How do I deal with multiple offers and what is the 48 hour clause? David Airey
Two of the more common questions REIWA agents get asked in relation to the buying and selling process are: what happens when there are multiple offers on a property and what is the 48 hour clause?
Let’s look at these separately.
First, when a seller finds themselves in the envious position of having more than one offer on their property for sale, there is no right or wrong procedure in terms of how they might respond to that.
There is no law around this and it’s up to the seller in consultation with their agent as to how to move forward.
In this context it is important to remember that it is always a seller’s right to assume that any offer received from a buyer is their best offer.
If the seller has several offers to consider then they will probably ask the agent to inform the potential buyers that there are multiple offers and that the buyers subsequently have until a specified time to reconsider and then present their best offer.
Alternatively, the seller might decide only to negotiate with one of the offers. That may not necessarily be the highest price as the decision by the seller might also be based upon the least complicated offer. For example, a higher offer that relies on the sale of another property may not interest a buyer who is keen to sell quickly.
The ‘48 hour clause’, now more properly known as the ‘two business day condition’ is a separate issue that buyers might come across.
This clause is normally inserted when the buyer wants to make an offer that is conditional upon the sale of the buyer’s existing property, but the seller wants to continue marketing their property in the hope of receiving an unconditional offer on better terms.
This clause gives the seller the right to continue advertising their property and to negotiate with a possible second buyer.
The second offer might be for a lesser amount but may provide greater certainty for the seller.
If the seller receives an alternative offer that they wish to accept, then they must serve a notice upon the first buyer.
From receipt of that notice the initial buyer then has two business days to secure an alternative source of finance or obtain a contract for the sale of their existing property.
If the first buyer does not waive the condition of selling their own home by the termination of two business days then the contract comes to an end and they get their deposit back.
The seller is then able to enter into the other contract with the alternative buyer.
REIWA provides a standard ‘two business day’ clause for its members to use, however, buyers and sellers are strongly encouraged to fully understand its terms and conditions before agreeing to it.
David Airey is president of the Real Estate Institute of Western Australia.This article was originally published on reiwa.com.
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