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Is it OK to simultaneously submit multiple offers from one buyer for three different properties?

By Thomas McCormack

Real Estate Agent with Resources Real Estate

March 04, 2009 11:46 AM

Just curious to what the general feeling is to this scenario:

I received a written contract from an agent on Monday for a property I have listed. I am told by the agent at this time that the buyer wants to return for another look at the house the following day to view the home again. It's a good offer which I discuss with my client right away and a very reasonable counter-offer is proposed.

Meanwhile, I learn of another agent in my office who has received an offer from this same agent for a house in the same town. I'm guessing it's the same buyer.

In my subsequent conversation with the buyer's agent (later Monday night when I call to submit my client's counter offer) I ask what was up with the offer with the other agent in my office. He confirms its the same buyers. I'm told that his clients felt that that transaction seemed less than firm so they had decided to pull that offer and move on... presumably to my client's home. He tells me he'll call me after they view the home and respond to the counter-offer.

Tuesday comes, they come to view the house again. No feedback all day long. Meanwhile, in my office, I can see there are ongoing efforts to keep the deal alive on the 1st home the buyer's agent has made an offer on. I call and leave a message for the buyer's agent requesting a status update but get no response. At the end of the day I receive a call from the buyer's agent saying they're definitely pulling the deal on the other home (the other transaction in my office) but they do not as yet have a response to our counter-offer. I take this as a positive sign.

Wednesday comes and mid-afternoon I receive a call from the buyer's agent saying that they still have not made up their mind and there's a third property that they've been interested in. I ask if they have submitted contracts on all three properties. (Long silence.) "Yes, and I have deposits for each." An hour later I receive another call from the buyer's agent telling me they've signed an agreement with the third property owner. I receive an email saying they are withdrawing their offer and he's returning their deposit. The other agent in my office gets a similar message and subsequent email withdrawing their offer.

My question is this: Is it ethical for a buyer or their agent to submit and be actively negotiating on multiple properties simultaneously without disclosing this fact to the respective sellers' agents when the intention is to purchase only one of these properties?

I should add that in New Jersey we have an "Attorney Review Period" which effectively provides either buyer or seller an easy way to cancel the contract if within three days after execution of the contract an attorney writes a letter to the opposing party's attorney disapproving the contract... so there was little concern that the buyer would be able to cancel any "unwanted" contracts if they found themselves with two (or more) executed contracts. I will also add that none of these were "short sale" properties so the expected (and actual) response time for these offers was quick.

Thoughts?

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Gay Ashley

Ashley Realty Group - Fairfax, VA

I've seen this too, then they get out of their less desirable home during the POA review. I don't feel it is ethical, and it is very hurtful to a sincere seller who takes their home from active to a contingency period while the purchaser decides which home to buy.

Mar 04, 2009 11:59 AM

Pat Tasker

Shorewest Realtors - Germantown, WI

Your Milwaukee Metro Area Agent (WI)

What I have seen investors do in our market is write multiple "letters of intent". This consists of l page, and it states it is a letter of intent to purchase the property at ___________, for $X,000.

Not sure of all the language, there is not much of it.... What they are doing is floating offers to sellers, (these prices on the letters of intent are always about 50-60% UNDER the asking price) to see if there is ANY chance a seller is interested...usually not due to the low price...

IF the seller IS interested, then the buyers write an actual offer and proceeeds.... The letter of intent is actually better than just calling up and asking if a seller will take X. Yet it is not an ll page document that wastes an hour or two of everyones time on a really low offer....

The only danger in your case, is WHAT IF EACH OFFER WAS ACCEPTED? The buyer would have purchased 3 homes!

Mar 04, 2009 12:00 PM

Bill Gillhespy

16 Sunview Blvd - Fort Myers Beach, FL

Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Evening Thomas, Frustrating series of events. You probably would not have known about it except for the other offer also involving your office. Persoonally I would have made it clear to each agent thast this buyer prefers to make multiple offers. Your premise"...without disclosing this fact to the respective sellers' agents ..." is where I have a problem.

Mar 04, 2009 12:03 PM

Paul Kaplan

The Paul Kaplan Group, Inc - Palm Springs, CA

Mid Century/Modern homes in Palm Springs - www.Pau

I think this is an acceptable practice to submit multiple offers for one buyer. I would, however, disclose to a sellers' agent that the buyer is submitting other offers. The seller can respond accordingly.

