Also published on the Huffington Post
The D.C. real estate market continues to move along at a very swift pace. Our market is nothing if not efficient and we consistently prove here that there is no such thing as “bad” real estate — only bad prices. But I’m finding there’s a caveat to that rule.
There can good real estate but certifiable insanity among the parties which then supersedes any market corrections. I’ve recently seen two extremes that I can only hope are the exception, not the rule.
The Extreme Buyer
I recently took a client to see a home that somehow went under contract from the time I left my house to the time we arrived. My client loved the house, so I called the listing agent to find out the possibility that the contract may not go through on a contingency.
The listing agent informed me that the contract purchasers saw the home come on the market the evening before and offered 10 percent over asking price with no inspection, no appraisal and no financing contingency. She also told me that the contract purchasers put the offer in at 10 p.m. the evening before with a 12-hour expiration. Holy. Crap.
These buyers really wanted this house. They were willing to give $65,000 of what should have been their equity to the sellers to get the house instead of letting the market determine the price and just outbidding via escalation. (Being that this was a condo, it was unlikely the home would have been bid so high.) They waived all their contingencies, and took a 12-hour timeframe during which most people are asleep and make it a nail-biting slumber party.
I’m not sure if this was a brilliant strategy or an arrogant, obnoxious stunt but it was shocking to say the least. I don’t think it’s so dire out there that buyers have to go to these extremes.
The Irrational Seller
Clients wanted to see a home that has been listed for sale for three weeks. The seller (who is also the agent, who is also the broker by the way) met us there. My clients did like the house.
Because most houses are under contract in this market within a week, I asked the owner/agent/broker if she had any offers. She said she had received full price offers but rejected them because of the contingencies. She wants no inspection, no appraisal and a 7 day financing contingency. It was hard not to laugh in her face. I told her what is usual in this market and she said if the buyers wanted to do an inspection they could, but she would not fix anything nor could they walk away. Waiving an inspection with a condo isn’t that risky but on a single family house? Whoa.
After I collected my jaw from the floor I said, “It sounds like you need a cash buyer.” She said she has a lender who will do the loan in seven days and they need to use that lender. I’ve never heard of such a thing but I also never heard of twerking until a few weeks ago so what the hell do I know.
I told her that I would advise my clients not to write an offer on her house, as I would never advocate waiving a home inspection, forfeiting the right to walk away, waiving the appraisal contingency which protects both the buyers and the lender from an overvalued asset, and waiving the financing contingency putting the buyer’s deposit in jeopardy if the lender can’t underwrite the loan for some reason. Never mind the fact that my clients have a lender and I never allow buyers using the seller-dictated lender even though this has happened before. A builder recommended lender with an incentive is fine. A seller holding their house hostage unless you use their lender friend who will divulge all your personal information to the seller is not fine. With that, we left.
This seller is all that is wrong with real estate. She’s greedy, she wants buyers to believe her about the condition of her house and its systems, she doesn’t want them to know if they are overpaying by way of an independent verification of value, and she wants her lender used. I am vehemently opposed to sellers or their agents trying to control markets and buyers like this.
Buyers? Never give away money when you’re not bidding against someone or waive your contingencies and rights no matter how badly you want a house. There are plenty of people from 2005 who did exactly this and can attest to the fact that you could be buying yourself very big problems down the road.