When a property is in high demand, there is a good probability that multiple buyers may make an offer. When more than one bidder submits a written offer on a property, a multi-offer situation will occur. The purpose of the multi-offer process is to provide all interested purchasers with a fair chance to submit their best offer for a property they want to buy.
Multi-offer processes can range from one agency to the next, but they can only be called multi-offer if there are multiple written offers made. All prospective buyers and sellers are expected to understand the process and all relevant documents, while agents are expected to provide this information accordingly. If there are no actual rival offers, an agent is not entitled to act as if there are.
The purpose of the multi-offer approach is to foster competition among possible purchasers, giving the seller the best outcome possible whilst being as fair as possible to all interested parties. Each buyer should think about how they might make their offer more appealing to the seller. The vendor is under no obligation to accept any offer and has the option of accepting one offer, rejecting all offers, or continuing to negotiate with one party.
In this blog, we outline everything you need to know about multi-offers, from buyers looking to make an offer on a property, to sellers looking to get the most money for their home.
Important things to know about a multi-offer
Our friends at settled.govt.nz have listed their most important considerations to be aware of when dealing with a multi-offer situation. These include:
- There must be more than one offer in writing. An agent can’t say you are in a multi-offer process if there are no other offers in writing.
- In a multi-offer situation, the seller can choose the offer that works best for them from a number of offers.
- If you are a buyer in a multi-offer process, you need to put your best offer forward because you may not have another opportunity to increase your offer.
- If you have any concerns about a multi-offer process you are part of, you can speak to the supervising agent or branch manager about your concerns.
How to make the most of a multi-offer situation if you are the buyer
If you're a buyer in a multi-offer situation, it pays to make your best offer right at the start. You might only have one opportunity to do this, so making your strongest offer right from the get-go will help you put your best foot forward. If you are going into a multi-offer situation, the real estate agent will advise you of this, to confirm that you are aware of the situation they will have you sign a multi-offer acknowledgement form.
To reduce your risk and give your offer the greatest chance, conduct as much research as possible on a property before making an offer. This is critical for a variety of reasons, including removing conditions from your offer and determining what your "best" offer will be. If you haven't given yourself enough time to conduct your due diligence before submitting your offer, you may add conditions such as obtaining financing, obtaining a property inspection report, or obtaining a value.
It also pays to keep in mind that the highest offer isn't always the best offer. A lower offer with fewer conditions may be prefered to a higher offer with more conditions. Therefore, you may want to rule out as many conditions as possible while at the same time, making sure you cover any areas where you are at risk. This is where your lending provider or mortgage broker can help advise you on your final offer. Seeking their help with this step of the process will reduce any financial obligation problems down the road.
What you need to know about the multi-offer process if you are the seller
When there is a demand for housing creating a seller's market, multi-offers are a common occurrence due to competition amongst buyers. As a seller, you want to ensure that you are getting the best deal possible. That's where Tenders, Auctions, and Deadline Sales come in, meaning that a house is not marketed with a price label.
You'll find more properties listed with a price if/when the market slows down. This is because when there are 20+ 3-bedroom houses on the market in one suburb, you have to be the best-priced home to attract the few buyers who are available. However, if there are only two 3-bedroom houses on the market in the same suburb and more than 20+ groups at each open home, the competition heats up and a multi-offer situation can be formed.
What to be aware of with a multi-offer?
Finally, buyers and sellers should be aware that in multiple offer circumstances, only one offer will be approved, and the other purchasers will most likely be unhappy if their offers are rejected. While there is little that can be done to alleviate that disappointment, fair and honest treatment during the offer and negotiation process, as well as fast, continuous, and open communication, can increase the likelihood that all purchasers, whether successful or not, will feel handled fairly and honestly.
Potential buyers may be confused by multi-offer scenarios, and REA continues to get complaints and inquiries about them. Potential buyers may file complaints if they do not understand the process and believe they have been handled unfairly. This is why, here at McDonald Real Estate, we take critical care when explaining the multi-offer process to the potential buyer and double-check that they understand it.
How to take advantage of the current multi-offer market?
If you would like to discuss your home's sale during the current seller's market, then get in touch with us by requesting a no-obligation appraisal of your property. During the property appraisal, a salesperson will visit your home before presenting you with a current market appraisal. This will include current market conditions, any improvements you've made to the property since it was last sold, significant features of the home, recent sales in your region, as well as the benefits and drawbacks of selling a home in the present market, including when the best time to list your home is.
