Multiple offers are so common these days and I’ve hit into this tricky situation a few times already in the past month.
I’m surprised that many realtors don’t even know the answer to the situation and often cause unnecessary fights.
Let me share this with you so you’ll be well informed.
Here’s the 1st event.
Buyer #1 puts in an offer at $900,000 and it’s valid for the Seller to accept it until 11 o’clock tonight.
Now the 2nd event.
The Seller wants a higher price and signs back the offer at $950,000. It’s valid for Buyer #1 to accept until 11 o’clock tonight.
Buyer #1 is actually good with $950,000 but wants to see if there’s room to low ball a little more.
So here comes the 3rd event.
Buyer #1 signs back again at $920,000 and it’s only valid for the Seller to accept until 9 o’clock tonight, trying to shorten the game.
It’s now 5 o’clock in the afternoon. We have a 4th event.
Seller suddenly receives another offer from Buyer #2.
Buyer #1 freaks out because now there’s competition.
Of course, Buyer #1 wants to find a way out of the bidding war, right?
Let’s go back to the 2nd event.
Remember Buyer #1 received a sign back offer from the seller at $950,000, it’s valid until 11 o’clock tonight.
It’s only 5 o’clock now, can Buyer #1 simply accept the offer at $950,000 and call this a done deal?
What do you think?
So I posted this question in our YouTube community last week.
26% says Yes. Buyer #1 can just accept the $950,000 offer.
74% says No. Buyer #1 now has a bidding war with Buyer #2.
Most of you got the correct answer.
No, Buyer #1 cannot just go back and accept that $950,000 offer.
Why is that?
Wasn’t the offer valid until 11 o’clock?
The key here is that a counter offer was made after that $950,000 offer.
When a counter offer is made, it serves as a rejection to the original offer. So the original offer is void and cannot be accepted anymore.
In other words, a counter offer kills the original offer.
This is a general rule of contract law.
Disclaimer here. I’m not trying to offer formal legal advice. When in doubt, make sure you check with your lawyer.
I’m just speaking from a real estate transaction perspective where all offers are communicated in written forms, it should be pretty clear that a counter offer has been made and should void the original offer.
Speaking of multiple offers, let me share a story with you.
A few weeks ago, we put in an offer for John to buy a 2 bedroom condo at the east waterfront.
Remember my lakeview condo in the “Unboxing My Condo” video? It’s in that same building.
The seller signed back the offer at a slightly higher price, which was pretty much what we expected.
Everything was fine except John wanted to push the closing date a little further out.
My advice was to accept the offer first so we locked in the price and we could amend the closing date afterwards because we got a verbal blessing that the seller would be fine with it.
John didn’t like the idea because “What’s the rush to accept?”
So we signed back the offer with a new closing date, everything else stayed the same.
Shortly after we sent in our counter offer, the Seller received a new offer from another buyer.
Uh-Oh, now we got a bidding war.
So we went from “accept and done deal” to “a chance to improve our offer”.
John originally had a 5 day mortgage condition in the offer, now he’s removing it after rushing to the bank to clear things out.
So we improved our offer to unconditional, but stayed at the same price we were ready to accept before.
Our competition also submitted an unconditional offer, but with $30,000 more in price.
We lost the bid. A devastating outcome for John.
We keep searching but nothing matches up to John’s expectation.
You see, it’s hard for him to get over that psychological barrier. He missed that golden opportunity, now everything is more expensive and just doesn’t seem as good.
It’s the same with everything else in life. Some opportunities only appear once and for a very short time, so we always have to prepare ourselves and be ready to grab the opportunity when it’s here.
And of course, sometimes we do miss opportunities. There’s nothing we could do about the past, the best we can do for ourselves is to forget, forgive and move on.
When you focus on problems, you’ll have more problems.
When you focus on possibilities, you’ll have more opportunities.
If you want to know more about the strategies you should use for the current market, you can schedule a call with me at the link below.