Buyers Making Multiple Offers. What the........................?

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Buyers Making Multiple Offers. What the........................?

Big head Hi folks. This post is a follow up to my recent post My Buyer only wants one house. Why make 14 offers? If you haven’t read that one….I’ll give you a brief synopsis. It’s about making offers on multiple properties even though my Buyers intent is to only purchase one of them.

I’m writing this post for clarity. I want to clarify what I’m doing and I need clarity on a few of the comments that were left.

First, a few people mentioned that they MUST have an escrow deposit in hand prior to submitting a purchase offer. If this is a law……….show it to me. I don’t believe it.

Secondly, I had two agents from Georgia comment about what their purchase contracts state about disclosure.

One said:

"In GA we actually have something in our contracts specifically for this. A checkbox in which the buyer must disclose whether this is their only offer or if they have others in the hopper simultaneously."

The other wrote this:

"Actually, here in GA the Purchase Offer has a box to check for the buyer to either have or not have the right to enter into a contract on another property."

One’s talking about offers the other is talking about contracts. Which is it? I would be SHOCKED if there were a State law in any State that stated a Buyer had to disclose if they were making offers on more than one property. If there is……show it to me. I don’t believe it.

OK….I’m not trying to be a dick....I just want clarity. These things are important. Sometimes things we think are illegal or unethical are not. If I’m wrong..... I want to be corrected. It’s how I learn.

Now let me clarify a couple of things.

I only use this tactic on REO properties.

I only use this tactic when working with experienced Investors with cash.

My Buyers do not back out of contracts. They do however withdraw offers.

There is no chance in heck of a Bank signing off on an offer without coming back with a stack of addendums.

Offers are presented with escrow deposit being deposited within 24 hours of acceptance.

My Buyers are making very strong, over list price, cash offers with the intent of purchasing the property.

If the offer is accepted in a timely fashion my Buyers will go under contract.

I think that’s it. Maybe when Wendy and I get finished with “Short Sale Basics” we’ll jump over to “Dealing With Buyers in a REO Market”. What do you think?

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Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 06/29/2009 06:03 PM

Comments (75)

Buying Foreclosures in the Home Buying Channel

multiple offers, reos, investing

Originally posted at: BrokerBryant.com: Buyers Making Multiple Offers. What the........................?

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75 Comments on Buyers Making Multiple Offers. What the........................?

JUN

2009

Hun...

You forgot to tell them that the Buyer we are talking about actually decided to purchase 3 houses instead of 2. Good thing you submitted enough of those offers :)

TLW...ROAR!

I agree that I can't imagine a law that says a buyer can't make offers on multiple properties. I don't look kindly at it on regular resale properties, but I understand a foreclosure/REO is different and don't have a problem with submitting offers on other properties...

Though it does always beg the question of, "Which house do you really want?"

Hey..I am your side..the banks do what is best for them.. I had an offer accepted by a bank...the agent even sent us the addendums... which I had to chase him around for.....then the next day, before I was able to send the addendums. back SIGNED, the agent called me and told me, my clients had to come back with higest and best... WHAT!! We had an accepted offer... But the banks will CLEARLY tell you, when it is convenient..... an offer is NOT an offer, UNTIL YOU RECEIVE THE BANKS ADDENDUMS BACK signed by the banks....so write those contracts...it appears to be everyman for himself.....(herself)

Brian,

I have many buyers who have gone through abuse for months writing brilliant contracts but for many reasons they just can't get the house. Any house. Usually there are 20+ offers on a good property And by good I mean just decent, not a stunner. I got an email not five minutes ago for another buyer, saying that she was one of 43 offers on a clean home owned free & clear, non-REO property. It was fantastic. We were $30,000 over asking price. We wrote our highest and best first. And now we won't get this one. We wrote that offer ten days ago. I have been shopping aggressively for her ever since sending the offer. You have to. I am not going to sit around eating chocolate! Write, write, write.

There is no California law stating that multiple offers are illegal. That's bogus; probably bogus in all states. In San Diego you have to write multiple contracts if the buyer's "demographic" is highly competitive. And here we have no deal if the buyer doesn't open escrow. No deposit check brought to escrow means no deal. In that way, the offer by itself is actually not binding. We do not write a deposit check. Only a copy is every needed. No funds go to the trust account ever. The good faith check is written upon acceptance and we have three days to do that.

So if (God forbid) two offers I had written for one buyer both got accepted on the same day (FYI, then it's got to be the end of days), then we would write a proper contract withdrawal on the home the buyer didn't want ~ instantly. Believe me, this probably never happens. But if it did, it would be very quick. There are HOARDS of buyers lined up for homes under $300K in San Diego County. No one would cry if they got a contract withdrawal from me within one hour upon saying they wanted our deal.

