For many buyers looking to purchase a property over the past 12 months, they’ve probably been presented with a “multiple offer” form to complete, not fully understanding the rules of a multiple offer situation.
One of our current buyers is finding this a very painful process to go through especially when they have no idea what parameters are in place and where the offer needs to be in order to secure the property.
“We attended a very popular open home which was exactly what we wanted and was listed in our price range. As we entered the house, we were handed a form and told we were in a multiple offer situation. We offered well above the listed price only to find we missed out on the property by nearly $100,000!” said Natasha.
Many buyers are finding the same thing, especially with the current crazy housing market. The issue we agents have in this market is that we are governed by the Office of Fair Trading with how we are to handle the process of “multiple offers”.
At a standard auction there is transparency, you can see what everyone else is bidding and know exactly what you need to offer to secure the property.
With a multiple offer situation, you must put your absolute best offer forward, there is no second chance to increase your offer or change your conditions.
A lot of buyers don’t understand or aren’t clearly educated by the agent on how a multiple offer situation works and, therefore, expect the agent to let them know what offers have come in so they can make another offer. What they are actually asking the agent to do is called a “dutch” auction which is illegal in Queensland.
A dutch auction is when an agent plays one buyer off against another buyer to keep increasing the offers. For example, an agent will source an offer (let’s call it ‘Offer A’), they then disclose Offer A to their another buyer (let’s call this one ‘Offer B’). They use Offer A as leverage to increase ‘Offer B’. They then go back to ‘Offer A’ and disclose ‘Offer B’ in order to further advance ‘Offer A’…and so on. You can see why this is totally unethical and illegal.
It’s a really difficult situation to police in such a competitive market and we’ve been told the REIQ (The Real Estate Institute of Queensland) and Fair Trading have been bombarded with complaints over the last few months on the handling of negotiations by many different agents.
Remember, if you need any help or advice, we are just a phone call away.
All the best, Simon.