A door-to-door seller may choose a lower offer if conditions suit them better


We entered into competing offers on a house and the seller accepted a lower offer than ours. Doesn’t the seller have to accept the highest bid?

This can happen for a variety of reasons, but the simple answer is “no”.

In real estate transactions, the seller can choose the offer he wants and there is no obligation to accept the offer with the highest price. Indeed, the seller is not obliged to accept any offer.

It’s tempting to think that something fishy is going on when this happens, but the selling price is just one of many factors influencing the seller’s decision.

In your situation, although a competing offer may have included a lower price, it might be more attractive for other reasons. For example, the seller may prefer to choose an offer that does not include a financing condition or other conditions regarding inspections or the sale of the buyer’s home. Sometimes commission rates are adjusted, which can also affect a seller’s bottom line.

Another common distinction is the close date: the offer they choose may have a close date that suits them better than the one you offered. Timing can be everything.

Since price is just one factor the seller should consider, it may be tempting for you, the buyer, to start eliminating terms designed to protect yourself. If, for example, there are no financing conditions, you could lose your deposit or, worse yet, incur financial penalties if you fail to secure the funds necessary to complete the transaction. And without a home inspection requirement, you might be forced to make expensive repairs later.

These are serious risks, and you need to make sure you understand the trade-offs before leaving these conditions out. It is best to discuss this with your real estate professional to assess your risk tolerance.

It can also be helpful to consider what the transaction looks like from the seller’s perspective.

A seller who is considering competing offers should think about how they want to handle the situation. The seller can decide to accept the best offer, negotiate with one or more buyers, or reject all other offers.

This means that even if your initial offer was higher, the seller could have chosen to enter into negotiations with another offer with more favorable terms.

Negotiations can be tricky. Even in a competing offer situation, a buyer has other options and may choose not to continue participating. A seller may attempt to negotiate, only to find that this was the best offer the buyer could submit. In the meantime, other buyers have moved on to other properties that interest them.

As the weather warms up and the market shows no signs of cooling, it’s a good idea to hire a real estate professional who can provide you with advice and guidance to help you understand the options that are available. ‘offer to you and the obligations that may accompany each of them.

Joe Richer is Registrar of the Ontario Real Estate Council (RECO) and Contributor to The Star. Follow him on Twitter: @RECOhelp. This column is for general information purposes only and is not intended as legal or professional advice on real estate transactions.


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