Every principals fiduciary interest is in jeopardy during every transaction. Always, every time. You cannot offer 100% protection against any and all, unlikely, but theoretically possible events and dangers.

We are not required to guarantee our clients a profit, financial gain, or guarantee against loss.

When a client asks me "What is the worst case scenario?" I frequently answer in deadpan: "The worst case scenario is that a comet or meteor will strike the earth and wipe out all life as we know it."

Then I suggest to the client that it is more useful to consider probabilities, likelihoods, and improbabilities (percentages) rather than "possibilities"

Several times I have had clients looking at homes at high elevations ask about the risk of flooding. Rather than tell them that a Noachian flood is impossible, I mention the biblical episode, then tell them I think it is unlikely in the near future, and they are welcome to do further due diligence research on the issue.

If they still want the house, considering the danger, I'll write their offer

I think the consumer being sued for implied contract breach due to multiple offers is in a league with the Noachian flood threat level.

The ultimate excess of caution would be to stop to selling real estate altogether.

I cut and pasted this from the wikipedia definition:

"The Implied covenant of good faith and fair dealing is a general assumption of the law of contracts, that people will act in good faith and deal fairly without breaking their word, using shifty means to avoid obligations, or denying what the other party obviously understood. A lawsuit (or one of the causes of action in a lawsuit) based on the breach of this covenant is often brought when the other party has been claiming technical excuses for breaching the contract or using the specific words of the contract to refuse to perform when the surrounding circumstances or apparent understanding of the parties were to the contrary.

An example of this covenant would be when an employer fires a long-time employee without cause and says that it can fire him or her at its whim because the employment contract states that the employment is "at will." However, the employee was encouraged to join the company on the basis of retirement plans and other conduct which led him or her to believe that the job was permanent barring misconduct or financial downturn. Thus, there could be a breach of the implied covenant, since the surrounding circumstances implied that there would be career-long employment."

In brief, I infer that the concept of implied covenant should be applied to protect the less powerful party from technicality tricks employed by the more powerful party.

Using implied contract to go after consumers who are only trying to level the playing field in REO negotiations, would seem to be a technical ploy employed by a powerful party against the less powerful party. Since it is the banks who own most of the lawyers these days, I would argue that if banks don't want to consider offers from consumers who are making multiple offers then they can put that requirement in writing, in advance.

The banks already notify the consumer that an approval letter is required, and several other conditions are often stated as requirements, or the bank will not even consider the offer.

Let me try the Lyon Lawyers logic out in some non-real estate metaphor.

Let say Ron's Roofing company makes bids to roof thirty different homes this November. Ron knows that competition is intense and that he is lucky to win even two or three bids to keep himself and his crew working next month. To his surprise he wins more work than he can handle before the rains set in. By the time homeowner #8 calls him to schedule the job he has to decline the job. - Should Ron be liable to the homeowner #8 because he bid for more work than he can handle?

That is an interesting concept your lawyers have reached..".the breach would be the implied covenant of good faith and fair dealings inherent in all contracts."

Did they cite any cases?
I would be curious to know if they can show any actual cases that have been tried or even filed, where a bank, anywhere in the country used that claim of breach against a consumer or small investor.

If there have been no such cases, if there is no case law in precedent, then perhaps the lawyers are using an excess of caution.

Limiting the buyers to offering on only one property at a time, while the REO sellers can encourage, collect and review dozens of offers, slants the balance of power strongly against the consumer, in favor of the corporations and banks.

Of course that is what corporate lawyers are supposed to do.

How timely...Lyon Real Estate's legal folks just released an advisory regarding making multiple offers on REO and Short Sale property. To summarize, if the buyer does not have the intent to purchase all of the properties (probably measured by financial ability of the buyer to purchase all of the property he/she made offers on), the buyer could be liable for breach of contract upon cancellation...the breach would be the implied covenant of good faith and fair dealings inherent in all contracts. If you plan to do this, you should consult an attorney.