Please! I wish they WOULD want our deal.

My advice is to write as many offers as it takes, and write your best first, in an attempt to get a house.

Good luck and I love your posts! Now I have to go so I can do it all again.

Kimberly Dotseth

broker/owner

Green Box Homes

San Diego, CA

I think I left a question about what happened if the seller just signed the offer, thus making it a bilateral contract. But that's clarified with the offers only being on REO properties... I guess.

I wounder if it's law or just a box on the local forms?

Maybe we should add a blank to fill in about how much higher the buyer could go?

Bill

I love the "show it to me" statement. If it's there, I would ignore it because, unless it's law, and I would doubt that seriously, it stinks.

If I'm a fiduciary, my duty of confidentiality wouldn't permit me to recommend this disclosure and loss of negotiating position.

As for earnest money check. It's a check. It doesn't get deposited unless and until there is a contract accepted by both parties.

If listing agent object so strongly to buyers making multiple offers, the cure is simple: answer the phone, update listings, provide disclosures timely, monitor e-mail, present offers "as quickly as possible", etc. and generally let buyer's agents work with speed to get a contract. Then we don't have to show a buyer any more homes.

Of course, the banks would also have to learn to sell real estate.

I personally think it's brilliant. You'd never be tied up until your buyer signs the bank addendum, so there's always an opportunity to walk away if the buyer gets a different deal. I think it's very savvy, makes plenty of sense, and I don't see why the buyer should ever have to disclose whether he/she is writing offers on other properties.

Why should the seller get that kind of leverage?

Any Realtor that does this is remembered by the Realtor community. I know who the agents are that make multiple offers for their clients; and I have to counter with those agents in a much different manner than I would with an agent that makes one offer.

When your reputation is tarnished buy such a thing, it does not go away. Am am on guard for agents that did this 5-10-15 years ago. Have they changed? Who knows, but their reputation remains. An agent should always be very concerned as to their reputation not just with their sphere, but with the realty community. If that is the reputation that an agent does not care about, they will most definitely hurt themselves down the road.

Tim, My reputation is ecellent among my peers. Neither me or my buyers play games. We do however do what we need to do to be successful in a difficult market. I don't work for REALTORS(R) I work for Buyers and Sellers. Most of the big REO agents in my area are my friends and have been for many years. Do I hold it against them when they have 40 offers on a property and the seller won't respond? Of course not. We are all professionals. We know what we can and can't control.

The only thing I can tell you about Oklahoma is that we are supposed to submit an earnest money check with an offer. Now, most will send over a copy of the check made out to the Listing Broker but rarely do we send the actual check unless we both know the deal will be accepted or if you're confident it will be accepted.

Now, nowhere does it say how much. It could be $5.00 or $500.00. $500 is the average here in OK believe it or not. I have had as little as $50.00 from a buyer who had very little money on a low end home back in the days when you did not need money to purchase a home.

Sounds like you're in a market where that kind of practice is warranted. Thank the Good Lord that has not yet happened here in OK and to be honest, I hope it never does.

Hey BB, these REO listings warrant this process. Tim mentions it tarnishing a reputation - yes, if it were a normal home sale, yes, if it isn't disclosed or yes, if other shady stuff is going on, I can see that. But bank owned & short sales are a different beast. The buyers are treated like they have no value by the banks, time is not of the essence to them, and we are here to protect the buyers. I have begun to encourage this procedure with much caution.

Line 2 A of the California Resid Purchase Agreement, states that the buyer has given the agent a check for XX amount to be held uncashed, then deposited within 3 days into escrow or trust account, which ever you checked. I don't know what other states have, but in CA, you MUST have a check in order to write a contract.

I would be pretty ticked if someone wrote me a contract without a deposit check in hand, and they could lose their license. But it's only because that's what our contract stipulates. Your state may be different.

Thanks Sally. That's interesting. So I have to have a check but I don't have to deposit it. Deposited within 3 days of acceptance?

(In Oregon) We can use a Promissory Note to submit with an offer, although a check works better. As long as it's a valid form of earnest money deposit, it should be fine. And we also have the wording in the Sales Agreement of having the EM deposit held, uncashed, until the offer is mutually agreed to by the parties. The offer is valid under certain conditions, one of those conditions being a legal term called: consideration. EM satisfies this, and proof of EM is all that's needed. The check doesn't have to be deposited to go along with the buyer's offers.

OK I just read the CA Residential Contract. It has to deposited 3 days after acceptance. So a deposit in escrow is not required to make an offer. You just need an uncashed check. What does CA law say?

