If you’re in the market to buy a home or condo right now, you know you’re up against a wave of fellow buyers competing for a pathetic amount of available inventory. Someone sent me a meme the other day that said there were more REALTORS® than listings, but trust me, there have always been more REALTORS® than MLS listings. If you’re about to buy or have been making offers, here’s what’s in our contracts written in your favor:
All Utah Assn. Of REALTOR® Real Estate Purchase Contracts have language to protect the buyer to get OUT of the contract if: a) the buyer doesn’t like the seller’s property disclosures and/or has the property inspected and doesn’t like what they find; b) the property doesn’t appraise for the agreed purchase price and c) the buyer doesn’t get final loan approval. In this market, to win contracts, I’m seeing buyers give up one, two, or all three of these rights to secure a property! If you’re never purchased a home, it’s scary NOT to get a professional inspection to determine if the wiring is safe, the roof doesn’t leak, there’s no or low radon gas, or if the property has high mold or allergen readings, hidden moisture in walls, a broken main sewer line or poor water quality. Yet some buyers are willing to risk buying a money pit to win the multiple offer battle.
Appraisers right now are living in hell because homes are selling fast and there are very few comparable sales to support increasing high sales prices. I know of a home near the U of U that just sold for $300K over asking and an agent of mine sold one in Harvard/Yale for $115 over ask price. I work more with sellers than buyers and try to suggest list prices that are fair and will garner the seller multiple offers. If the property is listed too high the seller won’t get to chose from as many offers, and multiples are what drive the final sales price up. Some buyers are taking out the ‘subject to appraisal’ clause in their offers and making up the difference between an appraisal that may come in low and the final sales price. Yet, buyers that don’t have that cash in hand drive up prices more hoping the seller will like a high offer. Example: seller asks $450,000 and there are 10 offers. Seller picks the highest offers at $500,000 and the appraisal only comes in at $460,000. Buyer must come up with $40,000 to make up the difference, when they had originally planned on putting only 5% down on the home. And worst of all, buyer may not eventually qualify for a loan at the higher sales price and the sale will fail.
Offers I see rolling into my office or that I’m writing may also temp the seller with ‘non-refundable earnest money’ from the buyer at signing of the offer and/or buyer offering to pay seller’s closing costs at settlement! Whoa! Will this ever stop? Not soon, in my opinion!