If someone makes a higher offer, will you come back to me so that I can increase my offer?
Any real estate practice must be consistent with the law, nonetheless we too often witness things that agents do that are well meaning but go against the intentions of the laws that govern sale of property. One of those areas is the managing of multiple offers on a property. To the layman, it’s called gazumping.
First of all, let’s look at what the law requires an agent to do and what not to do when dealing with offers.
If a buyer has paid a part deposit, that doesn’t necessarily mean that the buyer has signed a contract. The buyer must be told if there is another offer on the property. They don’t have to be told how much or by who, just that the offer has been made.
Unless you have paid a part deposit, agents are not required to update you on the property. (eg, if they are getting building inspections done or their finance organised). If you want to be notified, pay a deposit upon having an offer accepted. The deposit is fully refundable to you if you don’t go ahead.
The next thing is that an agent must submit any offer made. Even if the agent ‘promises’ you that the property is yours, if someone else makes an offer, all offers need to be submitted. It’s not about ethics, it’s the law. Agents get very little out of a gazumping situation, except everyone hating them. The lesson here is don’t just be happy with acceptance of an offer, pay a deposit and sign a cooling off contract. You’ll be safer, a lot safer.
We know being well informed about a property is important to a buyer. For example, if you haven’t had an offer accepted but you are negotiating and another buyer makes an offer, will you be told? It depends on the agent. Some will, some won’t. There is also the issue of the validity of the information the agent gives you – how do you know that you aren’t being lied to if an agent says there’s a higher offer? The law stipulates that agents aren’t allowed to misrepresent information, so lying about an offer is illegal. This doesn’t mean it doesn’t happen.
The Jackson+Rowe process:
- A property remains on the market until contracts have been exchanged. That means anyone can make an offer up to exchange and their offer will be submitted. We have an overriding obligation to get the best outcome for the owner and can never turn the process of marketing a property off.
- All offers are requested to be confirmed in some form of writing, either email or fax or sms. This eliminates issues around uncertainty about what was offered.
- All offered amounts are treated in confidence. We won’t tell another buyer how much anyone has offered.
- If an owner makes a counter offer to a buyer (says they won’t accept the buyers amount but will accept a higher figure) that counter offer will be made to all buyers who have made offers.
- Every buyer is recommended to sign a contract once their offer has been accepted
- We will endeavour to exchange contracts as quickly as possible
- Finally and most importantly, if we give our word, we will deliver on it, every time.
- No system is ideal for everyone involved. Every negotiation is part science, part economics and unfortunately, part games. If you don’t want to answer a question, say you don’t want to answer rather than make something up. Know what a property is worth to you, what another buyer might pay and what price you would be unwilling to pay. If you can get an agreement somewhere in that range, you’ve got a good deal.