Tony,

My first question to you is, are you using a Realtor to represent you and if so why have you not had this conversation?

Yes, you can write multiple offers. The deposit check shouldn't be going to any escrow company until you have an accepted contract.

The "Good Faith" part of the transaction occurs when you place the deposit check in escrow with "a signed sealed and delivered contract". That's what it's used for. To insure and demonstrate "Good Faith" by your willingness to place a deposit with a neutral 3rd party. (be careful of banks using servicing companies where the deposit is held out of state)

Be cautious of bank addenda. I have seen some that require a "Hard" or "Non-refundable" em deposit and of considerable sum.

Most importantly, Please consult with your Realtor. Hopefully you have a good one.

Best of Luck,

Stew Keene
Ph (480) 220-7491
Fax (866) 711 8573
StewKeene@yahoo.com
Keller Williams - Scottsdale, AZ
2008-2009 Master of Real Estate award recipient
ABR, GRI, ePro, CNE, MRE, AHWD

I write simultaneous, multiple offers for my clients without hesitation these days.
-and I have been doing it frequently.

That is because the sellers of most properties are either banks or short sales. The banks unfailingly respond with a counter offer or "addendum" . Even if the offer is verbally accepted.
The banks simply do not accept any offers in writing outright.
Without a signed acceptance there is no ratified contract and the bank cannot make you forfeit your deposit on a "verbal handshake" especially if you still have the original check in your pocket after having provided a photocopy of it with your offer.
-It is not necessary to turn the check over to anyone: seller, agent or escrow company until the acceptance is signed by the seller or the sellers authorized representative.

After the bank has verbally agreed and you and bank have both signed the contract and addendum, then you are finally obligated.

Offering on multiple properties is OK. It is not a good idea to get into a ratified contract on more than one property at a time.

Rob and I must have some kind of mental telepathy going on tonight...I could not have said it better myself. I feel that by doing this you walk a fine ethical line if you have no intention or ability to perform on each offer you submit, however (unfortunately) many buyers are out there "shotgunning" offers with the hope that one sticks...it is allowed provided that you write separate deposit checks for each offer...your agent takes possession of these checks, and once an offer is accepted, the check is deposited.

As a buyer's agent, I feel this is a terrible "strategy" for buying property.

Buyers who are willing to spray out offers at several houses simultaneously will ultimately end up in contract for a house they do not really like. You will be likely to second guess yourself once you get into contract. You will have to spend money on inspections and appraisal, and get a ways down the line in the transaction and change your mind. You will have already spent perhaps $1,000 or more...Then you may put your deposit in jeopardy backing out mid-contract! Buyers who are willing to spray out offers at several houses simultaneously also waste a lot of time, effort, gas, and paper.

I suggest figuring out what you really want in a house and go get it. Find a highly skilled agent to assist you who is in tune with what you want. Develop a real strategy, take aim, and hit the bullseye.

Tony,

What I would suggest is that you get yourself a knowledgeable buyer agent who can help you. You can probably write something into each contract which indicates that you are making offers on more than one property and that if one of your offers is accepted then the other offers are null and void. You might also want to put something to the effect that if more than one offer is accepted, then you (as buyer) have the option to select which offer you wish to pursue.

I am not a lawyer so you might want to consult a lawyer who can dictate some verbiage to protect you. An additional protection would be to have your earnest money deposit be tendered upon agreement between buyer and seller (instead of tendering it with the offer).

I should warn you, however., that sellers do not like buyers who are trying to get "something for nothing" so to speak. In many parts of the country it is a buyer's market, but most sellers still have an inflated idea of what their properties are worth.

I had a listing earlier this year where I received an offer from an agent representing a buyer who made a number of "lowball" offers on several different properties, including one I had listed (a "starter" home). The agent included verbiage as I have described above. My seller was totally offended and didn't want to waste his time with someone who was not serious about purchasing his home. On the other hand, he wanted to sell his property, so he made a verbal counter offer.

