How to navigate multi-offer situations as a buyer & seller

A multi-offer is when more than one buyer makes a written offer for a property. This happens frequently when auctions are passed in and when a property is for sale by tender or deadline.

The process is designed to give all interested buyers a chance to submit their best offer, to create competition amongst buyers, and ultimately achieve the best possible sale price for the seller. 

• A multi-offer only occurs when all offers are in writing. A real estate agent cannot tell other buyers that there is a multi-offer if there are no other offers in writing. 

• Usually agents will let buyers know they are in a multi-offer by asking them to sign an acknowledgement of multi-offer form (although this is not required by law). 

• The real estate agent should clearly explain the multi-offer process to the seller and all buyers. If you’re not sure how their process works feel free to ask for clarification. 

• If a multi-offer is occurring, agents should contact all interested parties to give them a chance to make an offer. 

• Real estate agents are required to present all written offers to the vendor in a timely fashion, however, the vendor doesn't have to accept them within any time frame. At this stage the agent is free to let other buyers know an offer has been made and encourage them to make a competing offer if they’re interested in the property. 

• If a buyer submits an offer before a multi-offer process begins, the agent must give that buyer the chance to review their offer. 

• If a buyer withdraws their offer, leaving your offer as the only one the agent must also inform you that it is no longer a multi-offer, giving you the chance to review your offer. 

• Vendors are free to accept an offer, to choose to negotiate with one or more parties, or reject all offers. 

A multi-offer is a good time to think about what you want. If you’re determined to buy the property it’s best to put your offer in. With that said, if you’re not set on buying this particular property you don’t need to revise your offer - you’re free to withdraw your offer before it's accepted and refocus on another property (perhaps one with fewer interested buyers). 

If you’ve decided to try to buy the property here are five tips to give you the best chance:

When there are other offers on the table you don’t want to mess around. The real estate agent can’t tell you what level the other offer is at, so you’ll need to put your best offer in to give yourself a chance. There’s usually no point in leaving a little in reserve to negotiate with the vendor because if yours isn’t the best offer you may not get the opportunity. 

Think about the maximum amount you’d be happy to pay for the property and talk to your lender about what you can afford.

While it’s always best to put your best offer forward, it’s also important to be realistic and avoid overpaying. Stay calm and don’t let the agent pressure you into increasing or changing your offer if you’re not ready to. Research comparable house sales in the nearby area to get an idea of what to offer. Speak to your mortgage broker or lender about what they think it’s worth and feel free to request a valuation. 

If it doesn’t work out, remember - If you’re not able to buy this home another will come along soon. 

The offer with the highest price isn’t always the one the vendor choses. Every vendor has different priorities but generally speaking offers with fewer conditions are preferred (and unconditional offers are the ultimate). It’s a good idea to get due diligence done in advance so that your offer is clean and simple. Speak to your lawyer to check the LIM, title and sale and purchase agreement. Arrange a building inspection if necessary. Get formal approval from your lender in advance and do whatever you can to remove conditions from your offer (without skipping any necessary due diligence of course). 

It’s a good idea to find out what the vendor wants before making your offer so don’t be afraid to ask the agent some key questions. For example, they may be building and want a longer settlement, or they may have bought another house and want to settle as quickly as possible. They may even want a larger deposit upfront. Whatever the vendor wants - if you can give it to them, they’ll be more likely to accept your offer. 

If a real estate agent is indicating that a multi-offer may occur (but is not yet in writing) you can put the pressure on the vendor with an offer that expires after a short time period, for example, after 48 hours. This may cut out other buyers who would have otherwise competed with you and driven the price of the property up. 

Most vendors want to get the best possible price for their property. But some also care about who is buying their beloved home and how they might choose to use it in future. Writing a cover letter telling the vendor about yourself and your plans can help in some cases so it’s always worth a try (this helped me when I bought my first home). 

When there’s just one offer, the ball is in the buyer’s court - but when there’s a multi-offer the vendor is in a position of power. Here’s how you can make the most of the situation to get the best possible price:

Provided you did your due diligence when picking an agent, they’ll be experienced with multi-offers and have your best interest in mind. Listen to their advice and trust them when they make a recommendation - they’ve been here before. 

Your agent needs to know what a good offer looks like for you so they can communicate with buyers. For example, you might only care about getting the highest price, you might want a quick settlement, a large deposit or fewer conditions. Make your stipulations clear.

When you’re choosing an offer, consider every part of it, including the price, conditions, the length of the conditional period, the deposit amount and the settlement date. For example, a longer settlement may mean you can move right from your existing home into a new home which might be more convenient and save you money on accommodation. 

It's in your best interest to let buyers complete their due diligence so be as helpful as you can when buyers want to inspect, or consultants (like valuers and building inspectors) want access to the property. 

Before listing your home it’s helpful to get an idea of how much it’s worth. To do this speak to your real estate agent for an appraisal and check recent sales of comparable homes in the area.