The Dangerous "Shortcut" Most Home Buyers Regret

Placing multiple offers simultaneously may not be illegal, but certainly unethical.

In a seller's market where there are more buyers than sellers, buyers are often competing with others for homes they like. This often leads to being outbid by another buyer and frustration for the losing party. While it may be tempting to submit multiple offers simultaneously, in case one offer is rejected another is already in the works, this can put you, as a buyer, in serious ethical and financial risk.

Isn't it illegal to submit more than one offer at a time?

While each state has its own laws, it is not illegal in the state of Florida to submit more than one offer at a time. However, some local jurisdictions may have regulations that prevent doing so. You should always consult a real estate attorney if this is something you choose to do.

Although it may be technically "legal," doesn't make it ethical. Imagine you are the seller. You signed a legal, binding purchase agreement, accepting an offer while declining other offers from potential buyers. If you cancel the contract because another simultaneous offer on a property you liked better was accepted, you have cost the canceled seller money, time, and undue hardship. After all, accepting your offer, they took the house off the market, thinking they had a valid contract and you have now sent them back to square one!

Other offers that they declined may be long-gone as those buyers may also now be under contract elsewhere.

Placing multiple offers is costly to you as the buyer...

When submitting an offer, most buyers submit a "deposit" - or what is known in the industry as "earnest money deposit (EMD)," which is typically between 1% - 3% of the offer price. This is often due within 3 days after submitting the offer. If you submit multiple offers simultaneously, you will need to put down an EMD for each offer, which also ties up your money.

For example, if you submit three offers at the same time and your EMD is:

$2,500 for House A

$3,000 for House B

$3,500 for House C

You will be out of pocket $9,000 just in deposits! What if the sellers of each home accept your offer? Clearly you won't be buying three homes (unless it is inentionally for investment purposes). Therefore, you can risk losing the deposits or even be contractually obligated to purchase all three, which may cost you far more than your dignity! It could lead to a major legal and financial situation that could bankrupt you in the end or, in some cases, be considered criminal, if determined fraudulent.

Real estate professionals, including agents, brokers, attorneys, title companies, and loan officers often network and attend countless social functions where they discuss the industry. If word gets around that you, as a buyer, are placing multiple offers, seller's agents may red-flag your offer if they see it come through on their listing, raising concerns for the seller.

How to find the house you want without placing multiple offers...

A better alternative is to work with a local real estate advisor who is skilled in representing you as a buyer's agent. Your agent can help you navigate an offer strategically including providing a shortened deadline for acceptance, placing a full-price offer with a shortened due diligence or inspection period, and even paying a higher deposit or shorter closing period when possible.

Working with a skilled negotiator with a strong track record in representing buyers is key to helping you avoid undue risk, legal, and financial liabilities by using sensible methods to ensure you increase your chances for an accepted offer quickly.

Cash is key. If you are able to buy a home with cash, your offer automatically becomes stronger than a financed home and allows for a much quicker closing, which often appeals most to a seller. Consider Odyssey's "Buy-Before-You-Sell" option, which offers a great cash-offer like incentive without requiring cash out of pocket, double mortgages, double utility payments, etc.

Also avoid a lot of contingencies, except those required by law, insurance, or lending. The more conditions you place on your offer the more likely the seller will lost interest and reject the offer.

Ultimately, the key to finding the right home is to select 3 of your favorite options. You can have multiple offers ready to go, but only submit one at a time based on top preference. If that offer is rejected, your agent can immediately submit the second offer, and so on, without placing you in unnecessary risk.

For more information or guidance, CONTACT US with your questions and we'll be happy to help you guide your offer process.