You’ve likely seen the dearth of dramatic real estate articles lately. Mortgage rates are up! Home inventory is scarce! The days a home spends on the market keeps shrinking!
And yet some news is good: More sellers are entering the market, boosting overall homes for sale.
This swirl of real estate market ups and downs may lead a desperate seller to consider drastic measures to land a home before the market gets even more out of whack. One move that may seem to make sense at first blush is to put offers out on multiple properties in the hopes that one will come through.
While putting your offer bids in more than one basket may give you a leg up on the competition in some way, there are a couple of crucial issues to consider.
Like, can you put offers on multiple houses? Plus, putting out multiple offers may lead to increased frustration if you keep losing out to competitive buyers on the homes you want.
In either scenario, buyers may still be tempted to make simultaneous offers on multiple homes in the hope that one will be accepted. But can you put multiple offers on different houses? Or, better yet, should you?
Can you put offers on multiple houses? Yes, but first understand the legal ramifications
Before you take the drastic step of signing offers for several homes, consult with a real estate attorney. While many people think it’s unethical to make multiple offers when you only intend to buy one property, it also may be illegal depending on where you live.
A law in many jurisdictions that’s referred to as a “good faith and fair dealing covenant” could be broken if you make multiple offers at once, knowing that you cannot fulfill all those contracts if they were all to be accepted.
How to protect yourself when making multiple offers
Your first protection should be legal advice from a reputable attorney, but if your lawyer gives you the go-ahead to make several offers at once, you also need to make sure those offers are made correctly:
- Provide separate deposits for each offer: You’ll need to provide an earnest money deposit with each offer which will then be put in escrow until your offer is accepted. You must write a separate check for each and be prepared to have enough cash available to cover each check because if you lose control of the multiple offer situation you could end up losing more than one deposit. You cannot simply photocopy the same check with each offer because this could invalidate every offer.
- Consider contingencies: The best way to make multiple offers would be to make them contingent on whether one of your other offers is accepted by another seller, but realistically no seller is likely to accept such an offer. However, if you don’t have any contingencies on your offer, you run the risk of having more than one offer accepted at the same time. In that case, each seller would expect to cash your deposit and to complete the sales transaction. If you fail to complete the transaction you can lose your deposit and perhaps face further legal and financial consequences from the sellers.
- Be considerate of sellers: If you make several offers and one is accepted, you should immediately notify each of the other sellers and revoke your offer so they don’t consider it valid. Timing is crucial in this type of situation because once a seller has signed off on your offer it’s considered a ratified agreement. It’s possible to have two of your offers accepted by sellers within a short period of time, which is where you run into trouble.
Here are some alternatives to putting offers on multiple houses
Rather than playing this risky game, you are better off competing in a seller’s market by making a solid offer—one-at-a-time—that meets all the seller’s needs, including the price and the preferred closing date.
Your real estate professional can help you find properties as soon as they are listed for sale so that you can be among the first to identify homes and areas that may have less competition. That way you can become a homeowner without taking the risk of making simultaneous offers.