In this market that we are currently in Multiple Offers are becoming a very common occurrence, especially in the lower price ranges.
It is not uncommon to have 3-6 offers on a well priced property at a time. (Isn't it funny that when you watch the news - nobody's buying - homes aren't selling - the real estate market is at a stand still - NOT TRUE)
If you are a buyer in a multiple offer situation the listing agent (the agent with the name on the for sale sign) may ask that your home inspection be done BEFORE the sellers decide what offer to accept or negotiate with.
Some Buyers Agents are hyperventilating at that statement! "You want MY BUYER to spend THEIR MONEY without a signature on a contract???" or when pertaining to a short sale "There is NO GUARANTEE that the bank will even accept the offer then they just flushed that $350 down the drain are you nuts??"
Let me explain to you the benefits of doing the Home Inspection up front and when asked in a multiple offer situation:
There is a home on 123 Lovely Street for sale at a bargain price of $169,900. This price is a true bargain!!
Buyer 1 offers $163,000 - they are 3% down FHA Buyers, only giving $1,500 with Purchase and Sales
Buyer 2 offers $169,900 - they are also 3% down FHA Buyers, but are giving $8,000 with Purchase and Sales BUT have also included their credit score which is 720 and 740 (great scores)
Buyer 3 offers $172,500 - they are 5% down Conventional Buyers, are giving the same $8,000 with Purchase and Sales - no credit score given but pre-approval letter was strong
At first look that $172,500 Buyer (#3) is obviously the best. Of course, the offer is higher and their financing is stronger.
Well, this seller who is sharp and well educated by his Realtor requests that all Buyers conduct their Home Inspection before he/she decides what offer to accept. This seller wants "Surety to Close" This seller priced his home very well and wants to pick a buyer that has the BEST likelihood of closing, hence "Surety to Close"
Buyer #1 completes his Home Inspection and decides to back out of the purchase as it shows that the heating system is nearing the end of it's useful life - they could have come back with a request to have the Seller either replace it or offer funds at closing so the Buyer could replace it but they don't. Obviously, they really didn't WANT or LOVE the home so they had no interest in pursuing options.
Buyer #3 completes his Home Inspection next and it also shows that the heating system is nearing the end of it's useful life. They revise their offer to be $165,500 subtracting the amount that they were told would cost to replace the heating system.
Buyer #2 completes their Home Inspection and that pesky heating system presents the same problem - it's nearing the end of it's useful life (By now we ALL know that this poor heating system is tired). Well, the buyer's brother is a Plumbing / Heating Contractor so they can get the system at cost with NO charge for the install (gotta' love relatives), so they are fine with it, as they were planning on replacing it anyway before the home inspector mentioned it.
Here we are now with all home inspections complete, only 2 buyers left.
Buyer #2 holds firm at $169,900
Buyer #3 is now at $165,500.
Who is the better offer now?
If the Seller had not been properly educated by his/her Realtor up front he/she would have taken the initially apparent higher offer and would have gotten less for his home.
Well, Buyer #2 would not have gotten the home that they really wanted and loved had they not have been willing or had been improperly advised not to do their home inspection.
A Home Inspection is a valuable and necessary part of the home buying and home selling process. A Home Inspection could make or break your decision to buy. The cost of the Home Inspection is part of the costs incurred when buying a home.
When you decide to do a home inspection, whether it is at a request due to multiple offers, or at the start of what could be a very lengthy short sale process, or after the conventional seller signs the offer, you are doing it to ascertain the overall condition of the home and to avoid a home that could present problems that you could not afford to fix.
Does it really matter when you do it?
Why wait 4 months emotionally and possibly financially tied to a home only to find out that the sills are all rotted? In that time several other homes that you would have equally loved have come on and off the market - and you missed them all waiting for this money pit. Did that actually benefit you?
I hope I have given you some insight and benefits on doing your home inspection up front. Yes, it could happen that you are "out the money" without the home. But that would happen if you decided not to purchase too.
Your Bristol and Plymouth County Realtor
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