How can you tell if other offers in 'multi-offer' situations are real or not? File photo. Photo: RNZ
Property investors say buyers need to know their rights about "multi-offer" purchase situations.
Property investment coach Steve Goodey told his followers this week about a friend who was asked to sign a form acknowledging he was in a multi-offer situation, with other purchasers also trying to buy the same property. But the other offers did not yet exist.
He said the real estate salesperson was "holding" back his offer because they expected another from another buyer and wanted to present the two together.
"There was zero interest before he went to paper," Goodey said.
He said he had received hundreds of responses from people who said the same thing had happened to them.
One said he complained about an agent after he increased his offer because he was told he was in a multi-offer situation.
"It was our first home, and it turned out the other 'offer' was a phone call from another buyer stating they might be interested at $295,000, $10,000 less than our original offer which we increased to $315,000."
Another said he was told that his purchase was going to be a multioffer situation because other people were interested.
"We said we will make an offer, the agent straight away said 'it's going to be a multi'. We said 'ok have you got another offer', he said no, so we walked away and got a call couple days later saying we can buy it."
Opes Partners economist Ed McKnight said it was common.
"Many buyers know that feeling. They see a property that has been on the market for a long time. There's been no sign of other buyers. Then as soon as you make an offer, the agent says there are other offers potentially coming.
"What agents will often do is use one offer to get other buyers to then make an offer too. In effect, they use the first offer to engineer a multi-offer situation."
He said buyers did not have to sign a multi-offer form.
Real Estate Authority chief executive Belinda Moffat said her organisation received more complaints about the offer process, including multi-offers, during the peak of the market in 2021.
She said salespeople sometimes had to anticipate whether a multioffer situation could eventuate.
"However, while there may need to be a degree of flexibility in multioffer processes, it is important that the process remains fair.
Notifying a party that a multi-offer process is or may be in play would not necessarily breach the code of conduct. However, if a licensee were to knowingly misrepresent to a prospective buyer that there were other offers in play when this was not the case, this could conflict with rule 6.4 of the code, which says that the licensee may not mislead a customer or provide them with false information."
She said the authority encouraged agencies to have clearly documented policies and procedures for multi-offer situations.
"The code of conduct requires real estate licensees to act in the best interests of their vendor client, while also acting in good faith and dealing fairly with all parties engaged in a transaction, and those rules underpin how multi-offer situations must be managed.
"Licensees should ensure each prospective buyer understands that they are in a multioffer situation, so they can put their best offer forward as they may not have the opportunity to revise it later."
She said buyers should know they could withdraw their offer at any time.
Goodey said salespeople who organised a multioffer situation when their first offer was received were changing the nature of a sale.
He said there should be more clarity, including potentially disclosure at the point of sale of how many offers had been made.
"It's so widespread."
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