In the event where a property is listed for sale by private treaty (with an asking price) and more than one buyer expresses interest in making an offer to purchase, each of these buyers will be advised that there will be another offer in consideration and that the offer with the most attractive price and terms to the seller will be accepted. To maintain fairness each of these buyers cannot know the price or terms of the other offers and must simply make their best offer in hope that it is accepted over all others.
This is at odds with a property which is listed for sale by auction whereby all bids (offers) are made in a public forum and each buyer is aware of exactly how much more they will need to offer in order to purchase the property. This method of sale through the bidding process will almost always produce the highest possible purchase price.
The Real Estate Institute of Queensland (REIQ) recently released a statement discussing this topic and also clarifying the legal obligations of the real estate agent during the multiple offer process:
The REIQ often receives queries from consumers about multiple offers on a property. A multiple offer occurs when more than one prospective buyer makes an offer on a property by submitting a Contract of Sale. Multiple offers often happen in a seller’s market when competition for residential property is greatest and there are more buyers than there are properties for sale. However, it can occur in any market and especially for properties within an affordable price range.
Occasionally prospective buyers have alleged that agents tell them there is another offer on the property in order to secure a higher price for the seller, when in fact there is no competing offer.
There are heavy penalties for agents who mislead or deceive buyers by telling them there are competing offers when there are not.
When a seller is to be presented with multiple offers, a prudent agent will inform prospective buyers of that fact in writing and obtain a written acknowledgement. This gives potential buyers an opportunity to submit an offer if they have not already done so, or to revise an existing offer that has not yet been accepted by the seller.
Real estate agents have an obligation under the Property Agents and Motor Dealers Act to submit all offers that comply with the seller’s instructions to the agent.
Exceptions occur when, for example, the seller instructs their agent not to submit offers under a certain dollar figure.
Agents also have a statutory obligation to attempt to get the highest possible price for the seller. The law further requires that agents be fair to buyers.
Buyers should also be aware that sellers will examine all the terms and conditions of each offer before deciding to accept or reject any particular offer. The conditions can make certain offers more attractive for reasons other than the proposed price alone.
Some sellers may be prepared to accept a lower price if the offer is unconditional rather than take the risk that a higher offer may not proceed to settlement, because of the special conditions required by a buyer.
Statement posted by the REIQ on the 13th of August 2012.
Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.
