I’ve been in several multiple offer situations this year and learned of several interesting situations that other REALTORS® have experienced.
First, someone had a great question on myREINspace about how you know if there’s another offer on the table. As an agent we’re required to disclose when there’s another offer. That said, an offer isn’t really an offer until you have it in writing with a deposit cheque. The vast majority of us, as listing agents, will call and tell another interested party if there’s an offer coming in.
There’s a specific protocol to be used for multiple offers and my esteemed colleague Brett Turner, a REALTOR® in Calgary, laid it out very simply:
When a listing REALTOR® receives a second offer they are required to follow protocol set forth by their local real estate board and also overseen by their governing body (the Real Estate Council of Alberta in AB, or the Real Estate Council of Ontario in ON)
Basically it works like this:
- You put your offer in and you are the only offer currently on the table.
- Buyer 2 comes along and submits their offer. They always know there is an offer already in play.
- Listing realtor is required to notify your agent that there has been another offer submitted after you submitted yours. The brokerage representing them and the agent working for buyer 2 is required to be disclosed.
- If you choose to change your offer then buyer 2 is notified that buyer 1 has amended their offer.
- If a third offer comes in then the listing realtor must notify both other agents and tell them that there is a third offer submitted. Again, brokerage and agent info is required to be disclosed.
- If you or buyer 2 amend their offers then everyone (buyer 1, 2 and 3) are notified that a party has amended their offer.
This is of course assuming that the listing agent is a pro and is doing their job properly.
So long story short the brokerage and agents representing each buyer are made known to the other parties. They can be contacted to verify this if you want.
The advise for you as the buyer (or the Buyers’ Agent) is to confirm the status of the other offer. Do they have a purchase contract and at least a copy of a deposit cheque? If not, don’t even think about amending your offer to do something stupid. If they do, then you know you’re actually up against another legit offer that the other Agent has seen and didn’t reject out of hand.
Secondly, be cautious about what you do in the heat of the moment. A friend of mine who is a REALTOR® in St. Albert told the story of a multiple offer situation during the boom where his clients’ offer (one of three) was the only one which had a condition on it, which was a home inspection. The property in question was a $500,000 detached home. The listing agent started laughing at them across the table. Craigs’ a pretty tough guy to shake and one the other agent stopped laughing he said “mind telling us what’s so funny?” The listing agent said “Don’t you know that only a fool writes a conditional offer when there’s multiples?” Craig didn’t miss a beat, saying “Don’t you know only a fool takes a half-million dollar risk with no backup?” His buyers ended up winning the multiple situation in part because the sellers agreed with Craig and his clients!
I’ve written unconditional offers myself before, but that’s never something I recommend to a client unless they have extensive experience buying and selling real estate, doing renovations/construction, property management and VERY deep pockets. Craig’s right – you could be putting $500K on one spin of the wheel and lose it all and more! An unconditional offer can be a great tool, but it can be just as dangerous. Don’t feel pressured to write unconditional offers, but don’t be surprised when you lose out on them.