Pity the poor real estate buyer right now in today’s insane seller’s market. I listed a home in Millcreek a few weeks back with a specific marketing strategy that ended up getting the seller 24 offers within three days. Most buyers offered slightly above asking price but there were a few wild offers with ‘escalation clauses’ up to 20% over asking. Let me back track and explain that a seller’s market is when available inventory to buy is far less than the number of buyers wanting to buy homes. It’s not an exact number but I’m seeing about half as many homes for sale right now than there would have been a year ago. And an escalation clause in a buyer’s offer to purchase reads something like… “Buyer will offer seller’s asking price, but if there are multiple offers, buyer is willing to pay X over the highest bona fide offer, not to exceed Y”. As an example, a home is listed at $450,000. Buyer offer’s $450,000 but seller gets 6 offers. Buyer’s escalation clause says that buyer will pay $1500 over the highest offer seller gets, not to exceed a sales price of $475,000.” The escalation clause doesn’t guarantee the buyer will win the battle for the home because the seller has free will to accept whatever offer they want.I have seen sellers accept lower offers because they were charmed by a letter the potential buyer(s) wrote to the seller or because they knew the buyer. What I am seeing more often is that the cash buyer is beating out all other buyers these days, especially cash buyers who write contracts with no contingencies. What are purchase contract contingencies? To paraphrase, there are three contingencies or protections built into the real estate purchase contract used by the Utah Association of REALTORSBuyer’s right to have the property inspected by anyone they choose and buyer can cancel the contract without penalty by a certain date;Buyer’s right to cancel the contract if the property does not appraise for the purchase price without penalty;Buyer’s right to cancel if buyer’s loan is denied by the lender. Cash buyers are often ‘flippers’ who intend to purchase, updated and sell/flip the home for a large profit. Savvy cash buyers will present offers with NO contingencies and offer a fast closing to the seller. If you currently own you probably get dozens of post cards per week that offer to ‘Buy your home for cash!’ Beware of those offers because many of their strategies is to get you to accept their offer and then will have the home ‘inspected’ and come back and tell you there’s a ton wrong with the home. And if you still want them to buy you will have to discount your price to get your money fast. These kind of flippers take advantage of people facing foreclosure and find them in public records of foreclosure notices. Whether you’re a buyer or seller in this real estate market know you need a strategy and call a
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Listing information based on information from the Wasatch Front Regional Multiple Listing Service, Inc. All data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by broker or the MLS. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information.
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