Offering On “COMING SOON” Listings!?!?

Question

Hi all,I have been looking at houses for over a year and have been outbid three time’s and have had many houses that an offer was accepted during “coming soon” period. With this in mind what kind of offers are people putting in to get these houses before showings even take place? I am in Charlotte NC so Due Diligence makes it difficult as if I offer before seeing they get to keep that. I am curious, if a house comes up and I like it, what are the best offers to put in for sight unseen that are the best and would cost me the lowest if I see home and don’t like it? My thought would be on $400k house that is coming soon, put in the amount I would be willing to pay if it is perfect so let’s say $415k, with $1k DD and another $4k DD after I view. I figure this way I am basically only losing $1k tops as if they accept and I back out after viewing house, they only get to keep the $1k. Obviously I cannot do this often as I’d lose a lot of money but for one I think I really like I think it could be worth it. What do y’all think? Thanks!

Bruce Lynn · Answer

I don't have answers, but you might ask your agent how many buyers they've had that backed out of contracts due to inspections? and why they backed out. You might ask them what is common for seller's to repair these days in your market? What kind of $ are buyers getting in repair negotiations if any. One thing you might do is take a sample inspection report from another buyer they've had. One that really had lots of issues. Read through that. See if what's on the report are things you can live with or can't. Take that when you view the house. Look at potential issues. Have that offer ready to go when you see it in Coming Soon Status....and get there first...with offer ready to go.When I look back after 20 years of doing inspections....I think I've only had 1 buyer back out for really bad issues. When I think about it, 95% of the stuff was probably not really a big deal or a financial catastrophe. Roofs were maybe the worst issues....so that might be something you could check on seller's disclosure....1year old or 20 years old.

Jonathan Greene · Answer

I think these are terrible strategies and here is why. What you are doing is playing into your own desperation. When you do that, you pay more, make more sacrifices, and give up things you would never normally give up. So you have to ask yourself, do you have to buy this home or investment property right now? What is the rush? Why are you trying to come up with creative ways to overpay for houses in the hottest market? This is how full neighborhoods run up to a value that is not sustainable.

Cindy Bowman · Answer

We are in the same boat. My husband who is a GC and I are seeing wholesale deals but the margin is too thin to make it worthwhile. My personal belief is that we are at the top of values and a correction will happen. Just may need to be patient. We are already seeing a lengthier time on market for condos and townhomes which is a future indicator for SFR. New construction is booming as more buyers give up trying to buy into the resale market. Not sure what is going to happen to all the homeowners that took the mortgage deferral and now have to pay up a huge sum. Not to mention the unemployment. Lots of factors at play.

Mike Kostner · Answer

15 offers, and 8 days left?I don't think this sounds like a deal.Walk away.

Lien Vuong · Answer

This is a common practice in Boston market. We make those offers "Contingent on satisfactory walk through of property" so no funds are relinquished until you have an accepted offer and you walk the property. In the event that you're not happy and it did not meet your expectations, you withdraw and lose nothing but some back and forth time for the offer. I was able to get an accepted offer using this strategy several times during this year already.

Stephen Foltin · Answer

@Jonathan GreeneThanks for the input, the house already has 15 offers and it still have 8 days left in the “coming soon” period. 15 offers on a house that no one is able to view is pretty crazy but this has been the norm here in Charlotte. So many people tell me to wait wait wait, well if you said that 6 months ago you were wrong and it could be worse in 6 months, especially if the government gives the $15k one time tax credit to new home buyers. Over 80 people a day are moving to Charlotte, I don’t see this is a thing I can wait on given it could be 1-3 year wait. I may be over paying now but with rates under 3% and seem to be at the bottom I don’t see borrowing money getting cheaper. The seller is asking for highest offer and $10k DD. They would also like guaranteed price not contingent on the appraisal.Not 100% what I am going to do yet, any additional advice is appreciated!!

Grant Wilsterman · Answer

Stephen, I think you are on the right path here. I have been having SUCH a difficult time getting buyers under contract based on the competitiveness of CLT's market right now. I have had submitted offers during the coming soon period and it has worked once for me. The biggest thing is providing good terms and having the "additional provisions' addendum to make you offer expire prior to home actually hitting the market. The only downfall of this is that since sellers know how aggressive the market is, they feel that by letting 2 days of showings happen and calling for highest and best they can get a huge price for the house. (which is true). You would really need to be able to provide them with a no hassle deal that they won't have to deal with all of the showings and a clean offer. Keep you DDF to $1k or less and make you DD period very short (1-2 weeks) with a high EMD ($5k+). Get your home inspection done right away and make sure that you like the house and can close on it before your high EMD goes hard.Feel free to reach out with more questions!

Gretchen Guarino · Answer

Are you able to put a home inspection contingency in the purchase offer? Our local market is so crazy that it's really difficult to get an offer accepted with a home inspection contingency! However, if could include this in your contract and go back with a licensed inspector, then you'd only be out the cost of the inspection if there's something really wrong with the house. If you can't do the home inspection, then I like your strategy with the 2 deposits!