Some sellers are sending many buyers on a race to the finish line to sign on the dotted line, only to get there and find the property has already been sold. NY1's Jill Urban filed the following report.
As if low inventory and bidding wars are not enough to make buyers feel squeezed, many purchasers are now finding a whole new battle begins when they get that accepted offer.
"What we've been seeing a lot of recently is that sellers send out more than one contract at a time to potential buyers," says Adam Stone of Regosin, Edwards, Stone & Feder.
Stone says he's now seeing more sellers send buyers on a race to the finish line when it comes to getting a deal done. With multiple contracts out, the buyers and their attorneys scramble to get the terms and due diligence done so they can get their pen to that dotted line before another buyer.
"It is perfectly legal to send out more than one contract at a time until you have a fully signed contract," Stone says. "Maybe a better question is, 'Is it morally acceptable to do so?'"
Especially when the buyers are investing money in an attorney, paying application fees for a mortgage or even getting an inspection.
Stone says sometimes it happens when a seller is left waiting for a buyer who is stalling on a contract, but other times, it's just an aggressive seller who wants it done as fast as possible. In either case, he says sellers should be warned of the risks.
"It may turn off all of their buyers, and the buyers may not be interested in pursuing this at all," Stone says. "If the seller wants to engage in this practice, they should consult with their broker and their attorney first so they know what the risks involved are.
Stone says buyers should have their attorney or broker contact the seller's side to see if this is happening so they can decide if they want to opt of the situation altogether. He also has advice to try to prevent it from happening in the first place.
"A buyer can try to give their seller some comfort while they're negotiating price," he says, "The purchaser can assure the seller that they will have a signed contract back within a set time frame."
So, whether the purchaser sets the deadline or the seller starts a race, either way, buyers should have their attorneys, mortgage experts and real estate brokers ready and set to go.