How legit is multi-offer and how can we avoid it as a buyer

[P.Bateman]

I had this situation happen to me yesterday and wanted to reach out to the more experienced investors out here and buyers agents for some thoughts and tactics

-Went to open home yesterday
-House has been on the market for 7 weeks and passed in at auction 2 weeks ago. No interest post auction and no bids
-House now Price by Neg with agent looking at offers over $750k which is too low for the area
-Asked agent if I had an offer in today would he present to the vendors today or wait till Monday
-Agent advised that they would present offers over $800k today so put a strong offer on the table
-Agent rings me at 5pm and says can't get hold of the vendors and someone else is now keen to offer so it has become a multi offer with offers presented on Monday
-Agent tells me there has been a lot of interest from people who missed out or didn't bid at the auction and they have been waiting patiently to put an offer in. To me this sounds BS because they would have pounced after auction was passed in right?

As a buyer I'm always left wondering how legit this process is as soon as you sign the multi offer form the agent asks you to put your best foot forward. Also suspiciously after a 7 week sales process 'other' buyers suddenly pop up when we put an offer in. For it to go to a multi offer does the other offer have to be a signed S&P or could someone verbally say "I want to put an offer on...." and that makes it a multi offer even if they don't end up signing a S&P?

Best way to negotiate this- a sunset clause and be prepared to walk away? I think my biggest mistake was not confirming with the agent that the vendors were available to take an offer

Be great to hear how others have negotiated this

Pat

[Learning]

Have you got a trusted friend who could contact the agent and enquire about the property as an interested party?

Personally if I was suspicious and not 100% blown away by the property I'd pull out of the negotiation at that point. Then tell the agent if then remaining offer falls through I'd reinstate my offer less 5% as a B.S fee.

[Uncle Pennybags]

Hi Pat

Unfortunately there is no way to avoid this, apart from just not putting in an offer yourself, and the integrity of the process does come down to the salesperson you're dealing with. For it to be a legitimate multi-offer scenario there must be another signed Sale & Purchase Agreement from another buyer - a verbal is not enough. Also, each buyer will be asked to sign the multi-offer form and that should outline the process.

If the other buyer pulls out before offers are presented, the salesperson is obliged to tell you about this (I know some that don't!), and give you the opportunity to change your offer if you wish. There is no legal timeframe in which offers have to be presented, and often there will be a delay in order to obtain each buyers offer (and I wouldn't be surprised if the salesperson is lying to you about not being able to get ahold of the vendors, and just buying more time to get the other offer).

Once all offers have been presented to the owners, the owners have three options, reject all offers, accept one, or negotiate with one and only one (eg countersign). In saying that, the salesperson can go back to ALL buyers involved in the multi-offer asking them to increase their offer - obviously it's up to you what you do should this happen.

I agree with the above, that if you're not 100% keen on the property, don't proceed with an offer - you'll soon find out how legitimate the salesperson is being. All you might end up doing is help the salesperson negotiate with the other buyer.

A sunset clause won't necessarily do anything for you, but if you want to put the pressure on the vendor then go for it. It only takes your verbal instruction to withdraw an offer (and a contract is not binding until acceptance is communicated to you), so telling your salesperson that an offer is only on the table for 24 to 48 hours is enough, just email them to protect yourself when you do want to withdraw.

I hope that is some help, good luck!

[Anthonyacat]

There's no way to know. I wrote a thread on this a few months back much in the same vein.

From my experience, the agent told me there was a multi offer, I said "Thanks for letting me know, but not anymore there's not. Let the vendor know I'm withdrawing my offer effective immediately, let me know when the other offer falls through; I know it will."

And he called me two days later. I now live in that house.

Could have gone another way of course, but I don't believe there was ever another offer.

[motivated]

I have been told by someone experienced in dealing in property that a good strategy is NOT to ever sign a multi offer document. Still put an offer in at whatever level you are comfortable with and see what unfolds--- Because the agent wont know if its your best and final offer or not it means they will look at all the other offers , discard all other offers except the best one, AND YOURS-- and they may (or may not)come back to you if they think there is some chance of negotiating/closing a deal with you --
In theory they shouldnt talk further with the other offers as they will have declared that they have put in their best offer
The point is--you dont have to play their game--put your offer in on your terms

[rocket]

Depends on how hot the market is & the value the property brings to you.
I have experienced both situations where the multi offer is genuine and vice versa. One must follow the instinct ...can't make a rule

[absoluteproperty]

It is a common scam I have come across with agents. Obviously it is designed to push the price higher and pressure the buyer to pay more.

It is a system that absolutely should be regulated, in a system which the REINZ must have a register of all multi offers, that a potential buyer can go onto the REINZ website or call them to confirm how many parties have signed confirmed offers on the property.

I have pulled out of 3 deals due to this tactic in Wellington in the past 2 years, 1 was a legit offer which I mistakenly didn't believe (I underestimated market interest) but the other two sold quite some time later.

Another policy I have, is that when I have this scam played on me I will not deal with the same agent again -I will find another agent within the Agency to deal with, and they can sort out how their comics ions are divided up themselves.

Those who give in and play the multi offer game (especially in non-hot markets) only do themselves a disservice by:

- Giving a seller leverage to play the two potential buyers off

- Telling the agent that it's a great system and we can keep doing this, because it's an easy way to squeeze a few more bucks out of the buyer, even if there is no genuine second offer on the table.

- Getting a sellers hopes up, and reducing the chances they will negotiate or reduce price at any time in the he future.

Just don't do it.

[Bobsyouruncle]

The agents just doing their job. I ALWAYS refuse to participate and about 25% of them come to me later but if it is a genuine MO then it's going to go for too much so just walk.

[BigDreamer]

Adding a sunset clause is always the best way forward in these situations. Also, only put an offer you are comfortable with and not what you feel the vendor/agent want.

[BigDreamer]

Adding a sunset clause is always the best way forward in these situations. Also, only put an offer you are comfortable with and not what you feel the vendor/agent want

[ladyagent]

Hope that you all run by the same ideaology when you come to selling.

[sidinz]

Hope that you all run by the same ideaology when you come to selling.

So you condone the practice of lying to potential purchasers? (And possibly committing fraud, by getting them to complete a multi-offer form when there is no multi-offer?)

[Anthonyacat]

Hope that you all run by the same ideaology when you come to selling.

I certainly hope this isn't you saying that lying to potential buyers is ok. It's clearly against REA rules, though I'd expect that's more of a don't ask don't tell sort of enforcement.

Personally I don't intend to sell anything anytime soon, but when I do I'd be disgusted if an agent lied to the vendors to try and get a better price.

EDIT: See Sid got there first. That's what I get when I open tabs and ignore them.

[P.Bateman]

The biggest issue for me is that agents are self regulated with the REA and don't show a great level of transparency. There needs to be a register of offers kept that stops a "friend" putting in a ridiculously low offer to push an existing offer into a multi offer situation

[Bob Kane]

Hope that you all run by the same ideaology when you come to selling.

We don't have any say.
We engage a professional liar when we sell and they never update us with progress reports.
We only hear from them when they present us with fabulous conditional offers and expect us to accept them.