Question: There are a lot of bank owned homes up in Anthem – is it legal to place 2 separate offers on 2 different houses?
The short answer is yes, it’s perfectly legal (at least in Arizona) to place multiple offers on multiple properties. Your mileage could vary in other states.
But, I’d be remiss if I didn’t discuss the potential ramifications of having multiple offers out.
In an absolute worse case scenario, you could have multiple offers accepted, you dilly-dally around and find yourself with no way out of a contract ”“ meaning you are now under contract to purchase more than one home.
Fortunately, there are ways to cancel a purchase contract without running afoul of the law or risking loss of your earnest money deposit. Primarily this can be done through the inspection period that is generally 10 days from contract acceptance.
I emphasize generally because no two contracts are the same. The boilerplate language in the standard Arizona Residential Resale Purchase Contract provides for a 10 day inspection period. Section 6j of the purchase contract and the Buyer’s Inspection Notice and Seller’s Response (BINSR), which is delivered from the buyer to the seller, contain a provision for the buyer to immediately cancel the contract if they disapprove of items uncovered during the inspection period.
Technically, this is not the “free pass” out of the contract that many say it is. In reality though, as long as you have an item to disapprove, any item, then the contract can be cancelled.
If you are looking at bank owned (REO) properties, you should be very cognizant of the lender’s addendums. They trump the contract and may contain language that significantly shortens your inspection period. Some will even attempt to eliminate the inspection period all together, which should be cause to run, not just walk, away.
So, should you submit multiple offers on multiple properties?
Every situation is different, and there are no blanket answers for a question like this. In the Phoenix real estate market, if you are interested in purchasing a short sale, you almost have to submit multiple offers. It doesn’t seem prudent to submit one short sale offer, and wait 3, 6, 15 weeks or more to get an answer ”“ an answer that may just be “no thanks” so you wind up starting all over again.
If you are looking at purchasing an REO property, particularly one priced at less than $150K-ish, then be advised that these properties often get multiple offers and while some banks respond swiftly, others can take days. If you only submit one offer and you’re outbid, then many other similar homes may have come and gone while you had your one offer under review.
In a traditional sale (not a short sale or bank owned home) you generally give the seller 24 hours to respond to an offer. In this case, it doesn’t make much sense to put in simultaneous offers on multiple homes.
If you chose to go down the multiple offer road, what you want to make sure of is that you’re working with a competent agent that will help you keep track of offers you have out, accepted offers, and all the timelines. Goof this up, and you may find yourself in a situation where you can’t get out of a contract and are well on your way to losing your earnest deposit on one or more of your accepted contracts.
Standard disclaimer: I am not an attorney, nor do I play one on TV, the internet, radio, print or anywhere. You should always seek competent professional legal help for any law related question.
Photo Credit: dbking on Flickr. Creative Commons License.