Why Buyers Write Offers Before Seeing the Home
When real estate inventory tightens, and buyer interest picks up, sometimes home buyers are tempted to write offers before seeing homes. In fact, 20% of homebuyers in 2018 said they 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 any penalty. But writing an offer before seeing the home is neither a welcome nor popular practice among many home sellers. 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. In multiple-offer situations, some agents prefer that their clients be the first to submit offers to the sellers.
Offers That Seem Too Good to Be True
Buyers who feel extreme pressure to immediately write an offer to buy a home before they are emotionally ready might offer the sun and the moon with the undisclosed intention that later they will renegotiate.
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
It is not to say that an offer cannot contain all of those items and close, but 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 further decide if the buyer 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, to which Realtors must pledge. It states that an agent will treat all parties honestly.
The problem with directly asking a buyer’s agent is an agent might 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,” meaning "me, myself and I." It is not the case with all agents or even the majority of agents. But, it’s the minority and small handful of agents that seem to cause the most problems in real estate. When pressed and further questioned, an agent might very well finally admit the truth. In such a case, the sellers might pass on the buyer's purchase offer and move along to 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.
At the time of writing, Elizabeth Weintraub, BRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.