Buying a property under the multiple offer process can be daunting.
When a property market is so hot that there are more buyers than sellers, we often find that more than one person wants to buy the property. When two or more property buyers put forward an offer to purchase a property, the purchase becomes a multiple offer process.
Buying under the multiple offer process can be stressful. It is a highly competitive environment, but there are certain things that can be done to improve your prospects for success. Of course, understanding the multiple offer process is the most important first step, so let’s take a look at how this works in Brisbane.
There are certain obligations that a real estate agent should comply with in this situation and there are also best practice guidelines set out by the REIQ.
Section 22 of the Property Occupations Regulation 2014 (Qld) states that an agent must act in accordance with their seller client’s instructions unless it is contrary to the conduct provisions of the Property Occupations Regulation or otherwise unlawful to do so.
Of course, the Australian Consumer Law prohibits conduct, in trade or commerce, which is misleading or deceptive or is likely to mislead or deceive. Agents must, therefore, exercise a degree of caution to ensure that any representations which they make in the course of marketing a property, are accurate and not likely to mislead or deceive.
Under a multiple offer process, Agents have an obligation to:
- Immediately inform their seller clients of all offers made,
- Act in accordance with instructions from their seller clients, and
- To obtain the maximum sale price for the property.
However, in obtaining the maximum sale price for the property, agents must treat all buyers honestly and fairly and not engage in misleading or deceptive conduct and/or unconscionable conduct.
Conduct that may be considered misleading or deceptive and/or unconscionable can include, but is not limited to:
- An agent playing potential buyers off against each other in an attempt to draw out further offers and drive up the sale price; and
- An agent advising a buyer of the existence of a higher offer in circumstances where a higher offer does not exist has lapsed or has previously been rejected by the seller.
Agents also have obligations to the buyers during the multiple offer process to:
- To advise every buyer that they have received more than one offer on the property
- To give each buyer the opportunity to revise their offer, if they wish to do so
- To let all buyers know that once their offer has been submitted, they may not have the opportunity to negotiate further – their offer must be their “Best and Final.”
Real Estate Agents in Brisbane who adhere to ethical and professional standards outlined by the Real Estate Institute of Queensland (REIQ), would distribute an “Acknowledgement of Multiple Offers” form to all buyers when there is more than one offer on the table at one time. This is signed by the buyer and returned to the Agent with the offer.
All offers are meant to be private and not able to be disclosed to competing parties. It is effectively a “silent auction” process – but with one chance only to secure the property. The process is often confusing and stressful for a buyer who may not understand what they need to do to make their offer stand out.
In many instances, a Seller is looking for the best price. This is the objective of most sales campaigns when a vendor is selling their property. But in some cases, the terms that accompany an offer can make a big difference also.
Here are some things a buyer can do to make an offer stand out under a multiple offer process:
- Increase the size of the deposit – this gives the seller and their agent the confidence that the finance will be approved.
- Align the settlement date with the Seller’s ideal timeframe – understanding the seller’s motivations can often work to a buyer’s advantage.
- Be finance ready – a shorter time frame for a finance clause, or an offer without a finance clause will be more attractive for a seller.
- Shorten the timeframe for the Building and Pest Inspection – pre-book a building and pest inspector so the timeframe can be shorter.
- Stretch that little bit more – most buyers put forward round numbers when making an offer. Buyers who add an extra few hundred dollars to the end of the offer amount can sometimes be successful because of the extra stretch.
- Write a personal letter – We have seen this done successfully in Brisbane. Buyer’s who try to find an emotional connection with the seller can sometimes pull on the heartstrings of a seller and convince them to choose their offer.
- Consider waiving the right to a “Cooling Off” period – if your buyer is certain about the purchase this is also possible.
- Be flexible with other conditions – understanding the seller’s circumstances will help to align any additional special conditions in their favour. For example, rent-back clauses can be useful when the seller has not yet bought elsewhere – so get to know the motivation behind the sale!
The multiple offer process can be overwhelming for many buyers, but understanding the process often helps to provide more confidence. Being able to position an offer favourably, even outside of price, can often be the difference between buying and missing out.