Have you been trying and trying to buy a house but to no avail? Have you been putting in offers on home after home and keep losing them to someone else? If so, you are not alone, it seems as if this has become the new normal for home buying and there doesn’t seem to be any end in sight.
It’s no mystery that the housing market has been a sellers’ market for many years now. Buyers are becoming more and more frustrated because they spend a significant amount of time looking for the perfect home and when they finally find one, they lose it to someone else.
Unfortunately, this has led to an unprecedented number of people opting to put simultaneous offers on multiple homes hoping that they might actually get one of them.
This is wrong on so many levels. However, there are alternatives to putting in simultaneous offers (more about that in a moment). But first, let’s go over the legality and morality of putting in simultaneous offers on multiple homes.
Is it Legal to Put an Offer on More Than One Home at a Time?
Yes, it’s legal; however, some jurisdictions might not allow it or have certain stipulations that go with doing so. Therefore, you should check with a real estate attorney if this is something you choose to do. Your local real estate agent should also be able to give you some information about doing this for each home and location you are considering.
Legal but Definitely Not Ethical—Here’s Why…
Just because something is legal doesn’t necessarily make it ethical. In a hot sellers’ market, people tend to want to put in simultaneous offers on multiple homes in the hopes they are able to snag one of them. However, while this might be legal, the consensus is that it is definitely not ethical.
Put yourself in the seller’s shoes. You signed a legal, binding home purchase contract and the seller accepted it in good faith. The seller took their house off the market and agreed to sell it to you. If you use one of the legal but unethical ways to get out of that contract because one of your preferred offers was accepted, this is morally and ethically wrong.
You never know what type of position the seller is in. Perhaps they need to sell their house quickly for whatever reason. They might need the money for a health-related emergency, to avoid foreclosure, or really any other pressing reason, you just never know.
Regardless of the reason, that seller, in good faith, took their house off the market for you. If you cancel that contract to accept another offer, you have cost that seller time, money, and possibly their or someone else’s life if that money was to be used for a medical emergency. Yes, this could be that serious because you never know why someone is selling!
The Danger of Putting Simultaneous Offers on Different Homes
When putting an offer on a house without an inspection period and signing a real estate purchase agreement, you will, in almost all cases, be required to submit an escrow deposit along with your offer. A typical escrow deposit ranges between 1% and 3% of the purchase price. And in a seller’s market, you will want to put down as much money as possible if you want any chance of your offer being accepted. That means if you are looking at houses around the $300,000 range, at 3% the escrow deposit would be $9,000.
Let’s say you decided to put an offer on three different houses simultaneously. You will have put down somewhere in the $27,000+ range in escrow deposits. Then, let’s say all three sellers accepted your offers. What now?
Well, that means you will lose $18,000+ because, if you are like most people, you won’t be buying all three houses. So not only have you lost $18,000+, but you will also have caused two of the sellers a significant amount of undue stress and hardship.
Additionally, just think how much more of a house you could have purchased with an additional $18,000+. Or perhaps, you could take that large amount of money and put it towards your child’s college fund, taken a family vacation, bought a boat, car, or something else you’ve always wanted.
As you can see, when you put everything into perspective, it doesn’t make sense to submit multiple simultaneous offers when all you really have to do is to be patient. There will always be houses for sale, and you will get one at some point. In fact, your patience could pay off, and you might just find a better house in a better location once everything is all said and done.
A Better Alternative to the Multiple Home Offer Strategy
Most local real estate agents regularly communicate with each other. Therefore, the chance of one or more agents finding out that you put an offer in on two or more houses at the same time is highly likely. If it becomes known that you put offers in on multiple houses at the same time, the result could be that none of the agents will take your offer seriously and that could result in you losing all of them. So what’s the solution?
Instead of submitting multiple offers, put an offer on the house you prefer. Then have your agent tell the seller’s agent that you need an answer today and if you have not heard back from the seller today you will be putting an offer on another home tomorrow. This will eliminate any long, drawn-out wait for a seller who is trying to hold out for a higher offer. This could also prevent you from losing out on your second choice home because you waited too long to submit an offer.
Why It’s Extremely Important to Choose a Strong Buyer’s Agent
In a hot seller’s market, it is even more important than ever to hire a Lakeland buyer’s agent with a strong record and background in real estate. A buyer’s agent who knows the local market inside and out. A buyer’s agent who knows how to work the system and be an influencer who can help everything work to your advantage.
But that’s not the only reason to hire a strong buyer’s agent. A strong buyer’s agent can also help keep you out of legal trouble. You need a buyer’s agent who knows the legalities of placing multiple simultaneous offers and what happens if more than one of your offers is accepted.
You need an agent who can effectively express that if you choose to go the multiple offer route, it could possibly land you in a lawsuit if multiple offers are accepted, and you are only qualified to purchase one of them.
