept the best offer. This means that there are no negotiations since you are happy with the offer overall including price, terms, closing date, etc.
- Negotiate with one buyer and reject all others. This is a tricky situation because if your counter-offer is rejected by the buyer, you’re back to square one. It can, however, work in your favour if there are only a couple minor details that need to be ironed out.
- Negotiate with one buyer and let the other buyers know that their offers have been set aside in the meantime. This is the least risky option for you, however be prepared for the “other” buyers to make offers on other properties.
- Reject all offers. As with non-competing offers, you don’t have to accept any of them if they don’t meet your minimum standards.
Whoever you are in a multiple offer situation, be sure to seek advice from your real estate professional about the choices. We have all the latest market conditions that can help you make the decision, but remember, you have the final say!
Good luck!
