How do investors send multiple offer in a day without trouble?

Question

I see some REIs sending multiple offers per day but how do you do so without getting in legal trouble? I talked to my agent and they say that it’s recommended that 1 offer is sent per 24 hours because if 2 offers are accepted at the same time and I decide to only go with one and back out the other then I’m at risk of getting sued.

Jefferson Bautista · Answer

Thank you @Brad Jacobson and @Nick Vazquez this really clears up my confusion

Nick Vazquez · Answer

Hey @Jefferson Bautista,

I'm not entirely sure how the contracts work in Vancouver but here in Ontario, I generally advise clients to not put in multiple offers on different properties if they are going in without conditions because you WOULD be at risk of being sued if you backed out of one of those deals.

Now if you have conditions in all your offers (like a financing condition or home inspection condition) then you would be able to back out of one or more contract and still get your deposit back without being sued depending on how you word the conditions. It is still a little risky though if the conditions aren't worded correctly and a lot of people look at this as acting in bad faith. But I do understand that it is a numbers game and the more offers you write, the more deals you will get under your belt.

Basically, just make sure your offers are conditional on something that would allow you to back out if you needed to. Another thing to consider is if these properties you are going after are truly good deals, if you end up under contract on multiple properties, finding money to close on them shouldn't be that hard (if they indeed are good deals). Hope that helps some!

Brad Jacobson · Answer

Hi @Jefferson Bautista,

This may be different in Canada where you're located but here in the states, most state purchase contracts (REPCs) have a lot of protection for the buyer, especially when in the "due diligence phase."  There is typically no ramification for backing out of a purchase contract as long as you're in the due diligence phase and haven't altered the contract in any way (like offering non-refundable earnest money upon acceptance).

When I'm trying to purchase a property, either for myself or a client, we'll write as many offers as we can everyday.  All serious investors do this as well since finding deals is mostly just a numbers game.

Earlier this month, a client of mine won multiple properties within a day or two of each other.  We did an inspection on both properties in the first few days of our due diligence deadline and then decided to cancel one purchase contract and pursue the other based on our findings and research.  There was no chance of getting sued or having any earnest money stripped from my client because we followed the purchase contract and backed out in our appropriate due diligence phase.

Not to be too harsh on your agent, but it might serve you to speak with other agents to get a second opinion.  If you've already entered into an exclusive buyer-agent agreement with your agent, perhaps you could ask to speak with their broker or ask the agent to show you what they are referring to.

Hope this helps!