The new trend in contracts appears to be “Shooting for the Moon.” Our active real estate inventory has been below average for months, many buyers are finding themselves in competition for each and every home they are interested in purchasing. Becoming slightly frustrated by losing out again and again, buyers often turn to creative ways to make their offer stand out. The most recent trend in contracts is to offer well above List Price, as much as 30%, expecting a low appraisal then requesting a reduction on sales price. I want to go on record, “Sellers I work with are wise to the game.”
As a Seller representative, I present all offers to the Seller but can not recommend they seriously consider multiple offers 10-30% above list price unless the terms are Cash with no contingencies. When reviewing challenges recently seen with escalated priced multiple offers … the highest sale price is not always the best offer in the end. If a buyer offers to pay a particular price for a home, they should be prepared to pay that price at settlement. Re-negotiation of the sale price after a loan commitment date and within days of settlement is not acceptable.
That being said, my suggestion to Buyers is to work with an agent who will represent you. An agent who will pull reports on recent comparable sales, this will give you an idea of what homes are selling for and what customary offers are on similar homes. An agent who will give you guidance to write a strong contract with terms that will allow you to close, not risky contract terms you plan to renegotiate after is accepted. Know your limits, talk to your lender, and understand the newest Appraisal guidelines. And above all else – read the contract and addendums you sign and understand ALL the terms. You, your Realtor®, your Lender and your Settlement Company are a team.