Accepting two real estate offers in parallel and negotiating two contracts
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Are they accepting two contractual estate offers and negotiating two contracts in parallel? The issue is not legal or illegal in the home-buying process; it’s meaningless. A seller cannot get another offer if the listing becomes “in contract.” A home is “in contract” after the buyer and the seller signed the contract.
The purchaser needs to pay the downpayment at the time of signing. The seller cannot cancel and sell the contract to a new buyer when the property becomes “in contract.”
Accepted offers alone have no legal value, and only fully completed contracts have legal significance when buying a home.
Can the seller accept another real estate offer while negotiating a contract with a first buyer?
Absolutely. We have seen cases where the seller has accepted another offer after the purchaser has signed the contract and sent the deposit. A seller can do that before they sign, and either party can do whatever they want until signing a fully executed contract. This happens when parties negotiate in a seller’s market.
This sometimes frustrates first-time homebuyers in a deal since they have already incurred various expenses. Because of this process, sellers often receive multiple offers on the house, leading to the highest and best offer process.
Some cash offers may compete with pre-approved buyers, especially when interest rates are low.
Are accepted real estate offers binding in New York?
No. In New York, accepted real estate offers are not binding. First-time buyers frequently put offers on multiple properties simultaneously, and an accepted offer is nothing more than an agreement on terms and pricing.
Only fully signed contracts matter; until then, buyers and sellers can back out, and they can change their minds or renegotiate the sales price or terms. At NestApple, our real estate agents have seen sellers deciding not to sell just before signing a copy of the contract.
Remember, an accepted offer is only a handshake based on general terms submitted by the buyer’s agent over email.
When does an accepted offer become legally enforceable?
An accepted offer becomes enforceable once both the buyer and the seller have signed the contract and the purchaser has paid the deposit. Generally, several copies are signed, and both the buyer’s attorney and the seller’s attorney keep a copy of it.
Buyers send the earnest money deposit to the seller’s attorney and deposit it into its firm escrow account. At this point, the offer becomes legally binding as the home becomes “in contract.”
Accepting two offers in parallel: can the seller’s attorney send out multiple contracts to prospective buyers?
Yes. It remains tolerated for the seller to send out multiple contracts to various interested buyers. Either party can change their mind, renegotiate, or walk away.
Until the listing becomes “in contract,” the seller can do a deal with someone else even if he had an offer accepted. For the records, this remains true in New York. However, in some states, such as Connecticut, buyers sign an offer form with more restrictions and commitments when submitting an offer.
Can a buyer make multiple offers and negotiate contracts on various properties simultaneously?
Yes. Purchasers can negotiate multiple contracts on multiple accepted real estate offers, and at the end of the process, they can choose the property they are willing to buy. Some purchasers use it to have backup contracts in case a deal fails to go through. Some are mortgage contingent and will depend on mortgage rates or where the home appraised.
Is accepting two real estate offers in parallel and sending multiple contracts ethical?
It’s not ethical, but it’s legal.
The seller’s broker and seller’s attorney have a fiduciary duty to their client (i.e., to the seller). As a result, they will act in the seller’s best interests. In theory, the seller’s real estate agent would give whoever has an accepted offer a few days to review the written contract and do its due diligence.
But in practice, listing agents sometimes receive bids, and the seller’s attorney sends several agreements out. In an ideal world, the listing agent would disclose to all prospective buyers that
several contracts are out.
What if a buyer comes in at a higher price?
When negotiating a deal with a potential home buyer, if a new buyer comes higher than the
asking price, the listing agent could give the first one the option to match. They do not always do it.
In reality, brokers send multiple contracts and negotiate with various buyers. Sometimes brokers even accept multiple real estate offers without notifying each buyer they are competing with others. This way, they have potential back-ups in case one of the buyers has a change of heart or tries to re-trade.
Accepting two offers in parallel: Should the seller disclose to buyers that they are getting two offers in parallel and sending multiple contracts out?
Ethically speaking, the listing agent should disclose to prospective buyers if the seller sent out several contracts. However, it’s not a legal requirement.
Accepting two real estate offers and negotiating contracts in parallel can be frustrating. The process takes time for Buyers and can be costly (due diligence and home inspection).
Most real estate agents will disclose that other contracts are out and that another buyer had a head start and has started working on his due diligence. If you receive multiple offers on your home, remember accepting an offer on the house is non-binding.
Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.
