A “hot” property hits the market. Despite being stung by recent losses on multiple offer listings, your buyer is ready to try again. Doing your job, you call the listing agent to get the “skinny.” How many offers are they expecting? What is the seller looking for? What do you think it will take for my client to win?
The listing agent’s answers are vague and possibly hyped. You and your client are left wondering: How can we get the property without grossly overpaying?
The current real estate offer system is inherently flawed. First, even with identical offer prices, two offers are rarely the same. There are contingencies, financing and the like. Second, given the “silent auction” nature of the current system, there is no way to tell what offer price is “just enough.” Typically, it comes down to the quality of your relationship with the listing agent and how well she can “probe” for information.
This inefficient, non-transparent offer process needs to change. Here’s my idea:
- The process should be open, with a level playing field similar to how eBay works.
- The seller would provide third party inspection reports. Prospective buyers must sign off on all inspections and disclosures as part of their offer. There would be a two to three week pre-inspection period. This could be done through published inspection “time-windows” or by special appointment.
- All offers must be accompanied by substantial non-refundable deposit upon acceptance. For legal reasons, this deposit would be treated as an “Option to Purchase.”
- Most importantly, the current high bid will be posted for all to see throughout the “auction.”
The advantages are obvious and many, including:
- Buyers don’t need to overpay to buy the home.
- Sellers get full market price as anybody can outbid anybody else.
- Escrows close with near 100% certainty, sharply contrasting with the average 35% fall-out rate in the current system.
Sounds like a win-win to me! What do you think?