“They love the home but feel it will go over list price and do not want to get into a bidding war.”

Bill and Diana Buying Concerns, Selling Concerns 0 Comments

I just received this comment from a showing broker this morning. This is the type of feedback we have received on our listings that causes us to promote some standards by which both sellers and buyers may be treated fairly in this unusually tight market.

  1. 4 days is long enough to gather enough offers. To go longer will frustrate more buyers than it will attract. Also, if you end up with no offers, the longer the timeline, the greater the damage to the seller’s value. Enter the listing into the NWMLS [“Northwest Multiple Listing Service”] Thursday evening, review offers Monday evening.
  2. Pre-listing inspection. If a listing broker believes there will be multiple offers they should convince their seller to have a pre-listing inspection done on the property, and share the results with all prospective buyers. This will allow buyers to adjust their respective bids accordingly e.g., if they know the furnace is 20 years old they may want to reduce their offer by $3,000-5,000. Does this hurt the seller? No. It helps the seller because the buyer is bidding with confidence. Confidence exponentially increases the likelihood that the buyer will finish the deal, not walk away on their inspection contingency.
  3. Do not allow pre-offer inspections. Contrary to what some brokers may believe, this does not help anyone. Ostensibly, the idea is to be able to submit a buyer’s offer WITHOUT an inspection contingency. There are three distinct disadvantages to this practice. (1) You will have buyers that have more information than other potential buyers about the subject property. Unless all buyers conduct a pre-offer inspection the playing field is uneven. (2) No seller should be subjected to this inconvenience, and most would not allow it if they weren’t convinced by their listing broker that it was a good idea. Any property can get trashed pretty fast when 4 or more inspections are conducted in a 48 hour period. Furnaces, appliances, fireplaces, garage door openers, etc., are all put through their paces at a rate that may invite failure in the near future. Who is the seller going to blame? (3) Pre-offer inspections tend to be low quality efforts. The potential buyer does not want to spend $400-600. They will seek a discounted rate for what amounts to a general evaluation of the property in the $200-300 range. This is no fault of the inspector, it is what the buyer wants (4) The biggest gaff of all is submitting any offer without an inspection contingency. Regardless of the buyer’s pre-offer inspection, every broker that submits an offer without an inspection contingency is potentially “on the hook” for anything that goes wrong with that property after the fact. “Additional inspections” are often called for by home inspectors, and buyers are protected by this provision in the NWMLS Inspection Contingency Form No. 35. Home inspectors generally do not inspect: hot tubs ($5,000-10,000), Chimneys/flues ($500-3,500), swimming pools ($400-no limit), furnace heat exchangers ($1,000-1,800), AC components ($3,500-6,000), irrigation systems ($250-no limit), sewer lines ($235-8,000). These are the items, and their potential replacement costs that are not covered in most home inspections. Most of these items will also not be covered by homeowner’s insurance and/or that nifty $100 home warranty your selling broker offers you as an inducement to roll the dice.
  4. NWMLS RULE NEEDED… WITH FINES. Listing Brokers make the rules on how their respective listings are to be shown and offers tendered. Sellers, until very recently, do not dream this stuff up on their own. If a listing comes on the market with specific rules for timelines in dealing with offers, those rules should not be allowed to change. This has to be the single most frustrating facet of the current multiple offer environment, for both buyers and their respective brokers. Scenario: (1) Listing broker states in the “agent only” remarks section of the listing, “offers to be reviewed by seller Monday at 5:00 PM”. (2) Selling broker calls their buyer to arrange to see the property Saturday afternoon. (3) Buyer likes the property and has selling broker submit their offer Sunday afternoon. (4) Listing broker calls selling broker upon receiving said offer and states, “oh, so sorry, my seller accepted an offer Saturday evening”. Brokers justify changing or ignoring their own rules by stating, “I was doing what was best for my seller”. This is patently unfair and unprofessional. Rules need to be created and enforced, with substantial fines, in order to curb this behavior. Such scenarios discredit all brokers and erodes the confidence that people place in us as trusted advisers.

Surely there are brokers that will disagree with me, and the NWMLS may never get around to addressing these problems before the current market conditions cool a bit. However, ethics and professionalism demand a coherent solution that will insure confidence in how we conduct our business. A few rogue/misinformed brokers should not be allowed to cause residential real estate brokers to appear inept.

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