When real estate inventory tightens, and buyer interest picks up, home buyers are sometimes tempted to write offers before even seeing their prospective homes.
In fact, 20% of homebuyers in 2018 said they went ahead and submitted an offer on a home without visiting it first. This is especially prevalent in parts of the country where buyers have all sorts of legal ways to cancel a contract without penalty. In places where it is legal to cancel as a buyer, the seller has 10 days to respond to your cancellation request.
Writing an offer before seeing the home is neither a welcomed nor popular practice among many home sellers. Naturally, they prefer to know that the buyer is already committed—or has at least made a decision based upon having personally toured the home.
Some buyer’s agents, on the other hand, tend to believe differently. They may be eager to put their buyer into the contract and “lockdown” the property before another buyer tries to snatch it up.
- Buyers who feel extreme pressure to immediately write an offer and buy a home may end up promising too much.
- Buyers may make an offer to buy some extra time, then later cancel the transaction after seeing the home.
- One way to determine if a buyer is writing an offer before seeing the home is to ask the agent—but the buyer's agent may not be truthful.
Offers That Seem Too Good to Be True
It's sometimes the case that buyers, who feel extreme pressure to immediately write an offer and buy a home, may end up promising too much. This is because they have it in the back of their minds that they'll be able to renegotiate the deal later. But, of course, the renegotiating part isn't something that they mention upfront.
They might offer such perceived benefits as:
- A cash offer
- An exceedingly high sales price
- A waiver of certain inspections
- A waiver of an appraisal
- A very short closing date
While an offer could still close with all of those items present, it is wise for sellers to be cautious. All of this could be a smokescreen to give the buyer time to actually see the home and decide if he or she wants to buy it.
Your everyday person might say people don’t play those kinds of games. But, at the same time, a regular person doesn’t buy and sell real estate every day. After a buyer finally sees the home, he might then decide to cancel the transaction.
Determining Buyer Intention
One of the ways to determine if a buyer is writing an offer before seeing the home is to ask the agent. The National Association of Realtors places the requirement of honesty in its first article of the Code of Ethics—and it's a rule that realtors must pledge to follow. The article states that all agents must treat participating parties with honesty.
The problem with directly asking a buyer’s agent is that the agent may not be truthful. Of course, the agent most likely does not see the answer as a bald-faced lie because the agent could twist the answer.
The agent might say, “we were there,” which could actually mean: "me, myself, and I." It is not the case with all agents or even the majority of agents. But, some agents are capable of telling such white lies, and it's often this small handful of dishonest agents that seems to cause the most problems in real estate.
When pressed and further questioned, an agent might finally admit the truth. In such a case, the sellers might pass on the buyer's purchase offer and take the next one, even if that next buyer’s offer was not as attractive.
The Key Takeaway
The bottom line is if the buyer has written an offer without seeing the home, it’s a good idea to inform the listing agent and not intentionally withhold this information. It’s even more important to own up to the fact if asked about it. Telling the truth should not be that hard.
And should you decide to place an offer on a home without first touring it, be sure to talk to your agent, especially since your agent may be able to lead you through a virtual Skype tour of the home. Or they can at least try to list out the pros and cons of going ahead with the offer.
So long as you trust your agent, you could be putting yourself in a position to win in a competitive market, while also having an edge on slick cash buyers.
At the time of writing, Elizabeth Weintraub, BRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.