The result was that evidently no one else responded positively to this strategy so the buyer accepted the verbal counter, we wrote up a contract, and my seller sold his property. The actual situation was that the buyer didn't have a lot of time--he was purchasing a home for his daughter who was attending the local university and had to be there by a particular date. He was not playing games and trying to get the cheapest price for the best house possible. But when I received the offer, I didn't know this, so my seller was offended by the strategy. And I think most sellers will be offended by what appears to be a buyer trying to take advantage of needy sellers.

This is a weird market in many areas. My recommendation is to make an offer on one property at a time if you can. In most parts of the country this is a buyer's market. There are not multiple offers as in past years unless a particular property is a spectacular buy. Also if a property is a bank-owned property, banks don't want to play games with "greedy" investors (I don't mean to offend here but this is usually the perception on the part of the seller in this type of situation).

A good buyer agent can advise you as to what similar properties nearby have been selling for. This will give you an idea of what is a "fair" price for the properties you are interested in. Much will depend on whether you are an investor or someone actually looking for a place to live. In any case, a knowledgeable buyer agent can advise you about what's going on.

If you need help in finding a good buyer agent, I recommend that you find someone in your area with both a CRS (Certified Residential Specialist) and an ABR (Accredited Buyer Representative) designation. Below are websites where you can search for agents. In all cases, interview them--find someone you feel comfortable with and who seems to understand your home purchase goals. For most homes listed by realtors, there is no extra cost to you to have a buyer agent (commissions paid by seller and included in purchase price).

http://www.crs.com
http://www.rebac.com

Good luck. If you have questions and would like me to help you find a good agent, I do have contacts all over the country and can help you find a good agent.

Judy Luna

Absolutely. A few months ago, this was not the case; however, agents who wish to truly represent their clients are encouraging this practice. You have nothing to lose and everything to gain, plus it's time the tables were turned, don't you think?

Gone are the days when sellers receive multiple offers and can accept or reject any number of them without recourse. Now, buyers are in the driver's seat.

I suggest to all my buyers that they write multiple offers. The catch is you must submit a separate earnest money deposit with each offer. You have 17 days, by CAR contract default, to cancel any number of acceptances without recourse. Bear in mind that once your deposit has been cashed (meaning the offer was accepted and your deposit was submitted to the bank, ordinarily within 3 days of offer acceptance), it could take 30 days to get it back.

It's complicated and intricate, but it's done all the time. And if you get a savvy enough agent to represent you, you can possibly avoid having your earnest money deposit sent for deposit in the first place.

Great question, Tony--and one I get asked often.

While you can potentially "get away with it" because of the many contingencies you're afforded within the purchase contract, writing offers on multiple properties at the same time would probably be considered acting in bad faith because you don't actually intend to purchase all the properties you're writing offers on. Chances are you're writing multiple offers with the hope that at least one of them will go somewhere--which is definitely a reality in the current market, especially in competitive price ranges.

When my clients ask this question, my response is simple: let's write one offer at a time and, as each offer expires, we can move on to the next offer. If your agent is using a CAR purchase agreement, the default expiration of your offer is probably 5pm on the third day after you submitted your offer. Banks may (and often do) drag their feet and take longer than three days to respond, so technically your offer may expire even while it's being considered by the bank. If you choose to accept a response after your offer is expired, that's great--but nothing precludes you from writing another offer in the meantime if your original offer's expiration date has come and gone. Further, you can adjust the day and time that your offer expires by writing in something else if three days is longer than you want to wait.

Hopefully this information helps!

Rob McQuade, ABR, REALTOR®
McMartin Realty | 2031 K St Ste 100 | Sacramento, CA 95811-4253

Tel (916) 444-7577 or Toll Free (866) 720-CITY (2489)
Fax (916) 444-7977