I actually have my buyers wire a deposit into my title companies escrow account before I submit any offers. Once we have an accepted and fully signed contract I want the deposit already in place.

Carla, In Florida law and most contract law that I have read "consideration" can be the promise to act. For example: I agree to sell you my property and you agree to pay me. In Florida you do not need a deposit to have a valid real estate contract. Thanks for participating.

Now we are learning!!!

According to the American Bar Association:

Does consideration have to be money?

No. Consideration is any promise, act or promise not to act, or transfer of value that one is not already bound to give or perform that induces a party to enter a contract. Consideration is a bargained-for benefit or advantage, or a bargained-for detriment or disadvantage. A benefit might be receiving $10. First dibs on Super Bowl tickets might be an advantage. A disadvantage may involve promising not to do something, such as a promise not to sue someone. For these purposes, even quitting smoking, done with the reasonable expectation of some reward or benefit from someone else, is a detriment: Even though it's good for your health, it took effort that you otherwise would not have made.

For example, you could agree to give your car to your friend in exchange for his promise that he'll stop letting his schnauzer out late at night. Your friend is giving up what is presumably his right to let his dog out any time he wants. In return, you are giving up your car.

Consideration cannot be merely illusory, or it is no promise at all.

In Oregon, we still need to validate that promise, so we have the Promissory Notes. That's why all states are different . . . but I agree with doing what you have to do for your clients. As long as it's ethical, legal, etc. I am a believer of making more than one offer . . . I call it "Guerrilla Shopping"

Kimberly, Great comment. If I didn't write multiple offers in my area my buyers would NEVER get a property.

Lenn. I knew you'd like this one :)

Lisa. Clear as mud now?

Dawn, I think you are right. I would NOT recommend doing this with normal listings. For one the seller could very well sign off on the offer and place my Buyer under contrcat. REOs are a whole nother ball game.

Russel, In my area a deposit is usually only $1,000. I have closed deals with no deposit at all.

Christina, In markets like ours we have to adapt. Or starve!!!

Konnie, Banks cancel whenver they feel like it. Heck most addenda give them the right to cancel up to closing!!

Donna, My buyers are purchasing rental properties. They'll take whatever they can get!!

Sir Bill. I wonder. Sometimes we forget that our contracts are written for REALTORS(R). Just because sonmethings on there does not mean it's a law.

TLW, He did buy 3!!! How cool is that.

Ok...it's bed time.

BB,

You're right about the uncashed check (3 business days) in CA according to our CA purchase agreement.

Although I'm no lawyer I believe (back from my days in r.e. school, much too long ago) the law in CA refers to "consideration" as one of the elements of a real estate contract. Currency has long become the usual consideration.

Carla, I find the promisory note thing very interesting. Can they just use the personal check as a note? Do you have an actually "form" note that you use?

Lynda, I completely agree you have to have consideration to have a valid contract. I wonder if the currency thing is more of a custom?

Can you email me, and I'll send (attach) a Promissory Note to you. I can't figure out how to post it here . . .

CarlaHomes@msn.com

Yeah, I was going to say something really profound, then decided not to as I don't have much to add. (read on, that was a lie, LOL) If I were in your position, I would do the exact same thing. And you are so right. The banks can and do back out, cause heartaches, lay waste and devastation as far as I am concerned. So, go for it. You are being responsible, we are not talking about a buyer putting multiple offers on a 500,000 home, with no ability to purchase more than one home.

I know what I am told here by our attorneys. In this part of CT it is customary to submit an offer to purchase. Within 3 days of the offer being accepted (in writing) the deposit check must be deposited. Customary is 1% at that time. The signed offers are passed on to both attorneys. The sellers atty prepares the contracts, sends them to the buyers atty, the buyers sign, send back to sellers atty with any additional deposits. Then and only then does it move from contingent to pending. Pending being off the market. The buyers attorney then orders title search, etc. I do know that without monies attorneys here will tell you that for the seller, this is great because it means nothing. And in this case, for the buyer, it would mean nothing and they could walk. If someone walks from an offer to purchase for any other reason other than what is stated, such as inspections are bad and can't be resolved, mortgage contingency can't be met, the seller could keep the monies from the deposit. Not in all cases, but.. they can. The sellers sue the buyers who walked away for specific performance. I am not an attorney, we do things differently here, so I have nothing of value to add to FL way of doing business.

Also, an interesting point, I know of no law that says I would have to disclose if my buyer made multiple offers. I can tell you that as a listing agent I cannot disclose multiple offers to agents unless directed to by my client. I have argued that point to many an agent, I will not disclose any information unless we sit down and discuss it, and my clients decide they want to go to highest and best. I usually negotiate each offer separately, and we pick the best offer for my clients. I am not popular with those buyers agents when I do this, but I am following the LAW.