Mar 04, 2009 12:15 PM

Connie Betz

Berkshire Hathaway HomeServices Ambassador Real Estate - Omaha, NE

Top Omaha Realtor - Omaha Homes for Sale

Wow, I wonder what the buyer would have done if all three properties accepted his offers as written.... Hmmmm

I have written and submitted multiple offers in the past. To protect my buyer from having to purchase numerous properties, I include the phrase "offer is not final until buyer signs again here ___________".

Mar 04, 2009 12:19 PM

Bob Foster

Century 21 Lanthorn R. E. Ltd. Belleville, Ontario - Belleville, ON

Hi Thomas. This is interesting because I am sure that conditions other than your Attorney Review Period could be used in the same way. Home inspections with results acceptable to the buyer at the buyer's sole discretion would be one simple example that could stretch the conditional period further.

When you come to look at the ethics involved, there is an obvious effect on your clients being disappointed by someone making an offer that is less based on real interest in completing the transaction than they might reasonably expect.

While it would obviously be better to deal with this type of situation openly, I don't think there is any legal obligation on the agent representing the buyer to disclose the multiple offers, so the detective work you did was one more ervice you provided to your clients.

I don't know .. are we suppoed to start asking agent presenting offers if their clients are making concurrent offers?

I agree that this doesn't feel right.

Mar 04, 2009 12:19 PM

Shane OnullGorman

Eau Claire Realty, Inc. - Eau Claire, WI

Eau Claire Wisconsin, Real Estate Agent & Realtor- Buy or Sell

Sure its legal as long as they dont mind being legally bound to buy all 3 properties. Has this agent ever thought of this?

Mar 04, 2009 12:21 PM

John Walters

Frank Rubi Real Estate - Slidell, LA

Licensed in Louisiana

I don't like it. I would find it very hard to work for this client. I think he is playing games with the agents and sellers time.

Mar 04, 2009 12:26 PM

Endre Barath, Jr.

Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA

Realtor - Los Angeles Home Sales 310.486.1002

Hi Thomas, I personally do not like working with buyers that are generating a lot of offers. (Especially since our offers with disclosures are about 30+ pages).Here in California we negotiate the Contingency Removal Period anywhere from 3 days to 17 days are standard. Our Purchase Contracts are written to allow the buyer to step out for basically for no reason and they need not to be give why they stepped out of the transaction. Previously(years ago) the buyers would start legal action to get out, hence the change in the Purchase Contract In this market if the buyer is trying to purchase a foreclosure or short sale then disregard what I said above, then the buyer needs to write as many as he can and hope one will be accepted.

Mar 04, 2009 12:40 PM

Thomas McCormack

Resources Real Estate - Rumson, NJ

Thanks for all the feedback.

Gay: My sellers did not change their status as the offer had not been accepted or executed so there was no "damage" to our marketing efforts but the process was disconcerting nonetheless. Thanks.

Pat: If this were an investor buyer I think I might be a bit more understanding but it was a family (relatively local) who I guess wanted to be very aggressive and confirm they had a house to move to. Thanks for the response.

Bill: I agree that disclosure would have been preferable. It would have certainly influenced my conversation with my clients about the offer. Thanks.

Paul: I suppose offering multiple offers is the buyers' market version of sellers using multiple offers from multiple buyers to drive up the price... but I would have thought that the buyer/agent would leverage one offer against another to try to get the best offers from all sellers. Thanks for your thoughts.

Connie: Thanks for your feedback... I've never encountered an offer where a buyer has to sign a second time after the seller has signed it. Very interesting.

Bob: I think your suggestion of asking agents if they are submitting concurrent offers on other properties a very good idea. In the same way that we are required to disclose the accurate status of a listing to a buyer's agent, I think it's fair to ask something similar of the buyer. I'll try to remember to ask next time.

Shane: Because the buyer has an easy out with the Attorney Review period, I don't think there was ever any real concern about being legally obligated to three different properties. Thanks for your thoughts.

John: Thanks for your input. I question if the idea came from the buyer or the agent.

Endre: I agree, if its a short sale situation generating a lot of offers makes more sense. Thanks for the feedback.

Mar 04, 2009 01:01 PM