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Zillow and Diz-intermediation

Yesterday I received an e-mail which revealed both the potential and the pitfalls of purchasing real estate online. Here was the e-mail in full, sent by a Zillow user regarding one of my Phoenix homes for sale:

my offer 247k

Putting aside the fact this came without a name, with only an e-mail address, there are a number of missing pieces connected with this “offer.”

Closing date
Financing details, including pre-approval
Inclusion of any personal property
Who would pay for the appraisal, any discount points and the ALTA title policy
Does the buyer want a home warranty? Who will pay for it?
Escrow company
Response period for the offer
Inspection period deadlines and negotiation of repairs
Inclusion of Sellers Property Disclosures and CLUE reports
Inclusion of any other reports the buyer may need to determine the suitability of this particular property
Buyer contingencies to allow for offer cancellation

That’s the short list off the top of my head. And this is one of the areas in which the notion of disintermediation falls flat. A purchase contract can be written on a cocktail napkin. It even can be completed and enforced based on e-mail. In Arizona, even this three-word e-mail constitutes an offer that must be presented.

But without the above details, the offer is virtually useless … and legally dangerous.

TO READ THE FULL ARTICLE, PLEASE VISIT DALTON'S ARIZONA HOMES BLOG

Posted by Jonathan Dalton on 06/07/2007 01:59 PM

Comments (23)

zillow, disintermediation, aar purchase contract

23 Comments on Zillow and Diz-intermediation

JUN

2007

The online playing field does not restrict those who are mentally chalenged and fail to take advantage of professional assistance. This individual's last transaction was probably on Ebay.

Unless I am mistaken, Uniform Electronic Transaction Act (adopted by 41 states - not sure about AZ) requires a consent to conduct the transaction electronically in the offer... without it it is NOT a valid offer. It also requires an electronic 'signature' in some states - no, not your written name but an electronic 'imprint' that says you are you (which has been verified).

Quoted directly form the CE course I took on electronic transactions:

Consider someone who, through e-mail, makes what he or she purports to be an offer to purchase a house. The offeree denies that the e-mail constitutes an offer. The e-mail, under UETA, would constitute an electronic record. UETA would not allow a court to declare that the e-mail communication was invalid as an offer solely because it was made by e-mail. However, to determine whether the e-mail communication had sufficient terms to constitute an offer, a court would have to look at the applicable statutes and common law in the state. The use of e-mail does not eliminate any of those requirements.

Good points. Purchasing Real Estate or Mortgages online are risky.

Did you email him back to ask to speak to his representative and explain why? I think if...no, when he reads about all the details he's missing, his cocky email's going to echo in his head: Don't you feel crunchy?

That's down right scary. Soon eleven year olds will be texting offers from their cell phones? How is an agent supposed to follow up on that and determine intent, financing and all the missing pieces you mentioned? At least in New Jersey we use a standard contract. Frightening.

That is just amazing!! Maybe she was just testing the waters. I hope you were able to email her back and at least start a dialogue. Best of luck to you!

That's about as much info as as usually get from buyers that ARE represented. Man, my market is tuff:)

ok, 248K, but that is my final offer.

And that is my highest price, man some people get caught up in the details. That is 248K yen by the way, and I need to close by Monday, but my inspector can't make it until Tuesday, so if the house does not pass can you just give me the money back?

Your post illustrates why I don't think that real estate agents have to be afraid of the "internetzation" of the real estate industry. There will always be a place of us to serve as guide's to the real estate world!

Bob Mitchell

ValueList Real Estate Services, Inc.

I agree with Bob. You just can't compare purchasing an airline ticket with purchasing a house. I only wish we could buy homes with credit cards. Wow, think of all the points I would have for cash back!

