The One, The Offer and The Wait
A Buyer’s Adventure - Part 2
So, the home we went to see at the end of my last blog was close – but there was a dealbreaker and a few little things that made it just not right. Disappointing, but also encouraging that more homes seem to be coming on the market and have more of the things we are looking for.
4 days ago, the ‘auto-search’ I had set up at the beginning of our adventure alerted us to a home in a neighborhood we had been to twice already. I already knew my clients liked this neighborhood, but this home has an in-ground pool. That was originally on their list of ‘deal-breakers’, and I almost didn’t even consider this house. But then I looked closer. It had EVERYTHING else. Literally everything else, and no other negatives. It was priced BELOW their budget. It had features that are incredibly hard to find. It was going active in 3 days.
My clients were excited. This is it! They wanted to put in an offer right away. There had been too many times a potentially great house had been stolen from under them.
We talked about their options, and they had a strong offer in mind. I pulled up the property condition disclosure for my clients to look over while I called the listing agent to get as much info as I could.
The Disclosure noted that in their storm cellar, there is occasionally some water seepage when there are heavy and continuous rains. My clients had experienced an issue with their foundation and crawl space several years ago, and I know that an issue like this could cause them concern.
I spoke to the listing agent and told her how excited my clients were about the house and inquired as to whether they had received any offers ‘sight unseen’ yet – as unfortunately that has become common place. She informed me that they had not, and that she has also counselled the sellers to be wary of those offers as in her recent experience they have done more harm than good. While it might seem great that you have an offer before you must really do anything, let any strangers in your house or adjust your own personal schedule to accommodate showings – but there is always a contingency for those. The buyer can see the home later and decide it isn’t for them and choose any little reason to walk away. When that happens, it shows on the record that there was an offer that fell through. The momentum and excitement generated from the original listing is lost, and now it is met with doubt and concern. Sure, they may still get offers, but they will most likely be lower or more conservative than had the listing gone live to begin with.
After sharing this info with my clients, they decided to put together an offer, but wait until they have seen it to submit. We made an appointment for early morning the day it went active.
It was even better in person than we thought. Special surprises that were not in description or photos that lined up perfectly with my clients needs. However, there were also a lot of other people there. The listing was popular, and they allowed over lapping appointments. There were 4 other parties viewing at the same time as us – and it likely continued like that all day. By 10:30am we were notified that it was a multiple offer situation. All offers were due by 9am the next day, and the decision will be made by 6pm.
My clients are financing through the VA. When you are in a multiple offer situation, you not only want to be the highest, but you also want to offer the seller the best terms. There are many options to include. Some are very risky, but incredibly attractive to buyers – such as waiving Inspections or waiving financing contingency.
When an offer is Cash, the financing contingency can be waived. Anyone could decide to waive an inspection, and I know people who have chosen to do so, but it can be dangerous. There could be hidden structural defects that even the seller is not aware of that could end up costing the over eager buyer a lot of money in the long run.
Another current popular option is to offer the inspection as a pass/fail – meaning you will still have an inspection, but you can decide if the items found are significant enough to walk away from the home – but you agree that you will not ask the seller to fix any minor, cosmetic issues. In a seller’s market this is a smart move. It protects the buyer from impactful issues but alleviates obligation of seller for nit-picky items they will likely not want to deal with.
When financing a home purchase, an appraisal is required. The lender wants to ensure that the home they are financing is worth what they will be putting forward. It is after all their investment. If something were to happen, and the loan went into default, would they be able to recoup their loss? One thing that can help make appraisal more palatable for the sellers is when the buyer offers to cover a gap. If the appraisal comes in lower than the offer previously made, the buyer can offer to pay the difference, or at least a portion of it. This again can give the seller some peace of mind and be more confident in the final net proceeds they will be able to walk away with after the sale of their home.
So, we have put in our offer. It is over asking price, with an escalation clause – meaning we agree to beat the highest offer by a specific sum, up to our maximum, along with an appraisal clause offering to pay any difference in appraisal up to purchase price – again within our maximum. Based on the recent sales in the neighborhood, I think our offer is extremely competitive and I think they have a good chance. My fear is based on my recent experience, too many buyers from out of state offer a higher sum, in cash.
It is now 9:30am, and all offers are in. We don’t know how many they received, but we know we will be informed by 6:00PM today if ours was accepted or not. At this point, there is nothing else to do but hope and pray.
I will let you know what happens……