Unless you are a buyer, in the thick of house hunting, or a seller entertaining multiple offers on your house, you probably don't know to what lengths buyers are going to get their offers accepted.
The short supply of houses has buyers going to extremes:
-Many buyers are offering 20% or more over the list price.
-Earnest money, while usually 1% of the purchase price (or more) is often 5%, or more, of the purchase price.
-Earnest money is released to the seller and non-refundable to the buyer, so even if a buyer doesn't like what came up on inspection, or if the appraisal comes in low, the seller keeps the earnest money.
-Most often, buyers' offers are subject to buyers' approval of professional inspections within 10 business days. These inspections might include a scope of the sewer line, testing the air inside the home for radon and searching for underground oil tanks and/or testing soil around buried oil tanks. In the interest of getting their offer accepted, many buyers are waiving some or all of these inspections.
-Financed transactions are subject to the independent appraisal value being equal to or greater than the agreed upon purchase price. Some buyers are offering to increase their down payment to make up any gap between the high sales price and a lower appraisal.
-As our sale agreement reads, buyers have the right revoke their offer (with full refund of their earnest money) within 5 business days of receiving the seller's property disclosures. Buyers are waiving this ability in an effort to make their offer look more solid.
In addition, buyers will take certain major systems in as-is condition, so the seller need not worry about it coming up in inspection. Buyers also often give sellers up to 60 days to remain in the home after closing, paying no "rent" to the buyers. And, some buyers let sellers leave whatever garbage, debris and personal property the sellers no longer want.
And then we see some very creative efforts; give the sellers a week at the buyers vacation home (Oregon Coast, Hawaii, etc). Buyers pay for a home warranty to cover the property during the sale/escrow period, buyers have goodies (wine, pizza or flowers to name a few) delivered to the sellers at the time they know sellers are reviewing offers. This last one has, at times, back fired, with the sellers feeling stalked or pressured.
Crafting an offer that a buyer is comfortable and able to fulfill can be a bit like threading a needle; how much could they increase their downpayment to make up for a ow appraisal? What inspections are they truly okay with forgoing? And what other enticements might work?
In general, from a seller side, the seller isn't always basing their decision on top sales price. What a seller usually wants is a good price, from the buyer who really will perform on this property, with a minimum of hassle or drama. An intricately written sale agreement, weaving the buyers' abilities and sensibilities, can be off putting. Most sellers will favor a cash offer (no appraisal) waiving all inspections and to the timeline of the seller's choice (quick close? long close? post-closing possession?).
All of this is happening, mind you, under quick timelines. Most houses hitting the market these days will have a deadline for offer submittal. Even getting in to see a popular house can be challenging as our online scheduling platform can quickly run out of available appointments. It is rare for a buyer to get a second look, before putting together one of these aggressive offers.
First time and lower income buyers are at a real disadvantage. Many of the above mentioned concessions rely on the buyer having a financial cushion to absorb the liabilities that might arise. Buyers with low down payments don't have the extra cash to bridge a low appraisal, pay for an unseen property condition issue, or lost earnest money.
Real estate is often a stark lesson in the "haves" and "have nots".
