A seller can sometimes receive more than one offer to purchase his/her property. But how should a seller or real estate agent handle multiple offers?
Receiving multiple offers to purchase a property is a good thing for the seller, but it can turn ugly if the seller or his real estate agent does not handle the situation in a responsible fashion.
The easy answer to handling multiple offers boils down to deciding to tell no one, or deciding to tell everyone.
Be fair
It just seems fair to me that, if you inform one of the parties that there are multiple offers on the property, that you inform all the parties. Wouldn't you agree?
Sellers and real estate agents should never allow themselves to get into a situation where potential purchasers have reason to be angry at them. It is always best to be fair towards all the parties involved in the sales process.
Simultaneous offers to purchase
If two purchasers simultaneously submit offers to purchase a property, for example at a show house, you can choose to inform both the parties about receiving multiple offers, or not.
Should you choose not to inform either party about the other offer to purchase the property, the losing party may, however, blame you for not informing him/her about the competing offer. They may rightly claim that they would have adjusted their offer to purchase the property, if they had known about all the facts.
If you decide to inform both parties, a very clean and neat way to handle the process would be to arrange that all the interested parties get a chance to submit their best offers before a given deadline.
Make it very clear to all the potential purchasers what the sellers require in terms of dates and other specific conditions of sale, so that all the parties have the same information.
This solution to handling multiple offers to purchase boils down to a kind of tender process. The seller therefore undertakes to reserve making a decision until after the deadline for submitting offers.
Consecutive offers to purchase
In practice, offers to purchase property never arrive simultaneously. One buyer will make an offer before another. This might be because the seller or the real estate agent can only write one offer at a time, but the why is less important than the way you handle the situation.
When the seller already has an offer to consider and then receives another offer to purchase, it is best to inform the second offeror that another offer is on the table already. But do NOT inform the second buyer about the terms of the offer!
Don't Shop
Informing the second offeror about the details of the first offer is "shopping" for a better contract. You don't want to start a bidding war now. If you wanted to auction off the property, you should have organised an auction sale right from the start.
Aggressively shopping for a better contract can backfire badly. You might very easily end up without ANY buyers for the property if the buyers catch on. And they catch on very quickly.
Shopping for a better offer can result in both the purchasers experiencing major distrust the offer process and you, the seller or real estate agent.
It is enough for the second purchaser to know that there is competition for his/her offer. The buyer can now make the best offer he/she feels comfortable with.
Once again, for the sake of fairness, the first offeror should be informed that a second offer to purchase the property exists as soon as the offer is received. And once again, the details of the second offer have got nothing to do with the first offeror either.
The first buyer must make his/her own decision about improving the offer to purchase the property, based solely on the knowledge that someone else is interested enough to have also submitted an offer the property.
Make it clear to all the parties that you regard each offer as confidential and that you are only informing them about the other offer to purchase the property to be fair to everyone involved.
The seller decides
The seller ultimately has the right to accept the offer he/she finds most beneficial to him/her. The seller is under no obligation to accept the first offer that was submitted.
Buyers have to accept the seller's decision, if their offer to purchase was rejected. Once the seller has signed a competing offer to purchase, it is a binding contract. And no amount of rudeness or tantrums will change that.
