Last week, we viewed from a homebuyer’s perspective the potential risks of making sight-unseen offers. For understandable reasons, this practice is becoming more and more common.
Realtors haven’t seen this level of competition in a very long time – if ever. Buyers are looking for any way to get an advantage over someone else’s offer, and making a sight-unseen offer seems practical to many folks.
Yet buyers aren’t the only ones facing potential risks. Let’s consider a scenario from the viewpoint of a seller looking to get the most for their property.
You’re ready to commit to a Realtor as your listing agent, but before you entertain showings and offers, there are a few cosmetic issues you want to address.
You and your Realtor sign a listing agreement, including an addendum to enter your home in the MLS and market it as being available for showings in the near future.
A buyer looking in the price range of your listed asking price learns from their Realtor that your home is “coming soon.” After not being successful with other recent offers, the buyer decides to make a sight-unseen offer on your home for well above the asking price.
The buyer’s offer is contingent upon securing financing and the home appraising at or above the contract price.
As the seller, you are surprised to get an offer before you’ve begun to allow showings. Your Realtor explains they are obligated per the Code of Ethics and licensing law to present all offers, unless the seller waives the Realtor of this obligation by providing written instructions to hold offers until a specific date and time.
You think, “That was easy. I didn’t even have to straighten up each morning for several consecutive days in preparation for daily showings. And I got well above asking price.”
Or did you? How you negotiated the contract will determine whether you’re obligated to sell at the appraised value, which could be the same, more or less than the contract price.
For the sake of this scenario, let’s say the sight-unseen offer you accepted was for $50,000 more than list price, and the appraisal comes back only $15,000 more than asking price.
While there’s no crystal ball, had you waited for showings to begin and other buyers to make an offer, it’s likely things would have played out differently – especially in this low-inventory market.
Perhaps there would have been an all-cash offer at $15,000 or more and with no financing or appraisal contingency. Or maybe another buyer who only needed to finance a portion of the asking price could have closed sooner, and their offer was contingent on the home appraising at or above the required loan amount.
Another term to consider is whether the sight-unsee offer turned contract is contingent upon the buyer previewing the home. Talk with your Realtor about how to negotiate this contingency, what timeframe makes sense and your rights and obligations once the buyer sees the home.
As you can see, “highest and best” doesn’t always mean the highest dollar amount. Talk with your Realtor during the execution of the listing agreement to discuss and agree on how to handle sight-unseen – even multiple offers. You’ll want to make these decisions with a clear head and before you’re in the middle of the excitement of reviewing any offers.
Realtors are bound to a Code of Ethics, which includes strict outlines on how transactions are to be handled. Consult a Realtor to make sure you’re covered on both sides of the transactions. Realtors work for homebuyers and sellers every day. 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 service 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.