OK, I lied, I just had to open my mouth. :D

Bryant- Again, we should always clarify our comments with which state we are discussing when the issue of law is brought up.

There is NO LAW in FLORIDA that says a buyer must disclose how many offers or even contracts they have submitted. It is no one's business.

There is NO LAW in FLORIDA that you can not make as many offers as you want to.

I viewed the entire real estate statute and there is none.

I keep saying to so many comments because ( I must write a post about the difference!) agents get NAR, MLS and STATE LAW mixed up all the time. It drives me batty!

I do want to address earnest money deposits-

Lenn- In the state of Florida a broker or an agent must deposit an earnest money check within a certain time frame. If you want to make it upon acceptance of the lender or acceptance by the seller, meaning an executed contract than you need to state that in an addendum to the FAR BAR contract for sale and purchase or add it into line 17 on page 1. We do that all the time. FREC has just fined some brokers for not depositing the earnest money when they did not specify this. Without this specification the earnest money must be deposited within the time frame by state statute whether or not the contract has been executed because it says:

17. Deposit held in escrow...

That means you have a deposit in escrow.

Now how we get around this is by adding an addendum that the buyer will deposit the money in escrow after execution of contract, signed by all parties within 2 business days.

For investors it is very typical to just have the title company hold some money and they state that they have $100 in earnest money at the time of the offers.

I think you've made your reasoning for making multiple offers in this situation very clear.

Bryant - You rock ! It is all about adjusting to the market that we are in. We are integrating a strategy for a market that is wild where you are. You are forced to take the initiative to best service your buyer client in these circumstances. One has to do what they have to do. It sounds like it is working very well for you and you are maintaining excellent rapport with your peers. It is all good.

On a side note, it sounds like we should buy one or two properties down there. I have no problem if you need to put in multiple offers for us to get one or two ! It is the nature of the market, especially for investors ! ~ Chris

No such ruling in NC that states you must advise if you're placing multiple offers either--what difference does it make to the seller anyway?

I recently had a seller complain that my buyer didn't deposit Escrow Money because my buyer wound up withdrawing the Offer. The seller wanted to keep the buyer's EMD--but, WAIT--there was no ratified Contract--merely an Offer that was not aknowledged with SELLER SIGNATURES! Go figure?! We were NEVER under Contract! What were they thinking?

Bryant, as long as the bank comes back with all those addendums an investor will not have to buy 14 simultaneous homes if accepted.

BB...

While not a law, the checkbox on the GA forms only refers to the due diligence period. It is a negotiation tool that states whether a buyer is under contract at the time, and whether the buyer shall have the right to purchase other properties "during the due diligence period."

It is only intended as a "sweetener" to make a longer due diligence period more palatable. That's all there is to it!

Interesting here in Michigan we only do one offer at a time unless you have a short sale offer in.

Here, the earnest money check is usually just made out to the title company that the buyer wishes to use without specifying the property. I have used the same check for different offers. Also could write into the offer (which becomes the contract when accepted) that the EMD will be wired into escrow upon acceptance.

I agree with Katerina:

"I do want to address earnest money deposits-

17. Deposit held in escrow...

That means you have a deposit in escrow.

Now how we get around this is by adding an addendum that the buyer will deposit the money in escrow after execution of contract, signed by all parties within 2 business days."

I too understand that this is Florida law.

The only reason that you need to do something like this is because the banks take so long to respond. If they could respond within 24 hours there would be no need to do this.

I think that the things in the Georgia contract are just clauses that the forms committee put in there in order to help the deal come together and everyone understands what their options are. Many things in the contract aren't because of specific laws. They're there to help smooth out past problems that agents have run into. Many agents used to think that it was the law that required sellers to provide a clean termite letter at closing. But it was just something that the forms committee stuck in there years ago and now the forms committee took it out again.

Our preprinted contract in Ga does indeed have a paragraph whereby a buyer may disclose offers he has already placed or intends to place on other properties. However, there is no law that dictates that a buyer must sign off on that paragraph. They could, instead, scratch through it and elect not to disclose what they are doing on other properties. Too many agents believe that just b/c something is preprinted on a contract that it is somehow law. It's all there as simply suggestion.

Secondly, I know of no law that requires anyone to put up earnest money. It's simply usual and traditional but not required. They can put up nothing or their left shoe or whatever they want. Conversely, a seller may choose to reject any offer that doesn't have earnest money in an amount that suits them.

Don Bush

In my part of Canada, it's simpler. There has to be a deposit, but this can be made with the offer or upon acceptance or on any terms you write into the contract. Once the deposit is made, buyers could still withdraw from an offer based on conditions in the offer, so there is a little time to think things over, but I don't see that this process leads to much of a temptation to submit mulitple offers.

