I am starting a new series: Bad Ideas in Real Estate
These are ideas that I hear, either socially or from prospects or clients, that do not work. They are usually “tricks” that someone picked up online, or heard from someone they know.
I start this series with a tactic that crossed my path this spring. At that time, the Greater Boston real estate market was white-hot and very competitive. The conversation went something like this:
Here’s an idea! Make offers on XX Street and on YY Street at the same time. They are both due on Monday night. That doubles my chances of getting an accepted offer.
Why this is a bad idea:
What if both get accepted? Even in this market, both offers could get accepted. At that point you would need to withdraw from one of them. Since you have no legitimate reason to withdraw one of them, you might lose your deposit.
Follow up: What if I don’t give them the check? See Good Faith.
Good Faith: If you have an accepted offer, but stop the transaction for no reason, you are not acting in good faith. You gave your word that you intended to purchase the property at the price and terms of your Offer to Purchase. You have contingencies that are legitimately yours, but “I got a better offer accepted” is not one of them.
When you make an offer, you include a pre-approval from a lender. That is a material fact you are telling the seller; you can get a mortgage for this property. Your lender gave their word, and you gave your word that your mortgage application material has been reviewed and you will get the loan. But, your lender has approved you for one property, not two. You are not qualified for both of properties you are making an offers on.
This can be considered acting in bad faith. You have lied to the seller; you are not qualified to buy this property once the other offer was accepted. Your withdrawal is based on your inability to get a mortgage on one of the two properties you made offers on.
What can you do, if two properties are worth making offers on, during the same weekend?
If both properties have offer deadlines that are at the same time, you should not make two offers. If they are one day apart, these things are possible:
- Make an offer on property number one.
- Prepare an offer for property number two.
- If the first offer is accepted. Congratulations.
- If the first offer is still in negotiation when the second deadline approaches, you have these options:
- Continue negotiating for property number one
- Withdraw offer number one, then put in an offer for property number two.
We have been preparing more than one offer on a weekend cycle this year. It can be worked out if one offer deadline is Monday and the other is Tuesday, or even Tuesday at 10 AM and Tuesday at 6 PM.
Honest dealing requires that we avoid putting our clients in a position where they could be putting their deposits in jeopardy, and many be considered to be acting in bad faith.
We are not lawyers. We are not pretending to be lawyers. As licensed real estate agents, we are duty-bound to take contracts seriously. From a non-legal standpoint, a contract (such as an Offer to Purchase) is giving your word that you intend to do something, based on the terms of the contract.
If our clients can’t fulfill the contract, we discourage them from giving their word falsely. This is the right thing to do. It is good for business and good for everyone’s integrity.
Imagine if a seller accepted two offers simultaneously? Then they let both parties pay for a home inspection. Then the seller chose one offer and dumped the other the next day? See why this isn’t OK?