An experienced buyer’s agent will have the experience and knowledge to be able to effectively educate his or her clients and help them understand that they need to be firm and confident in their offer to the seller. An experienced buyer’s agent will also be able to assess the true value of a property and have the experience to craft a strong enough offer to prove why their client is the best option.
This is important because the “strength” of any contract will beat an empty promise of more money any day of the week.
How to Make Your Offer More Appealing to a Seller
Don’t let the fact that we are in a sellers’ market stop you from finding and getting the home of your dreams. There are some powerful things you can do to help the pendulum swing in your direction.
Here are some tips for getting a seller to accept your offer over other offers on the table.
1. Proof of Complete Approval
Submit your offer with complete approval, not just a pre-approval letter. You need to show the seller that you are approved and ready to go. Attach a complete approval letter with your offer. This will show the seller proof that you are completely approved and all you need to do now is find a house. Knowing that there is no chance of losing the sale due to the buyer not being approved is a huge selling point. It also significantly cuts the length of time until they can close.
2. Make a Cash Offer
Cash is definitely king when it comes to buying real estate. Therefore, if you can, make an all-cash offer and that will greatly increase the chances of your offer being accepted.
3. Make a Higher Than Asking Price Offer
Keep in mind that if you are financing a home, whatever house you buy will have to appraise for the amount you offered. So you can offer a higher than the asking price offer, but if it doesn’t appraise for that value the mortgage company won’t approve your loan for that house.
However, there is a solution to this dilemma. Paying more than the asking price is always a good strategy if you want the seller to select your offer over the others. The caveat is that you might need to pay out of pocket for the amount between what the house appraised for and the amount you offered for the purchase.
4. Skip the “Love Letter”
In the past, it was often recommended that the buyer submit a letter to the buyer telling them how much they loved their house and why. However, in recent years, this has become problematic. While this sounds like it might be a good idea, it’s not. Doing so could violate a variety of fair housing laws or offend the seller in any number of ways. You never know what the seller might be going through at any given time, so it’s best to just skip the letter.
5. Don’t Include Contingencies
Many buyers include contingencies with their offers. A contingency is a condition that has to be met before the buyer will be able or willing to complete the sale of a home. An example of a contingency might be that the buyer has to sell his or her house before they can purchase the seller’s house. Additionally, be sure you don’t waive any contingencies that the mortgage company won’t agree to such as waiving the need for a home appraisal.
6. Offer to Pay the Seller’s Closing Costs
Sometimes it’s the little things that sway the seller’s decision. Try offering to pay the seller’s closing costs. This puts more money in the seller’s pocket which could be the one thing that seals the deal.
7. Be Flexible
Another attractive option is to be flexible with your closing date. The seller might have a specific timeline for moving. Therefore, if you are flexible and allow the seller to name the closing date that could be helpful. You could also tell the seller you will close now and allow them to stay in the house for as long as they need to before you take possession. Just remember to include specific dates for this in the lease-back contract. That way everything is legal, above board, and enforceable should an issue arise.
If you are looking for a house, we can help. We know the Lakeland, FL area extremely well and have helped buyers and sellers navigate the housing landscape for more than a decade. That includes the most successful approach for buying a house in a sellers’ market and selling a house in a buyers’ market. So Contact Lakeland Real Estate Group and let us show you just how quick and easy buying a house in Lakeland can be. You won’t find a more qualified, compassionate REALTOR® in the area. We look forward to working with you!
Other Important Resources Worth Reading
Ever wondered how your real estate agents get paid? Vicki Moore goes into detail about how a brokerage may pay their agents, who pays real estate agents, how much they get paid, and much more in her article: “How Do Real Estate Agents Get Paid?”
What is Days on Market (DOM) in Real Estate is another terminology Joe Boylan explains in his article that you should pay great attention to this when searching for homes.
Bill Gassett wrote: “When you own a home, you can enjoy some tax benefits that renters don’t have access to. These tax advantages of owning a home and fulfilling the American dream cause many to abandon their plans to continue renting for an indefinite period.” Owning a home can have some incentives. He explained more about the tax advantage of owning a home in his article
Danny Margagliano wrote that while newly built homes offer lots of advantages like modern appliances and customizable features, older houses offer more flexibility to the buyer, both in cost and location. He goes further into detail with his article: Is a New Construction Home Right For You
About the author: The above real estate article “The Dangers of Writing Multiple Offers at the Same Time” was written by Petra Norris of Lakeland Real Estate Group, Inc. With over 20 years of combined experience of selling or buying, we would love to share our knowledge and expertise. Petra can be reached via email at firstname.lastname@example.org or by phone at 863-712-4207
We service the following Central Florida areas: Lakeland, Auburndale, Mulberry, Winter Haven, Bartow, Plant City, Seffner, Valrico, Polk City, Lake Alfred, Lake Wales, Haines City, and Davenport FL.
Great info. Buyers can get into some tough financial situations if multiple offers are not written up carefully by an experienced agent or an attorney.
Great information, every buyer should read this article.