Clean Offers....Not What they Used to Be...Is that a Good Thing ?

Morning Sally.

Inspections/appraisals have killed many a deal.  Radon tests around here are few.   Have a great week

As long as buyers understand the risks associated with giving up inspections, putting down more money, waiving appraisal contingencies, they can make stronger offers. 

We do things a bit different here. When an agent tells me they're sending a clean offer, I expect it to be full price or higher, no closing cost, no home warranty, no personal property such as refrigerator or washer and dryer, strong due diligence, reasonable earnest money, a reasonable closing date, cash or conventional financing, and nothing else out of the ordinary. I did recently have two listings where the agent told me there would be no inspections. My clients had only owned the house for a few years and had inspections when they purchased. While things can still go wrong in a few years, it was a bit less risky than had it been a different situation such as older home or buyers having owned for a long time. One of the two who chose not to have an inspection was an agent with a contractor husband and the other was a buyer with a dad who builds custom homes. I'd say they were a little more knowledgeable than the average buyer.

Clearly savvy is at work in this post....

I would never want to waive an inspectioon unless it was an experienced flipper.  A buyer still needs to do an inspection.  Once they understand what they have in the house, they have elect not to ask the seller for anything, but an inspection is key.  Who knows what is in the attic or on the roof??

It feels a bit - okay, a lot - like around 2005, doesn't it? The frenzy, the waiving of contingencies, the escalation clauses.. our paperwork has evolved since then, thankfully. For example, the buyer now has the option to include a home inspection with or without the right to negotiate - one is the full package and the other still gives the buyer the right to walk should it turn out that "too much" is wrong with the house, but no right to ask for repairs. It's a compromise that can make the buyer a bit more competitive and still protect everyone. 

We are seeing all sorts of competitive offers and with thinventory the removal of an appraisal due to lack of available comps is becoming the most sought after by listing agents. 

Sally K. & David L. Hanson excellent post. Hot markets come and go and with that comes all kinds of variations of what a 'clean' offer looks like. Sometimes I think I've seen all the paths an offer can go - and then a new twist pops up. I had a doosy not to long ago but it didn't fly as it was so lame and unworkable.

Well deserved feature Sally K. & David L. Hanson And like others, love your word thinventory even though our spell check does not! 

Hello Sally and David,

It is crazy like that here also.  A well-priced home in a desirable area here almost always get multiple offers.  There have been a surprising amount of cash offers too. I do not see many buyers who forgo the inspection though.  

Thinventory best describes our market here in SE Wisconsin.  Being creative when writing an offer has become the norm.  I just wrote an offer this evening and the buyers chose to forego a home inspection as well as radon or "additional testing".  The competition is rough ... this was a well deserved feature Sally K. & David L. Hanson 

As many here know, I let my licnse go about 15 years ago, so I'm not up to date with what goes on in our little town.

When I was an agent, the customary earnest money was $100 - and we told both buyer and seller not to count on getting that money if the deal fell through.

Meanwhile, VERY few buyers asked for an inspection - and there were few inspectors working in the area.

One of my few experiences with inspectors left me with a buyer who was screaming "sue" in between words that might make a sailor blush. The inspector said the attic fan was working, when in fact there was no attic fan. It mattered to this buyer, who discovered the truth only after closing.

I think that inspections have been common here now, but I have no idea what the "normal" earnest money deposit is these days.

Hi Sally and David:

Things have certainly shifted over the years since the recession, but you still see some offers in competive situations that are not very clean and straighforward. And sa few ask for much more than is realistic when competing with other buyers. The other shift in some cases is the question...how much over asking do I have to go to get the house?

Jeff

Sally K. & David L. Hanson great post to get our minds into the changes that come in real estate. Change is certain and we need to be prepared to make appropiate shifts.

On Radon, I see more people getting a home tested. However, there is confusion on how to interpret the results.

EPA has set an action level of 4 pCi/L. At or above this level of radon, the EPA recommends mitigation. Note, a recommendation is not a requirement. Some agents and consumers need to know the difference.

Thanks for sharing.

Sally and David, our markets are very similar right now. If a home shows even remotely well and is priced correctly it's a given it will have multiple offers and if buyers want to be competitive they have to show the seller they are low risk. Just had one a buyer waive their financing contingency and that was the determining factor my seller picked their offer over everyone else. 

I’ve submitted many offers with waived home inspections and several with waived appraisals. I do it hesitantly and with firm language to my buyer- explaining the risks involved. In our area of Massachusetts, this has been practiced for the last couple years. Multiple offers and cash buyers are typical, and after losing out on house after house, buyers realize they must submit aggressive offers in order to get an offer accepted. I recently heard a listing agent refer to a clean offer as one with NO contingencies. It’s a lot to ask a buyer.

Many offers now a day have to be competitive on properties that price point match condition. Great Post

Thanks for sharing!

Experienced agents know that the two largest reasons an offer can fall apart are inspections and financing.  If a house appears to be "in good shape" OR has had a pre-inspection...Buyers may forego the inspection.. OR choose to use it as an "advisory" and not to either have the Buyer ask the Seller for repairs...or as a reason to cancel the sale.

What I appreciate about any offer is this:

neatly typed, with all the blanks filled in correctly. A text when the offer is sent. All necessary attachements sent with the offer.  

Let's start there!