Very touchy discussion - completely different in New Jersey. Check gets given to the listing agent when the contracts are signed by the buyers. Contracts aren't executed until the seller (REO or not) has initialed the attorney review. Offers only need a copy of a pre-qual from a lender.

I just looked it up and the FREC says that the BROKER must deposit the check within 3 business days. A Salesperson must turn in the escrow deposit check to the BROKER by the next day.

The way around this of course, is to specify in the offer that the earnest money is ZERO or that the earnest money will NOT be deposited until a specified date and time or event. Katerina

In AZ, we simply scan a check made out to "TBD" "to be determined" and submit those offers. Banks are taking 2 or 3 weeks to respond to offers, I would not be doing my job if I sat and waited for the bank to come back with a "Highest and best" response. Its called shotgunning offers...

To clarify on the matter of disclosure of "multiple offers" by buyers in Georgia . . .

The disclosure "requirements" mentioned is boilerplate language in our standard real estate forms provided through the Georgia Association of REALTORS, which most agents use, but not all. Most of the terms are negotiable, and while in compliance with state law, the existence of any clause or paragraph does not necessarily mean it is mandated or inflexible.

As with I'm sure all states, the offer is only that, an offer, until signed by all parties AND notice of acceptance is received by the Offeror, at which time it becomes a contract, so it is possible that the offer and contract are identical, or they could be two very different creatures once the blue ink dries.

The language in question (mentioned in BB's post) is specific to the "Due Diligence" Clause and actually does NOT require disclosure of multiple offers. During the Due Diligence period (if one is requested by the buyer), the Agreement is considered an Option Contract, which the buyer has the right to terminate for any reason until the expiration of the option. As part of this clause there are the referenced check boxes, which reveal whether or not the buyer is already under contract to purchase other real property, and whether or not as part of the agreement, the buyer will have the right to enter into other purchase contracts.

For one, this does not require disclosure of other offers already on the table or likely to be made, but only existing contracts at the time of purchase, and the possibility that other such agreements might be entered into during the due diligence / option period, which might allow a buyer to tie up a property while looking for more suitable options. For another it doesn't prevent having multiple offers, or contracts even, it simply allows the seller to make a more informed decision about whether or not they wish to enter into such an agreement.

I have placed multiple offers from one buyer, and checked the box that said they have the right to enter other agreements, but did not disclose whether or not we had in fact presented other offers. And, I have counteroffered on behalf of seller clients stipulating that the buyer not have this right, where it seemed appropriate . . . so this is clearly a negotiable point.

I would say the same goes for earnest money deposit . . . how it is handled, disbursed, etc., is controlled by state law and contract language. But the amount, or if there is any at all, is purely negotiable.

Hope that clears it up a little? (Or muddies the waters even more?)

[Of course, I am not a lawyer, and this all just my opinion, NOT to be considered legal advice or interpretation of law . . .]

BB - I have suggested this strategy in the past too, usually when a buyer is on the fence about two different properties. TRUE - Buyers do not back out of contracts. They do however withdraw offers. There is nothing wrong with making more than one offer and seeing where the chips fall. I DO suggest disclose, even though we don't have to - it gives leverage. Once, when disclosing that the buyer was making more than one offer the listing agent insisted that I cannot do this. I challenged her, asked her to show me where it says I can't and then reminded her that it is no different than the seller entertaining more than one offer. She grew silent and accepted that my buyer had the upper hand. I just love having leverage when negotiating.

About 6-8 months ago, I started adding a phrase to every short sale contract I write (in Florida). It says; The timelines within this contract shall commence upon both the seller's written acceptance and the current lien holder's written acknowledgement and acceptance of this contract and its terms.

That way, my buyers don't have to tie their earnest money up for months on end waiting for institutions like Countrywide to get off their as____ and either accept or decline the contract.

Does anybody have a GOOD reason why a buyer shouldn't write more than 1 offer?

Katerina, BB.

The way I understand it is that without escrow money, you have no offer. Even if it is only $100.

Bank Of America now claims to require a copy of the earnest money check and a pre-qual from their lender..... What the heck is this all about ?

I am all for the multiple offers the way you do it. No need to defend yourself in my opinion.

I'm one of those commentors... Buyers can OFFER on multiple properties, but must disclose if they go under contract... but what if an offer is accepted? Of course I know that they have a due diligence period to get out of the deal... but they would still have gone under contract.

Of course, if the buyer retains the right to go under contract with another property, then it isn't an issue.

