Sight Unseen Offers--Yea or Nay?

[Russell Howes]

I am looking at purchasing my first rental property in Utah (I currently own one in California.) The agent I'm working with has strongly suggested making offers sight unseen, as soon as I see something I like. Their reasoning is that (a) the market is hot and if we don't make an offer, someone else will; and (b) it's very easy to back out of a contract in Utah without losing earnest money, because of the looseness of inspection and other contingencies. I'm skeptical that this is the case, so was hoping to get some more perspectives.

California had a hot market but I never in a million years would have considered making an offer without a showing and at least a few questions of the agent. Is this actually normal in Utah (or in general), and are there situations where it would be hard to get out with earnest money? I can see where the agent is coming from--I've seen three properties go from new listing to under contract in less than four days--but I'm very reluctant to get into contract for a property that turns out to have tons of problems, or where the tenant situation is different from advertised, and having to deal with back-and-forth over earnest money.

[Account Closed]

Believe the first red flag, as Oprah would say.  Trust your gut.  Does that sound reasonable?  Nope.  I don't have to know anything about Utah to know that.

Why not invest in a different part of CA?  Keep your Prop 13 advantages and be able to drive to see your investment?  This is a big state.  Most of it is actually affordable.  Just take some time to see what you can afford right here in CA, is my advice.

[Charlie Galaviz]

I purchased my first property in Utah sight unseen back in April of 2018. It turned out to be an excellent investment property. Right now I feel that buyers have a lot more leverage. Would I do it today? Probably not. Most investors are waiting to see how this pandemic pans out before jumping back in. Also, I wonder if your agent is normally this aggressive or if he’s advising you based on your urgency. In any case, I wouldn’t rush it.

[Russell Howes]

@Sue I recently left California, and am probably going to end up in Utah within the next five years, which is why I've turned my focus there.

[William Hochstedler]

@Russell Howes

It can be very difficult to view units with tenants in them.  It requires 24 hour notice and can require small showing windows.  In Ogden, many seller's require an offer before they will accommodate showings.  Up here in Cache Valley, it's much more browse-able.

Your agent is correct that it is standard to ask for a due diligence contingency which provides for a no-explanation cancellation.  Cancelling based on due diligence will get you your earnest money back.

So I agree with your agent.  In this market, we shoot first and aim later.  Offers can get accepted before you have a chance to get to the property.  On hot properties there will be multiple offers.  Sellers often request highest and best.  That would be when you go check it out and really think about if you like what you see.

What's more, other buyers will be making offers site unseen which puts you at a disadvantage if you require looking first.

I'd recommend taking an afternoon and looking at a bunch of vacant properties all at once.  That way you can compare a bunch of properties and get a feel for the market.  You and your agent can get on the same page so when the one you want comes along, you'll both know it.

Good luck!

[Cherie Orellana]

Many of the multi unit properties are listed to make an offer subject to inspection in the Salt Lake, Utah and Davis County.  That being said, if there is a way to see the property.. you should.  Even if it’s a FaceTime showing or the agent makes a detailed video of the property for you.  Yes, it will likely go under contract fast. Yes, you can easily withdraw a contract before your due diligence deadline as long as there is nothing in the contract stating otherwise. For instance that earnest money goes hard upon acceptance.  However for your own sake, and the respect of sellers, tenants, agents (everyone involved) I think you should make offers with the intent to buy.  Due diligence period should be when you research the property, do your inspection, meth, mold, radon, get bids on repairs or work you plan on doing to the property etc. 

I don’t feel like you have to see it Physically in person to be confident in making an offer. But you should see it somehow.  

I recently helped someone purchase a fourplex  and to this day, nearly 3 months later, he still has not seen the property in person.  It was all done by video.  I am also helping him get in the position to self manage once we make a few changes and raise some rents.  It was an awesome property and he will do well with it.  

[RJ Schmertz]

I live in Utah and have purchased both of my duplexes with offers before seeing the property. Most listings for multi units even mention make an offer contingent on inspection. I've never run into a problem with getting earnest money back. I've made offers on about 20 properties, usually within 48 hours of listing, almost all of them with multiple offers.

[Tristan Young]

@Russell Howes

Hey Russell, your agent really has hit the nail on the head. Especially when you're looking at prices under 300,000. They're going to sell extremely fast and it's very easy to back out of a deal as a buyer. Let me know if you need any more info on the area! I grew up in Ogden, live in SLC, and service all of Northern Utah.

[Chris Herrera]

I wouldn’t be afraid to make an offer, as many have said you will have time to back out when you finally do get to see it.

I’ve done it myself, as long as you know the area/market and the numbers are strong then make the offer and do more due diligence once you’ve locked it up.

[Joe Cassandra]

I can agree with your agent, at the same time, make sure you gauge your agent's motives (ergo, are they out to help you and find a good deal, or do they just want you to buy something ASAP). 

Easy way to gauge that is ask them: "I'm fine with making sight unseen offers, but if I have to pull out of 1, 2, 3 deals, you have to be okay with that. If you're not, then you need to tell me now." 

Don't let the agent guide you into an investment you don't want. Take control now and set the expectations.

[Theresa Harris]

@Russell Howes  Have the realtor do a video tour before you put in any offer and have a viewing condition in the offer.  You can do the viewing quickly after the offer is done and set up the inspection at the same time.

[Lynn McGeein]

I am against sight unseen unless you know the area very well.  When we invested out of state, there were so many that looked wonderful in video or pictures, then we drove down to see them and, wow, what a difference.  We spent some time in the city we wanted to invest in, got to know specific neighborhoods, streets, etc.  So then when one popped up where we wanted it, we knew if it was worth the effort to see it or just pass.    

[Meredith Burt]

Interesting and useful insights everyone, thank you!

[Paul Shannon]

agree with @Lynn McGeein  You really have to know the market inside and out before making offers site unseen.  That comes from looking at dozens of properties in person, running comps, driving streets, knowing rents and ARVs.  If you've got that down, you can look at pictures and feel pretty confident about the value you put on it.  Then, as others have said, you can get out of the contract if you find the property has structural/foundation problems, for example, once you see it in person. 

[Cody Steck]

As an agent who works with relocating buyers a lot, It is very common to submit offers sight unseen for my buyers. A lot of times it is simply not possible for the buyer to be here for every showing. That being said, i usually tour the property and provide facetime video, or recorded video to the buyer so they have at least seen the layout and have heard my own feedback about the property including the good, the bad, and the ugly. I personally think this comes down to having a plan in place for what you are looking for (including the numbers for multi-family/investment deals) and having an experienced agent on your side that you trust.

The market here in Utah is moving very quickly, especially in the multifamily and investment space. If it's truly a good deal, it will have multiple offers in the first few days.

[Russell Howes]

Thank you everyone for your views! I'm going to put in a little more time to better understand the market for what I'm looking for, but once I'm there won't rule out quick offers with the right contingencies.

[Becca Summers]

I didn't read everyone's responses so I might be saying something they've already said. The Utah purchase contract is ridiculously buyer friendly it is so easy to cancel clear up until the financing deadline. However as a listing agent I would not accept a purchase contract if the buyer has not seen the property if I am selling a property in the retail market. If I'm selling it to an investor and I don't have any retail buyers I might. I saw people talking about multifamily it's pretty common for them to not show the property until it's under contract. For my own state clients I do a 360 tour walk through so they can see everything.