Multiple Offers and Michigan Real Estate Law

By
Real Estate Agent with Preview Properties, PC - http://www.RealEstateMich.com
http://activerain.com/droplet/45hJ

Multiple OffersI’ve had a couple of recent calls inquiring about the correct process for multiple offers.   There’s a lot of confusion on the way that consumers think they should be handled as opposed to what Michigan real estate law says.  Here is what the Michigan Association of Realtors (MAR) has to say about multiple offers.

·         License law requires all offers to be forwarded by a licensee to seller. After the offers are delivered the seller may consider them in any order he or she desires.

·         The buyer's agent is generally prohibited from contacting the seller who is represented by another agent.

·         There is no requirement that a seller must reject an offer in writing or even acknowledge receipt of the offer. A seller can accept, reject or counter an offer. Or the seller can choose to do nothing, or sit and wait for a second offer.

·         A buyer can request that a seller respond in writing but the seller has no legal obligation to do so.

·         There is no requirement on multiple offers that a seller treat each potential buyer equally or fairly (except for the protected categories under the Fair Housing Act which are race, color, religion, sex, handicap, familial status, or national origin).

·         Any material change to a counteroffer is a rejection and becomes a counteroffer back to the other party (true for all offers-not just multiple offer situations).

·         A seller is not required to take the highest offer, but could actually take a lower offer based on terms or cash.

·         The seller can disclose the amount of the offers to none, some or all of the other potential buyers.

·         A seller can offer one buyer an opportunity to submit another bid, without offering the other buyers a similar opportunity.

·         An offer cannot be accepted orally. You do not have a binding contract until the written acceptance is delivered to you (or your agent).

·         An offer or counteroffer can be revoked at any time before it is accepted (even if it contains an expiration date).

·         An offer can be revoked orally.

·         A seller is not required to accept a full price and terms offer.

Most prospective home buyers believe that a response is required by the seller, and that if they get their offer in first that they are ‘first in line’.  Neither is true.  Remember that this is based on Michigan Real Estate Law. Laws in other States may vary. To see MAR's primer on mulitple offers, click this link.

image courtesy of scottchan/freedigitalphotos.net

close

Re-Blogged 6 times:

Re-Blogged By Re-Blogged At
  1. Barbara Hensley 10/10/2013 05:36 AM
  2. Yvette Chisholm 10/11/2013 12:21 AM
  3. Anna Hatridge 10/11/2013 12:43 AM
  4. Sean Williams 10/14/2013 01:37 AM
  5. John Juarez 10/22/2013 05:05 AM
  6. Winston Heverly 01/03/2014 10:44 PM
Topic:
Real Estate Best Practices
Location:
Michigan
Groups:
Realtors®
Agents On Line
Posts to Localism
The Ninety-ninth Percentile
Advice for Buyers
Tags:
multiple offer
mar
howell homes for sale
brighton homes for sale

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
38,371
Sheree Holsey
Sold Buy the Sea Realty - Hampstead, NC
I am Happy to Help You Find your Way Home!

Everything in NC has to bee written...no oral agreements when it come to contractual agreements. I think that limits misunderstandings.

Oct 13, 2013 07:44 AM #79
Anonymous
Truett Neathery Appraiser

Sheree: I don't think ANY state allows verbal - too easy to refute! In CA it's called the Statute of Frauds! An oral contract is not worth the paper it's written on!

 

 

Oct 13, 2013 09:05 AM #80
Rainmaker
121,582
Wendy Smith
Wendy Smith Real Estate - Clearwater, FL
Real Estate Advisor

Good post, this is also true of multiple short sale offers.  Also, in short sales, the seller decides which offer to accept, not the bank.  I had this very issue come up this morning where a buyers agent insisted I must present all offers to the bank though the seller has already ratified a different offer.

Oct 14, 2013 01:13 AM #81
Anonymous
Truett Neathery Appraiser

Wendy: What if it's OK with the selled and not OK with the noteholder?

BTW, what is a "RE Advisor? An advisor does not usually collect a commission based on the closing price, but gives advise on a fee basis. Aren't you actually a commissend salesperson?

 

Oct 14, 2013 01:27 AM #82
Rainmaker
120,340
Sean Williams
AcklesWilliams of Semonin Realtors - Louisville, KY
Your Louisville Realtor

Robert - I love this blog, it clearly outlines and defines the ways an offer/multiple offers can be handled by the buyer & seller. I think this info is really well written and I will be sharing with my community by re-posting. Thanks!

Oct 14, 2013 01:35 AM #83
Rainmaker
982,944
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Well done and a good explanation of the process of multiple offers.

Oct 14, 2013 01:41 AM #84
Ambassador
1,885,996
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

Robert, great post and spot on.  There are many misconception among buyers and sellers - even agents - about how to handle multiple offers.

