Homebuyers looking at new construction often sign a sales contract without setting foot in the house. Lately, more buyers are doing the same thing when purchasing an existing home.
COVID certainly made many Realtors pivot to virtual walkthroughs, and the hot housing market has made this a usual occurrence.
Sure, most people would still prefer to see a home in person before making an offer, but the low inventory across the country at times makes homebuyers go above and beyond the norm to get an advantage on the potential next home.
We’ve already discussed the fair housing risks of buyer “love letters,” and now I want to focus on the merits of a new trend – sight-unseen offers.
Both buyers and sellers face potential risks when negotiating sight-unseen offers, so it’s important to explore this topic from both sides of the transaction. This week, I’ll highlight a buyer’s potential risks. Next week, I’ll explore this topic from the seller’s perspective.
Imagine you’re a prospective buyer. You’ve obtained a preapproval from a lender and engaged a Realtor to help you through the buying process.
Your agent sets you up with an app-based portal for previewing active listings in the Multiple Listing Service. They’ve also emailed you a “coming soon” listing which isn’t yet available for showings. Or, maybe you saw a social media post about a “coming soon” property.
Either way, after not prevailing in a recent multiple-offer situation, you decide to make a sight-unseen offer on the property. The seller accepts your offer, and you’ll soon be a homeowner.
Let’s hope your Realtor guided you to make your contract contingent upon seeing the property in person by a specific date. If not, once inside the property, you might be disappointed with certain features or the layout.
The rooms might look a little smaller. The wallpaper could look different in person. You might begin to feel a twinge of regret. No problem: Your contract included an inspection period, so you plan to walk away if anything isn’t to your satisfaction.
Yet exiting the agreement at this juncture might be easier said than done, or could cause you to forfeit the earnest money or even face legal action.
In both Tennessee and Georgia, this widely used contract includes language stating the buyer waives any objection to cosmetic items (e.g., decorative, color or finish).
Also, you agreed to negotiate with the seller in good faith when it came to repairs and items not in working order. You’re buying an existing home that has been lived in previously, and a seller should not be expected to agree to every buyer request, especially those considered cosmetic.
Inspection aside, there are other items to consider before binding a sight-unseen contract. For example, if you’re paying part cash, is your contract contingent upon the property appraising for the full purchase price or only the loan amount?
In the latter case, you might have “won” the property but “lost” when it came to price and overpay what current market conditions support.
In your hurry to make an offer ahead of other buyers, did you remember to make your purchase contingent, if applicable, on the sale of your current home? If not, and you can’t close without the proceeds from selling your current home, then the failure to close could be a basis for your earnest money not being refunded.
A Realtor will do everything in their power to help a buyer negotiate the best terms and conditions given their individual needs and concerns.
Ahead of making an offer, communicate with your agent about key issues and concerns (e.g., financing, proximity to amenities, house layout, traffic noise). This communication will help your Realtor minimize misunderstandings when negotiating the contract.
Realtors go above and beyond for their clients to ensure as best they can that they are pleased with their purchase for years to come. That’s Who We R.
Greater Chattanooga Realtors is The Voice of Real Estate in Greater Chattanooga. A regional organization with more than 2,400 members, Greater Chattanooga Realtors is one of 300 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. For more information, visit www.gcar.net or call 423 698-8001.