Last Updated Aug 3, 2009 6:40 PM EDT
I am a first-time buyer and I have seen more than one house I like, but I'm not interested in paying full freight in this economy. Can I submit lowball bids on more than one house? Is that legal?
A: Real estate contract law varies by state, so the answer to "is that legal?" is going to depend on where you live. Check with an attorney in the state where you're househunting.
What you want to do is find out at what point an offer is actually "binding." Some states (Illinois and New Jersey, for instance) have a period called "attorney review," during which you have the right to change your mind about a contract, but once attorney review ends, you're locked in.
Most states do not have "attorney review," but there is often a period of negotiating over price before a purchase is binding. In New York, for instance, buyers and sellers typically haggle over price before going to contract, and even if this back-and-forth is in writing, they're not technically locked until they have a signed contract with monies exchanged. (I feel my attorney mom turning red in the face here over the fact that I, a non-lawyer, would even dare to use words like "technically" and "contract" in a sentence, so maybe now is a good time to point out that Internet real estate advice should not be construed as legal advice.)
Here in New York, pre-contract, I certainly encourage my buyers to submit bids on multiple properties.
Especially if you're price-shopping, sometimes the feedback from two bids will help you figure out where the sellers are in their thinking. Let's say you see two $400,000 (asking price) houses you like equally, so you bid $350,000 on each. Then let's say the seller of House A counters at $390,000, and the seller of House B counters at $365,000. Which house do you like better now?
Now I'm going to say again, because I'm scared of my mom, that I am working in a state where offers are not binding until there is a signed and countersigned contract. If you bid $350,000 on each house in New York State, and both sellers say yes, you're not yet legally obligated to go forward with either purchase.
One more point concerning people who want to walk away from a deal: when the crash happened last September, I heard from a lot of buyers-in-process who had entered into contracts, and wanted to break them, even at the risk of losing their deposit money. It's theoretically possible, depending on the contract language, that the seller could sue to force you to purchase the home anyway. Every contract is different, and you need to read yours to see what the consequences are of breaking it.