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

By
Real Estate Agent with EXP Realty 414-525-0563 57026-90 Broker

If you have been practicing real estate for a while...likely you have seen the evolution of the Clean Offer.  In the "olden days"....which in any market anywhere pre-dates Thinventory....times vary with the market. In the olden days....a "Clean Offer"was...an offer with inspection and in clean offersoutheastern  Wisconsin, a radon test... and financing contingencies which included an appraisal. That was "clean" and "normal" ,,,,,it is what Buyers wrote...it is what Sellers accepted...it is what agents on both sides accepted as "usual and customary."

       In the interest of being competitive...less and less becomes "usual". The radon tests are sometimes one of the first things to be deleted.Buyers may choose to test for radon...but will not  ask the Sellers to have it mitigated in a muliple offer situation for fear of having their offer eliminated due to asking the Sellers to bear the cost of mitigation.

    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 inspectorinspection..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.
   Financing....hmmm...regardless of the price range in Southeastern Wisconsin, unless the sale is investor oriented, we do not often see cash sales. Agents/Buyers don't worry about 

cash sale competition when submitting an offer.  Other "strengths" in writing can mean a larger earnest money deposit. We don't have "rules or percentages" that are usual and Earnest moneycustomary here...Buyers are free to deposit whatever number they please as a show of good faith to the Sellers. Now...what may have been a four figure deposit is becoming five figures.

   There are Buyers and Agents that look at an appraisal contingency as the "saving grace" in an offer...If the property does not appraise for the price offered...the Buyers can choose to walk away...or finance the balance of the home that was over the appraised amount....or negotiate with the Sellers...who cannot be sure that another appraiser will not give No appraisalthem the same number "different day."   If the Buyer is able to...wishes to take the risk...is going to live in the property long term...an offer can be written...NOT subject to appraisal. 

     Agents need to be aware of the "New Clean Offer" options....AND more importantly be able to explain with each "new improved" option what the realities are for the Buyers.

      Thinventory has created a NEW DAY in real estate...are you Ready ?

      This has been an informational market post brought to you by Sally K. & David L. Hanson, Broker Associates with EXP Realty, LLC bringing you the best in real estate marketing in southeastern Wisconsin. #FewerContingenciesinrealestateoffers,#NoAppraisalinRealEstate,

#Notestinginrealestate

 

Posted by

Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS


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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Barbara Todaro 06/16/2019 05:58 AM
  2. Frank Rubi 06/18/2019 06:43 PM
Topic:
Real Estate Best Practices
Tags:
fewer contingencies in real estate offers
no appraisal in a real estate offer
no inspection in real estate offer

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Rainmaker
2,856,211
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Sally.

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

Jun 17, 2019 01:54 AM #21
Rainmaker
1,416,404
Kat Palmiotti
Grand Lux Realty, Monroe NY, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

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

Jun 17, 2019 02:32 AM #22
Rainmaker
615,399
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
Raleigh - Cary Triangle Real Estate 919-602-8489

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.

Jun 17, 2019 05:27 AM #23
Rainmaker
2,435,791
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

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

Jun 17, 2019 06:07 AM #24
Rainmaker
285,860
Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

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??

Jun 17, 2019 06:09 AM #25
Rainmaker
707,154
Andrea Bedard
Thompson Company, REALTORS® - Silver Spring, MD
M.A.; REALTOR® Silver Spring, MD and beyond

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. 

Jun 17, 2019 06:35 AM #26
Rainmaker
751,086
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

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. 

Jun 17, 2019 07:44 AM #27
Ambassador
2,814,857
Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana!

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.

Jun 17, 2019 03:55 PM #28
Ambassador
2,961,475
Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

 

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

Jun 17, 2019 04:03 PM #29
Rainmaker
330,942
Dana Basiliere
Rossi & Riina Real Estate - Williston, VT
Making deals "Happen"

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.  

Jun 17, 2019 06:12 PM #30
Rainmaker
449,514
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

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 

Jun 17, 2019 08:27 PM #31
Rainmaker
1,523,805
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

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.

Jun 17, 2019 08:34 PM #32
Ambassador
3,939,681
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

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

Jun 17, 2019 09:11 PM #33
Rainmaker
398,287
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

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.

Jun 18, 2019 03:31 AM #34
Rainmaker
3,213,911
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

In Wisconsin John Wiley if the results of a radon test are above the government recommended level, the Buyer amends the offer to tell the Selles, at their expense to have the radon mitigated and a second test performed before closing to verify the system was working properly. If the Sellers do not install a mitigation system, the Buyers can....if they have not given the sellers the "right to cure" call it a defect and walk from the transaction.

Jun 18, 2019 04:02 AM #35
Rainmaker
1,518,592
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

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. 

Jun 18, 2019 05:21 AM #37
Rainer
9,210
Denise LeBreux
Re/Max Real Estate Center - North Attleboro, MA
I love working with BUYERS!

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.

Jun 18, 2019 05:56 AM #38
Ambassador
908,985
Frank Rubi
Frank Rubi Real Estate, LLC - Metairie, LA
FrankRubiRealEstate.com

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

Jun 18, 2019 06:45 PM #39
Rainer
507,909
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

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.

Jun 19, 2019 05:02 AM #40
Rainmaker
502,163
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

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!

Jun 19, 2019 12:43 PM #41
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Rainmaker
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Sally K. & David L. Hanson

WI Realtors - Luxury - Divorce
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