JUN

2009

Karen- According to contract law; you can make an offer without consideration, but such an offer is unenforcable. You can not make a contract without consideration however, and that is why when you do quit claims like between spouses you see for "$10 and other consideration " written into the contract. That is why you can even make verbal offers but verbal offers are not enforcable.

I have done this for my investors for years and years. Had to do it regularly when we were in a seller's market just to get ONE accepted, I often had to write up 10 or more offers to get one accepted. After a while I figured out instead of waiting to see if it was accepted and then writing another on another we could just do them all @ one time. Sometimes they ended up buying more than one when more than one was accepted.

BB, as a CA agent that used to have a FL real estate practice, I find a lot of differences in the paperwork and deposit. Yet, as you say, there is absolutely "... no chance in heck of a Bank signing off on an offer without coming back with a 'stack of addendums" and my REO buyers know it as well.

Interesting comments all the way around. I have had conversations with others regarding this issue and this is the cited work I reference.

According to the Florida Real Estate Brokers Guide-Crawford & O'Donnell-3rd Edition -

Page 251 lines 34-39

"No law requires the buyer to make an earnest money deposit on a real estate contract. A recent appeals court case affirmed that a promise to buy and a promise to sell are enough consideration to create a valid contract for the sale of real property. Licensees must present all offers, with or without a good faith deposit. If an offer is presented without a good faith deposit, the seller usually counteroffers for a substantial earnest money deposit to help ensure that the buyer performs."

Page 252 Lines36-43 NOTES as earnest money

Occasionally, a buyer does not have enough funds to give the broker a substantial earnest deposit. This often occurs with zero-down-payment VA financing when the seller agrees to pay closing costs. In this case, the seller probably should request a promissory note from the buyer as earnest money. The broker should have the note made payable to the seller, but the broker holds the note. If the buyer defaults, the broker, after complying with conflicting demands requirements, gives the note to the seller for collection. Broker may not accept promissory notes as earnest money without a seller's approval."

Does that clear up the conflict?

As for Multiple offers- I think in Florida, this is becoming a necessary tactic for buyers. Putting all your eggs in one basket or on one home is now subject to many variables which were not obstacles in previous Real Estate Market conditions.

For Instance: When the short sale moves forward to foreclosure even with "full price" offer submitted. The contract is often killed. Property is withdrawn.

Change of Staus to Auctioned Property- still listed but scheduled for public auction. Many times these properties will not qualify for FHA/VA financing due to missing components such as appliances or kitchen cabinets- as a result they can only be sold absent of financing in other words for cash.

Buyers who are serious about trying to purchase a home, should be prepared to submit multiple offers as the homes on the market change daily sometimes hourly. More often than not, they are unable to get the home they orginally wanted and the process is perpetual- they keep losing homes one at a time, until they get frustrated and walk away.

Bryant, I didn't notice if you answered this above, but in Florida with a FAR/BAR as is contract, it is not difficult to cancel a bilateral contract during the inspection period.

An earlier comment on NJ (#38 Bridget) does not cover law. First, I've never provide the list agent with an actual check. Perhaps that is a practice in a certain area but around here, it is unheard of - and absolutely not a law! Ido provide a copy of the check & mortgage preapproval with the offer but the checkgoes promptly into the buyer-broker (or attorney) trust account.

Second, in NJ a contract is fully executed once both parties have signed and have received a copy. We do have an Attorney Review period and the MLS considers a home "Under Contract" once Attorney Review is completed. Normally, the fully-executed contract is what goes to the attorneys.

For Short Sales, bank approval is a contingency on a fully executed contract, no different than say the home inspection. (Many banks will approve/deny a sale based on an offer - without the full execution - permitting agents to keep the property as an active listing.)

In your scenario, BB, you have 14 offers, no contracts and are awaiting a response from the sellers. You (and I) are completely legal here in the Garden State too!

WOW! Excellent answers. It is interesting how folks in the same States have different responses. That tells me that we ALL need to check our laws to make sure we are doing things properly.

Trent, Thanks for the clarity on the GA purchase contract. Well done.

Allison, Great job on the deposit. In Florida and according to contract law you do NOT need a deposit to make a valid or enforeceable contract. You do however need consideration. This consideration does not have to be money.

Here's another way to explain it. A Listing Agreement is a valid AND enforceable contract. BUT there is no deposit. There is however consideration. The consideration is that I am giving the seller my services in excahnge for a commission. Make sense?

Gabe, I just had a Buyer cancel a contract using the "As Is with Right to Inspect" contingency. The REO agent neglected to point out in the listing that there was a $650 per month MANDATORY management fee that was attached to the property. This is not something we could "see" and it was not disclosed in the listing. It had nothing to do with the physical condition of the property. It did however affect the value of the property.