Oct 14, 2013 08:20 AM #85
Rainmaker
314,693
Robert Smith
Preview Properties, PC - http://www.RealEstateMich.com - Brighton, MI
SRES, Search for Homes Brighton-Howell-SE Michigan

I find that there are a lot of confused agents, period.  It doesn't help that in addition to private (traditional, or retail) sellers, that each bank can pretty much dictate their own rules into the mix.

Oct 14, 2013 09:36 PM #86
Rainmaker
781,077
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team
Hi Robert, excellent post. So many agents think they must get a highest and best and that is not true.
Oct 15, 2013 02:38 AM #87
Rainmaker
491,765
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Robert,

One more vote for the excellence of our post and the information that it contains. We have been experiencing multiple offers for many months in the SF Bay Area. Knowing how to handle is very important. The points elucidated (a word I don’t get to use very often) in your post are similar to expectations and responsibilities in the handling of multiple offers in California.

In fact, this merits re-blogging!

 

Oct 21, 2013 01:23 PM #88
Rainmaker
1,269,312
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

I would appreciate if the sellers were required, at least, to acknowledge the offer. This year almost all properties had multiple offers, due law inventory and panic among buyers that they 'might miss the bottom'. 

Nov 06, 2013 04:30 PM #89
Rainmaker
314,693
Robert Smith
Preview Properties, PC - http://www.RealEstateMich.com - Brighton, MI
SRES, Search for Homes Brighton-Howell-SE Michigan

At the very leaset, I would hope listing agents notified other agents that they're out of the mix.  Having been on both sides of this one, I can say that it sometimes is more trouble than it's worth when a buyer's agent gets rude or accuses you of improper motivations.  No easy answer.

Nov 06, 2013 11:03 PM #90
Rainmaker
273,233
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

This is spot on. Handling multiple offers for a Seller really toughens you up.

Nov 08, 2013 11:45 PM #91
Rainmaker
1,269,312
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

The problem with multiple offers: you never know if your offer even was presented to a seller. A good agent will send you the proof that it was presented. I just submitted a full price offer( 30% down, no special contingencies or incentives). The listing agent did acknowledged receiving it, but never replied me back with results. Her assistant answered me over the phone that another offer was accepted. That's it.

Jul 24, 2014 06:35 PM #92
Rainmaker
314,693
Robert Smith
Preview Properties, PC - http://www.RealEstateMich.com - Brighton, MI
SRES, Search for Homes Brighton-Howell-SE Michigan

Inna, you are correct. It boils down to courtesy, and we can't teach courtesy.  Multiple offers with a private seller can be much different than with an institutional seller, too.  Often institutions do it "their" way, and that's that.  Thanks for the comment!

Jul 24, 2014 09:58 PM #93
Anonymous
Emily

In regards to Michigan law.. If a seller counteroffers and the buyers accepts, can the seller then go back and look at other offers that came in after that first buyer, and then cancel/not follow through with the counter offer they made (which was accepted)?

Apr 23, 2015 06:11 AM #94
Rainmaker
314,693
Robert Smith
Preview Properties, PC - http://www.RealEstateMich.com - Brighton, MI
SRES, Search for Homes Brighton-Howell-SE Michigan

Emily, there is a difference between a verbal and a written acceptance.  Nothing verbal is binding legally, although there may be ethical/moral considerations - depending upon the parties involved.

If the seller's counter offer was accepted in writing by the buyer that should be a binding contract - unless the buyer cannot/doesn't perform or there's a mutual release.  Sometimes the two Brokers can iron it out, sometimes not.  In that case, you may need to consult an attorney. 

 

Apr 23, 2015 10:32 PM #95
Rainmaker
461,840
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

There is no obligation to conduct multiple offer bidding. Also, highest offer is not always best offer.

Jul 10, 2017 03:46 AM #96
Anonymous
Robert Bailey

In regards to verbal and written agreements. If a buyer sends a text message to the buyers agents accepting the sellers counter offer, does this constitute a binding legal agreement? Or does the seller still have the right to look at other offers? The paperwork was supposed to be sent over today, however the sellers agent had computer issues and now there is another offer on the table.

Jan 17, 2018 06:20 PM #97
Rainmaker
314,693
Robert Smith
Preview Properties, PC - http://www.RealEstateMich.com - Brighton, MI
SRES, Search for Homes Brighton-Howell-SE Michigan

I'm not an attorney, but I do not think a text constitutes acceptance as would a signed purchase agreement/addendum.  In Michigan, verbal agreements are not legally binding.  If your sellers have not signed a purchase agreement/addendum with this buyer (where he could sign, return and complete the deal), you are probably OK, but check with your broker. 

 

Jan 18, 2018 07:22 AM #98
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
314,693

Robert Smith

SRES, Search for Homes Brighton-Howell-SE Michigan
Curious about your home's value? Call me today
*
*
*
*
Spam prevention

Additional Information