Can someone place a higher bid after the registration deadline has passed?

Can you still be outbid after the closing deadline has passed? This guest blog explains what “underbid” means, what role the written offer requirement plays, and how this affects you as a buyer. Buying or selling a home is one of the most important life decisions, one that most people make only two or three times in their lives. Due to increased legislation, regulatory pressure, and interference from various parties (including lawmakers, associations, representatives of stakeholder groups, politicians, and the media), buying or selling a home has only become more complicated.

Verbal Agreements Are Not Legally Binding

The written agreement requirement stipulates that the purchase of a home by a buyer must always be documented in writing and also signed by the seller. Verbal agreements, emails, text messages, or other forms of communication are therefore not sufficient on their own to legally compel either party to fulfill their obligations. As long as the deed of sale has not yet been signed by both parties, both the seller and the buyer can still back out.

“Under Offer” and the Written Requirement

Throughout the entire buying and selling process, there are a few moments that can be particularly nerve-wracking and confusing. One of these is the phase in which a home is “under offer.” In this blog, we’ll explain these two concepts. Suppose you’re interested in a home you’ve viewed and you learn from the selling real estate agent that the home is “under offer.” What does that mean? “Under offer” means that someone has made an offer on the home that the seller is considering. Under the legal requirement for written documentation, you still have every opportunity to submit an offer as well, as long as no purchase agreement has been signed by the buyer and seller.

Even if the seller has agreed verbally (see box), that seller can still accept another offer as long as no purchase agreement has been signed by the buyer and seller. After all, according to the written requirement, there is no legally binding agreement until the buyer and seller have signed the contract. The seller is then still free to consider themselves unbound by a verbal agreement and to enter into a deal with a third party who makes a better offer before the purchase agreement is signed. Intuitively, this naturally runs counter to moral norms and values. After all, a verbal agreement is still an agreement: “We did agree on that, didn’t we?” one might think. However, the legislature has not sought to repeal the written agreement requirement legislation from 2003 to the present.

The Written Form Requirement Explained

On September 1, 2003, the statutory written form requirement for the purchase of a home by a private individual was introduced in the Netherlands. Since then, Article 7:2 of the Civil Code has stipulated that the purchase of real property intended for residential use by a private buyer must be entered into in writing. A verbal agreement is therefore not sufficient to establish a valid purchase agreement.

Key points:

• This applies when the buyer is a natural person who is not acting in the course of a profession or business.
• The agreement is not concluded until both parties have signed the deed of sale.
• The statutory three-day cooling-off period begins as soon as the buyer receives a copy of the signed deed of sale.

This provision was introduced by the Act of June 5, 2003, supplementing the regulations governing the sale of real property (Stb. 2003, 238). The reason this legislation was enacted is to better protect private buyers against hasty verbal commitments made during the purchase of a home.

What do real estate agents see happening in practice?

Often, when demanding and establishing regulations, the media, politicians, lawmakers, and others overlook practical realities and the consequences they entail. The emotions that prospective buyers may face as a result of the undoubtedly well-intentioned laws and regulations regarding the written requirement are immense.

Example: The Emotions Behind an Offer

After viewing homes sixteen times and making offers on them, Angela (fictional name) finally learned that she had made the best offer, one that the seller is willing to accept.

Note: the best offer is not always the highest offer! The seller, who owns the home, decides with whom he or she will do business to sell his or her home. This could be, for example, someone who made a lower offer but has the seller’s favor.

Overjoyed, Angela calls all her friends and family and is ecstatic that she can finally buy a home. Then, the listing agent calls her the next day to report that an even higher offer has come in—even though it was submitted after the so-called bidding period had ended—and that the seller wants to proceed with that one. The role the listing agent has in delivering this news to Angela is far from pleasant and stirs up a great deal of emotion. But the seller tells the listing agent that she doesn’t earn that higher offer—say, an extra €5,000—every day, and while she feels sorry for Angela, she considers that higher offer too much money to “pass up.”

As expected, Angela is furious, and in such cases, the selling agent is often blamed. It is therefore not uncommon for a prospective buyer who experiences this to file a complaint against the agent with the appropriate judicial authorities—even though the selling agent, even if he or she wanted to, cannot do anything about it. I

Real Protection for a Prospective Buyer

It may seem simple for a private individual to buy or sell a home on their own, but it usually isn’t. Time and again, these “non-professionals” face unexpected—and often financial—setbacks when something isn’t properly arranged throughout the entire buying or selling process. People don’t go around advertising the fact that they’ve made mistakes due to their own lack of knowledge. The number of cases where this happens is therefore much higher than is generally known. The same applies to buying a home. Things may go smoothly when you buy as a private individual, but these are life-changing decisions involving enormous sums of money, and if things go wrong, it can result in significant financial losses.

Fortunately, we live in a free country, and as a seller or buyer, you have the freedom to choose whether to handle the buying or selling process yourself or to seek guidance from a professional. Given the magnitude of this life decision—both financially and emotionally—I believe that hiring a professional, such as a real estate agent, is not an expense but rather a step toward a worry-free home purchase or sale. You also go to court with a professional (a lawyer); so why wouldn’t you seek the help of a professional for the place where you spend a large part of your time every day and for which you have to pay a huge amount of money?

Politicians, lawmakers, and many media outlets believe that a buyer must be protected when purchasing a home and are seeking even more rules and legislation to that end, while a buyer’s agent can eliminate all those concerns and uncertainties for a buyer. That agent truly protects the buyer and looks out for their interests from the search for a home all the way through the closing at the notary’s office. Unfortunately, the costs of a buyer’s agent (unlike those of a mortgage advisor) are not tax-deductible, even though a buyer’s agent is precisely the one who provides the protection most parties want for a buyer when purchasing a home. Perhaps lawmakers and regulators should consider making the costs of a buyer’s agent tax-deductible and allowing these costs to be included in mortgage financing.

Buying or selling a home—how do you go about it?

Do you want to buy or sell a home in Amsterdam and be sure you understand your legal obligations? An agent affiliated with the Amsterdam Real Estate Agents Association (MVA) knows the written offer requirement, the bidding process, and the local market in detail and will represent your interests from the first viewing all the way to the notary. With us, you’ll find a reliable, certified MVA agent in your area.