Irene, Thanks for that explanation of NJ law. Big difference from the "customs" folks are referring to. It sounds like the attorney review is nothing more than a contingency in the CONTRACT between Buyer abd SEller.

I can't speak for anyone else and I can't speak for Georgia law, but this is how I've done things in Florida.

Earnest money deposit. Our office policy is to never collect a deposit check until after an offer gets accepted unless the check is already deposited into a title company escrow account (which is seldom, if never). We always put due within 1 day (or more) after acceptance. So many Realtors seem to think that a contract is not valid without a deposit. Totally wrong. A contract is not valid without CONSIDERATION. And the consideration in the contract is the agreement to pay the purchase price for the property.

I can't imagine anyone caring whether a buyer is buying more than one property. Why would it even matter? I remember back in 2003 where I bought 3 properties within a week's time - all distressed deals. Even today I have buyers buying multiple properties. It's a numbers game for investors. You make 10 offers to get hopefully 2-3 accepted.

I can't imagine there being a problem with writing multiple offers...especially with the criteria you talk about - We encourage regular homebuyers (non-investors) to put multiple offers on REO/short sales.

You have to unless you have 6 months to find a property.

Hmmm, I guess your approach makes sense, especially for investors. I have never encouraged my buyers to make for than one offer at a time but I don't see why one couldn't do exactly what you are doing in any state. As you have said, even if the EMD is part of the contract, if the contract is not accepted by all parties then there is no risk. The only time I could see this as risky is when a buyer is writing full price...or if the seller accepts the offer with no changes. It might get a bit dicy to refuse to acknowledge the acceptance.

I've submitted multiple offers for my buyers before and always add:

1. ED to be received within 2 days of accepted offer.

2. Contract not valid until buyer signs again here _________________________________.

very interesting all these varying requirements.

here in Florida the standard is Escrow of $XX will be deposited upon acceptance. A salesperson must deposit a received escrow into an account within 24 hours, or must give it to the Broker who has 48 hours. So I just have my clients write a check to teh title company, make a photocopy to send with the offer, and than have them tear up the check. Typically a copy of escrow is only required in SS & REOs. And since they take so damn long to reply, I am not going to have my clients tie up escrow monies for an indefininte amont of time.

Now in Florida a contract is not legally binding until it is signed by all parties, returned to the buyer fully executed, and Accepted by the buyer. so just because you put in multiple offers it does not mean that if you have multiple acceptances that your client is bound to any of them. Plus I use 24 hour to 48 hour offer expirations so the offer has usually expired by the time they get back to us to accept. On top of that I encourage all my Buyers to do As-Is Contracts so they can break it anytime during the inspection period, no questions asked.

Now a client Plymouth, MA who is now a friend can not believe how real estate is done down here. He actually said 'it's like we are in another country' LOL

almost forgot about the original topic: Multiple offers I am sorry, but I usually have buyers submitting multiple offers. Not on one day, over the course of time, because negotiations are taking longer, Listing Agents are 'holding out for more money' and way too many deals fall apart before closing. I believe last month 1/2 of all our firms contracts fell apart before closing.

So some may not like it, but i think it is in my Clients Best Interests to find them as many oppurtunities as possible, given the low contract to closing ratio here. Afterall for most people there is not Just One perfect fit house. And I do not care if my buyers have a contract, have mortgage approval and have finished inspections, I still encourage them, although i encourage discretion, I encourage them to keep looking at houses, in case the current deal falls apart. Hopefully things wiill stabilize soon, but for now this is what is in my buyers best interest. As far as telling a seller whether my buyer has multiple offers, I see it as none of their business, just as i see it as none of a buyers business how many offers my seller has.

I advise my buyer clients to make multiple bids all the time.(sometimes on properties that neither my client nor I have seen) As I see it there is only one danger and that is the possibilitiy of multiple acceptances at the same time. My protection is the inspection clause in the Florida Far-Bar as-is contract. I specify an inspection period within which my client can withdraw his bid for any reason. I also set the date for the good faith deposit to coincide with the end of the inspection period.

JUL

2009

Cash buyers can make as many offers on as amny properties as they wish. Whose business is it if they do? If they have the funds to follow through on all of them, then great! That's the only thing that should really matter.

I kind of wish Tim Moncrief who posted at #9 would come back and give us his response. Seems like he is the only person who objects to multiple offers in the REO environment. If I were a bank, I would think the more offers the better. Tim's view is so far outside what most people are saying about REOs here I'm really interested in getting a better understanding of where he is coming from.

