Those Pesky Multiple Offers are back

[SLP-NYCT]

Boy I just hate Multiple Offers/Bidding Wars. With 22 months of inventory, you think Buyers would be smart enough to walk away from deals with Accepted Offers where Engineering has been completed.

What is it with human nature that WE MUST get what someones got? Buyers are starting to bid like they were in 2005, only to find out later that they can't get it appraised because...ITS A DECLINING MARKET.

I always tell my buyers to stay away from homes that have A/O's. But now I have deals where its MY Buyer that has the AO and others are bidding against them after we have done engineering.

What do you do in these situations when representing the Buyer?

[satxproperty]

It's almost an unspoken rule to not show homes under AO... sometimes, I'll call the listing agent to find out how the inspections went and if financing is coming along well.

Based on what the listing agent tells me, I probably would avoid showing it.

[satxproperty]

Maybe I don't understand something here... We have an Active Option period, which is AO.

AO is usually 7-10 day period that the buyer pays a fee directly to the seller to have the right to terminate the contract. Inspections must be performed during this inspection period. The buyer may terminate for any reason and loose the Option fee they paid but receive their earnest money back.

Are your buyers in the Active Option stage or past the inspection stage in what we call the "Pending" status.

For us, Pending means no more showings. Whether or not other offers come in is another story. But, since you already have an accepted contract, you really can't be outbid, unless the seller is willing to risk default by terminating the first contract. (Which he may not have the right to do.)

We also have a "Pending-Show for Backup" status.

This is not meant to be any type of legal advice.

[scottiegrace]

I don't see any problem in putting in a backup offer in case something happens with the financing or inspection. Once an offer has been accepted by the seller in our jurisdiction they can't take other offers unless the original offer is conditional upon the sale of the origional buyer's property.

[SLP-NYCT]

Welcome to NY!
A/O= Accepted or Acceptable Offer. (we have no status for this in MLS. The appointment desk is supposed to inform you of it)

In Contract= Buyer and Seller have both signed contracts but contingencies are still being met.

Pending= Unconditional Contract. All contingencies have been met and we are just waiting for the closing date.

Listing Agents are required by law to advertise and show the property up until the day of the closing UNLESS the Seller requests not to. Yes, Even after the seller signs. Some sellers will continue showing, up until the day THEY (the seller) signs. Other stop showing as soon as the BUYER signs. Each office/agent/owner handles it differently so its a crap shoot.

To throw another monkey wrench into this. The buyer has to have the inspections done before contracts are written. So in this case, the buyer just lost hundreds of dollars having the place inspected. It is not refundable and they can not sue the owner for it.

I can't tell you how many times this has happened only for the listing agent to contact me a month later because the new buyer that bumped us out, can't follow through. Usually because of over paying. (Property won't appraise out for a mortgage.) In every case, but one, my buyers were already in contract on another property.

Basically, in NY, its a race to get the seller to sign those contracts because that is the best way to be sure they are locked in, but I have seen sellers back out and face a lawsuit. They usually pay some penalties and everyone goes their separate ways. If the listing broker would sue for their earned commission, that would also stop, but so many have an If As and When clause in the listing agreement.

[scottiegrace]

It's wierd how that works. You would think that they would want to make everyone adhere to an agreement unless the conditions are met by the buyer and seller. Our jurisdiction is paving the way for the rest of Canada and I am starting to appreciate all of the early changes that we go through after hearing about this.

[SLP-NYCT]

This is how it will be until the day we make written Purchase Offers legally binding, like I see in other areas.

[satxproperty]

As a buyer, I am not sure I would like that very much... So, in NY a purchase offer is kind of like a letter or intent that says "if everything works out we'll buy it from you if you decide to sell it to us"???

Wow!

Having to spend money before you know even if the terms are more than just close to what the seller might accept.

[scottiegrace]

Seems Backward...

[judyo]

I was wondering what A/O meant. Once an offer is accepted in writing, it goes into Contingency status:
A/I - contingent on attorney review/inspection
FIN - A/I done - just waiting for the commitment letter
PEND - closing date set
and then there's contingent on sale, contingent on close and contingent on Other

If I set up searches for my buyers I do not search for any kind of contingency, especially in this market. If they find a home and it is contingent on sale I will show the property and explain that the current buyers can remove their contingency and there's not a guarantee they will get it. In a seller's market I showed more contingent on sales because inventory was so low.

In my MLS, many years ago it was set up better and I don't know why they changed it. We could easily separate the "contingencies" doing a search so I would show buyers the contingent on sale properties. Now there is only a choice of "Contingent" which includes them all (PEND is not part of the contingency status). It would be too difficult trying to get buyers getting e-mail lists to understand the difference.