Discover the risks of making two or more offers simultaneously and a better alternative.

Some would-be homebuyers feel like Bill Murray’s character in the movie Groundhog Day. They review listings, tour homes, put in an offer and face the disappointment of having their offer rejected. Again and again. It’s no surprise that they might consider making offers on multiple houses at the same time in an attempt to get a home. Technically a multi-offer approach is permitted in most markets, but it has risks.

Earnest money is required for each offer

Each home purchase offer will include earnest money. The challenge here is simply having enough cash on hand to cover multiple good faith deposits.

Risk of losing earnest money

If multiple sellers accept your offers simultaneously you run the risk of losing earnest money on any purchases you don’t follow through with.

Some buyers erroneously think that if earnest money isn’t required until two or three days after a seller signs the agreement they won’t have to pay it if they back out of the deal. In reality, the purchase agreement is legally binding once the buyer and seller sign. The buyer is legally obligated to pay the earnest money. Failure to do so could lead to the seller filing a legal action against the buyer for breach of contract.

Using a contingency to mitigate risk

Multiple-offer buyers may also include a contingency, which makes their offers conditional on other offers not being accepted. However, from a seller’s point of view, this contingency shows a lack of commitment to following through on the sale.

Proceed with transparency

If you make multiple home purchase offers disclose your strategy to each seller. Not doing so is considered unethical. When an offer is made, it affects the seller and other buyers. While considering the offer, the seller may miss out on buyers who fully intend to buy the home, and buyers may be denied a purchase opportunity.

If you receive an acceptance on one offer, immediately retract the other offers.

Also, keep in mind that a seller may balk at accepting an offer from a buyer who’s making offers on multiple homes. They may reject the offer outright or make a counter offer you find unacceptable.

An alternative to multiple offers

Rather than taking financial and legal risks by making multiple offers, a better way to approach home buying is to make a strong offer on the house that’s your top choice, request a response within a day and inform the seller that if you don’t hear from them there’s another house you’ll be making an offer on tomorrow. This approach keeps the process moving quickly, is fair to both parties and doesn’t involve unnecessary risk.

When you’re ready to buy

Consumers is the place to go for competitive home loans. Our mortgage portfolio offers special programs for medical and service professionals, locking in your rate and more. Talk to one of our mortgage loan officers for details.

 

All loans subject to approval. Rates, terms, and conditions are subject to change may vary based on credit worthiness, qualifications, and collateral conditions.