Buyers Beware of Bidding War

Posted: July 17, 2012 in Buyers
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Understanding the process of putting an offer on a home could save you in the long run. In some areas the buyer’s agent will call the seller’s agent advising them that they will be bringing an offer later on that day. That however is not a guarantee and doesn’t mean that they will indeed do it. The buyers could simply change their mind and therefore there would be no offer. The seller may get a few of these so-called offers during the day with no guaranteed that any of them would be presented. In an effort to create a sense of urgency the listing agent might tell potential buyers that he is expecting offers later on the day. The thought behind this is quite similar to airlines or travel agents that states that there is only 2 seats left at the low price when often it is not the case.

Buyers should understand the bidding war and safeguard themselves by asking their agent to add a bidding war clause in their offer. The clause could say something to the effect that the buyer is presenting his offer based on the assumption that multiple offers will be presented to the seller that same evening and that if the seller receives no other offers by a certain time, then the buyer can change their mind, cancel the deal or change the price.

If the seller accepts the buyer’s offer, he must provide the buyer with proof he has received another offer which mean providing at least the name, address and phone number of the real estate agent who presented the rival offer.

In using this clause, the buyer has the assurance that if his offer is accepted, the seller will have to prove that he indeed did have at least one other offer available.

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