property, Buyer 1 may get buyer’s remorse if he now has to pay $335,000.
Another risk of bidding $1,000 more than the next
highest bidder with a cap is that an unscrupulous seller, knowing the limit of the buyer’s cap could work in cahoots with a “fake” buyer to have him or her put in an offer that is at or near the cap to drive up the price paid by the legitimate buyer.
The second problem with offering more than the next
highest offer is that it may not create an enforceable contract even if it is accepted by the seller. This is because the GAR Contract (and almost every other form real estate contract) provides that it represents the entire agreement of the parties and neither party is relying on anything not contained in the Agreement. Since the offer of the next highest bidder is not a part of the GAR Contract, there is a significant risk that a court may find the offer not to be one capable of being accepted by the seller because the other offer is not incorporated by reference into the GAR Contract. Some buyers have tried to work around this by trying to incorporate by reference the next highest offer into the contract. Others have stated that all other offers on the property are incorporated by reference. Whether courts will find these approaches to incorporate by ref - erence other offers into the contract is unclear. Until there is some judicial confirmation that this type of approach is legally enforceable in Georgia, REALTORS®
cautious in using this type of special stipulation. The third problem with allowing an offer to be made
that is $1,000 more than the next highest offer is how to resolve a conflict where more than one buyer makes this type of offer. If both parties have established an upper limit or cap on their offers, and the cap of one buyer is higher than the cap of the other buyer, this should hope - fully not be a problem. If neither buyer includes a cap, the competing offers would automatically increase by $1,000 ad infinitum. Presumably, the seller would then give each buyer the opportunity to make his or her best and final offer (not using the approach where they offer $1,000 more than the other).
The Appraisal Issue with Multiple Offers The other issue that sometimes arises in a transaction
with multiple offers is that the property may not appraise for the bidded up price being offered by the winning bidder. As such, the benefit to the seller of having multiple buyers bidding up the price of the property can be lost. One way that sellers can try to minimize this risk is to invite all buyers to make their best offers but to then com municate that only contracts with the following special stipulation included will be considered.
www.garealtor.com GEORGIA REALTOR® I 15
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