By Jane Mooy
What is a competing or multiple offer situation? Typically multiple offers occur in a sellers’ market where the demand is high and the supply is low. However, even in a balanced or buyers market there is always the possibility that more than one buyer will be interested in the same property at the same time. It is important that both sellers and buyers know how to respond when presented with competing offers.
In Ontario, the salesperson or broker representing a seller is required to disclose the number of competing offers to all buyers who have submitted written offers for consideration. However, the terms and conditions of those offers must remain confidential to the seller and their salesperson or broker.
Ultimately, the seller makes the decision about how the offers are presented and responded to, as well as which offer is accepted. The buyer, on the other hand, makes the final decisions related to the offer, including whether or not they want to participate in a competing offer situation.
In this type of situation, buyers are often tempted to offer more for a property than they had initially planned and quite often remove conditions from offers that were intended to protect them. When faced with a multiple offer situation buyers should consider all factors such as:
- Do I feel comfortable removing “conditions” from the offer (.i.e. the Home Inspection Condition)
- How much can I afford?
- How much is the property worth?
Offering a higher amount could result in success, but is it the best long-term financial decision. Competing offers does not mean the property will sell for more than the asking price, nor does it mean that an offer that exceeds the asking price will guarantee that the buyer’s offer is accepted.
Buyers should be aware that a financing condition allows for final financing qualifications to be solidified; and a condition for home inspection will hopefully protect against any unforeseen defects in property, immediate repairs required or any urgent upgrades needed. Forgoing a home inspection is a risk and should always be considered carefully.
Sellers have several choices when faced with a multiple offer situation, such as:
- They can decide to accept the best offer;
- Negotiate with one buyer and reject all other offers;
- Negotiate with one buyer and advise other buyers that their offers will be set aside while the seller negotiates;
- Reject all offers.
Conversely, buyers can choose not to compete for the property. Sellers can try to negotiate with one buyer only to find that the buyer has already presented their best offer and the other buyers have gone and found other properties they are interested in.
Whether a buyer or a seller it is important to seek advice and guidance from your real estate broker or salesperson. They will ensure that the obligations and options available to you are fully understood.
Jane Mooy is a Sales Representative with Royal LePage R.E.S. Ltd./Johnston & Daniel Division. Jane is a regular contributor to the Muddy York Blog. Jane can be reached at janemooyis@rogers.com or via the web at www.janemooy.com.
