The Nest

NestApple's Real Estate Blog

Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.

Accepting two real estate offers in parallel and negotiating two contracts: is it legal?

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Accepting 2 offers and negotiating contracts in parallel: is it legal?Accepting two real estate offers and negotiating two contracts in parallel? The issue is not legal or illegal: it’s meaningless. A seller cannot accept another offer if the listing becomes “in contract.” A home is “in contract” after the buyer and the seller have signed the contract. The buyer needs to pay the downpayment at the time of signing. The buyer cannot cancel the contract and sell it to a new buyer as soon as the property became “in-contract.” Accepted offers alone have no legal value. Only fully completed contracts have legal value.

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 buyer has signed the contract and sent the deposit. A seller can do that before they sign. Either party can do whatever they want until there is a fully executed contract.

This sometimes frustrates buyers in a deal since they have already incurred various expenses.

Are accepted real estate offers binding in New York?

Are accepted offers binding in New York? shaking hands around a tableNo. In New York, accepted real estate offers are not binding. 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 contract matters; until then, buyers and sellers can back out. They can change their mind or renegotiate the price or terms. At NestApple, our real estate agents have seen sellers deciding not to sell just before signing a 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?

Accepting 2 offers and negotiating contracts in parallel: is it legal? discussing a floorplanAn accepted offer becomes enforceable once both the buyer and the seller have signed the contract, and the buyer 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. The deposit usually gets sent to the seller’s attorney and deposited 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?

Are accepted offers binding in New York? signing a contractYes. It remains tolerated for the seller to send out multiple contracts to various prospective buyers. Obviously, 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. F

or 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?
new york skyscrapers behind the sun

Yes. Buyers 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 buyers use it to have backup contracts in case a deal fails to go through.

Is it ethical to accept two real estate offers in parallel and send multiple contracts out?
men shaking hands

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 broker would give whoever has an accepted offer a few days to review the 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 in at a higher price, the listing agent could give the first buyer the option to match. They do not always do it.

In reality, we see 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 other buyers. 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?

broker accepting a client offer and showing a couple a property

Ethically speaking, the listing agent should disclose to prospective buyers that several contracts are being sent out. However, it’s not a legal requirement. Accepting two real estate offers and negotiating contracts in parallel can be frustrating. For Buyers, the process takes time and can be costly (due diligence and home inspection).

The right thing to do is to disclose that other contracts are out and that another buyer had a head start and has started working on his due diligence.



Written By: Georges Benoliel

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.

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