It is in our contract, but it is not law. If you choose not to disclose this to be a legal and binding agreement it should be "struck" from the contract and not just left blank. Contract classes teach us that we don't just leave blanks. And you DO NOT have to have any earnest money in Georgia so long as you disclose the fact in the contract. And BB, just for fun, if you want to take a look at the GAR purchase and sale agreement I'd be happy to email you a .pdf of it if you send me your email address via AR. I don't think I can attach it to a AR email from my end to get it to you.

JUL

2009

Bryant, in your market working with REO listers and investors, I would do the same thing. As to reputation, everyone knows what agents have to do to get the job done for the buyers, especially in Poinciana. As long as your deposit is contingent on acceptance of the contract, you're fine. States that haven't had the firestorm of short sales and foreclosures that we have can afford to operate differently.

Sharon

JUL

2009

I have customers who do put in offers on multiple properties on REOs but especially with short sales because they take for ever and ever without certainty of success. Should they wait a few months for an answer and then find another property to make an offer on? I think not. Unless the banks do speed up their processing time and make it easier for willing and able buyers to actually buy, this mind set will not go away.

JUL

2009

I live in California....

Each time I submit an offer, I do get a check from the buyers for the initial deposit. But I only submit a COPY of that check with the offer. The check is held in safekeeping at my broker's safe until there is an accepted offer. Immediately after we receive confirmation of a formal acceptance, we open escrow and deposit that check.

On Short Sales, we have an addendum where we specify how many days our offer is good for --- 45 days is probably the norm. We check a box if we want that initial deposit check UNCASHED until there is formal acceptance.

On REOs, even if the listing agent gives me a verbal...I don't start the escrow process until I get the formal written acceptance. One listing agent told me my offer was accepted ....then he calls me back the next day to tell me another offer came in, and would I resubmit my client's best and highest offer?

In my neck of the woods, the entry level market of $300K and below is overheated. One property received 80 offers; another had 60. Last Friday, I wrote an offer on a property that was just listed Thursday, and they already had 25 offers. Even after writing an offer for $30K over list price with shortened contingencies, we still didn't get it.

So why shouldn I write multiple offers for my clients? If we get accepted, then we move forward with the accepted offer and withdraw the rest. Some of these listing agents are so busy fielding offers, that one of them has even told me it won't hurt her feelings if I withdraw.

JUL

2009

Pacita That is interesting. In Florida I have only 24 hours to deposit earnest money in an escrow account. If I give the check to my broker he has 48 hours.

SEP

2009

Great subject with great discussion. Thanks everyone.

Making multiple offers is the least of my problems! The REO agents here in CA are asking for each buyer to be approved or pre-qualified by their lender but they make it so hard to get a hold of the mortgage rep that it can take days to get the required documentation. I had one last weekend that wouldn't talk to my buyer because she said she worked for a bank and would not need to receive a loan from them but just needed a letter to submit with the offer as instructed by the listing agent. With the banks taking so long to respond the buyer is often hurt on his FICO score because of all these requests.

I also had a verbal acceptance and then the next day was asked for our highest and best offer! These banks are playing all sorts of games and the poor buyers are just lost.

I have been a REALTOR for 29 years and I never have seen the lack of professionalism that is out there today. The agents are not answering their phones and won't return emails. I have one offer that I don't even know if they received it!!! All I am asking for is a phone call or email. Of course all offers had to be emailed and the REO agent is a single man office so I can't drop by the office to check things out. Of course he's out of area which is another great thing banks are doing with their REO listings.

This market would be so much better if the banks would give listings to local agents, agents would put the correct status in the MLS and would answer phone calls and emails.

SEP

2009

All banks submit addendums back, which is essentially a counter offer. So if a buyer doesn't have multiple pokers in the fire in this market then they might not get any house. I had the same situation as Konnie. Accepted the terms and sent over the addendums which my buyers signed(against my advice since they wanted all contingencies automatically removed within 17days, which is impossible) and had them back. In transmit hell, the agent emailed me and said highest and best right now! My clients were pissed.... so every buyer needs to do what's best for them

DEC

2009

My buyers have all written offers on multiple homes. You have too, you can't wait around on one offers for weeks even months to hear from these banks. That means I would be working with one buyer for over a year. I think 6-7 months right now is long enough. Buyers are always having to put their highest and best, how does one Really know if there are other offers on the home? You don't you are taking the listing agents word when they send over the mulitple offer form to be signed. It's all a game and one that buyers are getting tired of playing!

JUN

As an REO agent, i had an asset manager demand from buyer's agent EMD deliver to listing office and fax him a copy before he signed on the contract. -California

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Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc

Poinciana, FL

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Bryant Tutas-Tutas Towne Realty, Inc

Address: 628 Grand Canal Dr, Poinciana, Fl, 34759

Office Phone: (407) 870-9003

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