What Happens When Multiple Buyers Want the Same House?
Imagine you are leaving the San Francisco Valley for a new job in Salt Lake City, Utah. While demand for San Francisco housing has all but collapsed in recent months, the Salt Lake City market is as hot as it has ever been. You could find yourself in a bidding war among several other buyers who all want the same house you have fallen in love with.
What happens in these kinds of situations? It depends on the circumstances. It depends on the seller, the seller’s agent, the buyers’ agents, and even a smattering of state law. The one thing consistent throughout the U.S. is that multiple buyers interested in a single house put the seller in the driver’s seat.
1. Disclosing Offer Details
Right off the top, the first thing to note is that your offer may not be confidential. It turns out there is no federal law that prevents real estate brokers or agents from disclosing the details of one offer to another interested buyer. There is also nothing in the National Association of Realtors (NAR) code of conduct prohibiting the practice.
When real estate agents disclose offer details to other bidders, they engage in a practice known as ‘offer shopping’. Some states prohibit such activity, but most do not. So be aware that you might be forced into a bidding war by an offer shopping seller’s agent.
One avenue of redress is to ask the seller to sign a confidentiality agreement when you submit an offer. It is a long shot, but you might gain the seller’s cooperation if the circumstances are just right. A lack of cooperation offers you the choice of walking away or still submitting an offer knowing it may not remain confidential.
2. Reading Your Real Estate Agent
Offer confidentiality is just one thing to consider in the arena of multiple offers. Something else to think about is whether or not your real estate agent is giving you the whole story. The NAR code of conduct expressly prohibits member real estate brokers from lying to clients. Thus, an agent cannot outright lie by saying there are multiple bidders when there really are not.
Agents can make statements that will draw you to reach your own conclusions about a potential bidding war. You could be led to believe something about the house you want, something that isn’t really true. This is why it is so important to learn how to read real estate agents.
The pros at Salt Lake City’s CityHome Collective real estate and design firm say there is no way to know for sure whether an agent is being totally upfront with a client. But they do say that paying close attention to everything an agent says and does can help. In other words, you can learn to read a real estate agent by paying close attention to what he or she says as opposed to what he/she does.
3. Bidding Wars Are Real
At the end of the day, bidding wars are very real in hot markets like Salt Lake City. Any locale in which supply is not keeping up with demand is ripe for a house getting multiple offers within days of going on the market. That is just the reality of house hunting in the current environment.
Your best bet is to go into the home buying experience already knowing how much you can afford, what priorities are highest on your list, and so forth. If you go into the process with the necessary confidence to make good decisions, you should be able to navigate any bidding war you find yourself in.