This sure presents some interesting legal questions! If a contract doesn't contain all the necessary material terms (such as the buyer, seller or legal description of the property, payment terms, etc.) then the validity of the contract certainly is in question. However, what if you can discern the material information from the email message itself, does that clarify things? But then again how would you even know the sender is who the sender claims to be, or whether someone has overtaken the sender's computer (or identify) and sending the offer under a false identity? This would make a great BAR EXAM question for law students! :-) Makes me think...and I always appreciate that!

David, Ronnie - absolutely!

Sondra - verification of identity would be needed, naturally. I wasn't saying this was a valid offer unto itself but, with a little more information, it could be one - albeit extremely incomplete and vague.

Daisy - why do you assume this person has a representative? People buy real estate without agents all the time. There's not always a representative.

Andrew - we use a standard contract here, too. But it's not required. Does New Jersey require that the Realtors' Association forms be used? I'd be surprised.

Mary - much to my surprise, I received a reply to my initial e-mail. We shall see what happens.

Bryant - I'm not losing sleep worrying about you as you cash your checks, brother. :-)

Daniel - damn funny and damn true

Bob - I agree. There's more to the transaction than most people realize. It's not like purchasing a plane ticket.

Jason - check your state statutes and see what's "required" to create a legal contract. I'll do the same here but my hunch is it's a hell of a lot less than what is on the AAR (local) contract. Like I said, you can write up an offer on a cocktail napkin. Scary, but true.

Johnathan,

Interestingly in Idaho you can't even have a binding contract for a real estate purchase unless you have an accurate legal description. Yes, the napkin counts IF all the particulars are there (the most important being the legal...even a street address is not sufficient in Idaho). You can imagine the abuse this has created (some call it a "loophole" used to get out of an unfavorable contract).

In Arizona like most (all?) other jurisidictions, the legal rule is that the material terms must be in the contract and the contract must be signed. That means, yes, it can be on a napkin, but it MUST contain the material terms of the agreement. That doesn't mean a 14 page agreement is necessary (and it certainly doesn't have to be an RE form), but it does mean that you need more than a dollar amount and you need clear indication that the person "to be charged" actually intended to execute the agreement by affixing his/her signature to the contract (this has varied interpretations).

I just did a purchase agreement for a client who insisted on keeping it simple and on ONE PAGE. We did it...and it will be legally enforceable. Not a napkin...but it could have fit on one!

On top of everything else that's wrong, the email address was probably hotty99723@hotmail.com or similar freebie anonymous!

pretty amazing - the Internet really is a Godsend for those who want to go through life anonymously with large lists of "favorites" full of strange avatars representing friends whose phone numbers they don't know because they are all in speed dial.

But hey - the really good part of the modern day personal relationship is how impersonal it is - it's a perfect formula for deep intimate relationships - if you're schizoid.

great posts people have to be careful about what businesses they purchase on-line there is still risk involved.

Wow....you can tell they really thought their offer through. I don't know what I would do with that.

so what did your seller have to say about it?

Yes it's crazy. we've received similar offers, sometimes with a few more words but still very similar. Advertising on craigslist brings a lot like that too. Hey, maybe they meant it's an all cash no contingency offer :) yeah right.....good luck, let us know if anything comes of it.

The email you received simply displays the ignorance that many folks have learned (can you learn ignorance) from the whole real estate internet craze. They actually think buying a home is like buying a laptop on ebay. It's just not that simple and there are many consumers out there, like this one, who are running blind just looking to get burned.

I like the simplicity. Why make things so complicated? Did they ask for free shipping?

Leigh - excellent question (not that the other comments weren't excellent, but I digress.)

The seller is willing to listen to all offers. I e-mailed this person back, and we've been going back and forth on e-mail today with additional details about the property. Maybe nothing at all will come of it. Maybe something will. We shall see.

One advantage to the Arizona law requiring offers to be forwarded is it forced me to attempt to get this to a place where it was a legitimate offer. We'll know soon how it ends up.

JUN

2007

Hey, I hope this works out for you. Then you'll have a great success story to share with us all.

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