As the residential real estate market continues to improve in our area and the inventory of homes available for sale comes down, the issue of “multiple offers,” when a seller receives two or more written offers from different prospective buyers simultaneously, is coming up more often. A result of the supply/demand formula, it often occurs on newer listings that are sharply priced or in highly desirable areas, or as a result of the combination of the two.
The National Association of Realtors’ Code of Ethics and Standards of Practice gives clear direction as to how its members must treat all parties in regard to receipt and presentation of offers. While NAR directs that “Realtors shall submit offers and counter-offers objectively and as quickly as possible” (standards 1-6), it is reasonable that more than one offer may be received in the same time frame. When this occurs, “brokers shall, with the sellers’ approval, disclose the existence of offers on the property” (standards 1-15).
The key phrase to keep in mind is “with the sellers’ approval.” When multiple offers are received, a seller has several options to consider. One is to negotiate with one offer and simply reject the others. A seller is not obligated to consider or respond to offers based on the order or time they are received. A second option which has become increasingly used is to notify all parties, in writing, of the existence of competing offers on the property. In this notification a seller will often give competing buyers a defined time frame in which to submit their “highest and best offer.” From this point the seller can choose to accept an offer, counter an offer or simply reject all offers if none are acceptable to them.
Since foreclosure properties are often priced below market value when compared to competing properties, the multiple offer scenario occurs more often in this category. Most banks/asset management companies have clearly defined guidelines as to how they respond to multiple offers, but here again, it is up to the owner/seller how they choose to respond.
In a changing real estate market like we are currently experiencing, a prospective buyer needs the guidance of an experienced and well-trained member of the Greater Chattanooga Association of Realtors to guide them through the buying process. If you are not working with a Realtor, your agent is not bound to abide by this Code of Ethics, so ask if they are a member in good standing.
Mark Hite is president of the Greater Chattanooga Association of Realtors