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.

Can you submit offers on multiple houses at once?

Yes, in most real estate markets you can submit offers on more than one house at a time. Many markets have no legal provisions against submitting multiple offers at the same time, and if you’re not under contract for any of the offers, nothing can prevent you from doing so. 

It is important to know, however, that there could be potential complications in doing so, which could hamper your entire purchase process.

What are some of the potential risks associated with submitting multiple home offers?

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.

Revoking other offers promptly

If one of your offers is accepted before the others, you need to contact the other sellers as soon as possible to begin revoking the offer, to avoid running into any further legal or financial issues.

Local contract law

In certain jurisdictions may exist a law referred to as “a good faith and fair dealing covenant”. This law prevents people from creating contracts they knowingly can’t fulfill, and in some situations this may apply to making multiple offers on homes. Make sure you understand the law in your area before proceeding with your potential offers.

How can I reduce the risks associated with putting in multiple offers?

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.

 

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