There has been some discussion lately about the strategy of submitting more than one offer at time on multiple properties. Is it legal? It is legal in Arizona, not sure about other states. However, there are risks involved if you do not keep proper track of the outstanding offers. You could end up obligated to purchase more than one property. I recommend working with an agent that has experience doing this and is careful about tracking your various offers.
This strategy is most often used when there is a lot of competition for certain properties where being late to submit an offer is a sure way to lose out. There is little incentive to use this strategy with normal sales, as a seller response is usually expected in a day or two. Most commonly, this is now being done with bank owned properties, generally priced under $150,000 that are receiving multiple offers. In the bank owned and short sale situations, you have several options to back out of the offer:
- Banks typically take days (sometimes weeks) to respond to an offer for a bank owned home; if one of your other offers is accepted, you can withdraw those with no response.
- In the case of a short sale, you can back out if you used the standard Short Sale Addendum that allows the buyer to cancel up until the bank accepts the offer submitted by the seller. Be aware that some listing agents are requiring that you put a partial earnest money deposit into escrow for a fixed time, usually 60-90 days, before you can cancel your short sale offer without losing the deposit.
- If your offer is accepted, the bank will first give you a verbal acceptance, followed by a bank addendum that you must sign and then the bank signs to fully execute the contract. This provides another opportunity to withdraw your offer if another you like better is accepted. Usually, no earnest money is deposited until the bank addendum is signed by both parties. Some banks may want a deposit upon verbal acceptance.
- If you went as far as fully executing the bank addendum, you should still have time allotted for inspection where you can cancel for any reason with return of earnest money. Be sure to carefully read the addendum for the specific inspection time frame allowed by the bank. Some do not allow any inspection period – avoid those!
- And if all else fails, you may qualify to terminate for not being able to obtain financing. Most buyers would not qualify for more than one home purchase. However, you should avoid pushing your luck this far. Also be aware that the bank addendum usually has a fixed time to obtain a financing commitment, typically 15 days, before you lose the right for return of earnest money.
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