Usually, when the words "multiple offers" are heard, they are referring to a home-seller that is fortunate enough to be dealing with several offers from several buyers. With the real estate market not just rebounding but flourishing in some locations, there can be another meaning to that term. Read on learn all about buyers who place offers on more than one property at a time.
Covering All Bases
In most cases, buyers who consider placing an offer on more than one home at a time have already been trying to buy a home for a while with no success. In a busy and competitive market, buyers may find themselves outbid on home after home. It is, perhaps, only natural for buyers to feel the need to increase their chances by placing offers on as many homes as they feel fit the bill. When you have multiple offers in on various homes, sellers won't usually know about it since real estate agents are bound by confidentiality not to mention it. Doing things this way is perfectly legal, but buyers need to understand the potential ramifications when they take this aggressive approach to home-buying.
The Earnest Money Issue
When submitting an offer for a home, it's common and expected for the buyer to also pledge a deposit. The amount of the deposit, known also as earnest money, varies but is usually a certain percentage of the offer price for the home. If the sale goes through, the earnest money goes toward the closing costs or the down-payment. With earnest money deposits being hundreds or thousands of dollars, making offers on more than one home can get expensive. What's more, the buyer is only refunded their earnest money deposit for very few and specific reasons. An offer to buy a home is a legal contract. Technically, the sellers can sue the buyer if they fail to go through with the contract. At the very least, buyers probably won't get their earnest money back unless things fall into the below categories:
- Repairs or other issues agreed upon in the contract were not addressed in a timely manner.
- The seller backed out of the deal.
- The buyer failed to get a home loan.
When you submit multiple offers, you may lose the earnest money if more than one offer is accepted. As long as you know the risks, this strategy could pay off and result in a new home. Talk with your real estate agent to find out more about making multiple buyer offers.