According to a new study by Redfin, nearly 33% of Denver homebuyers who purchased their homes during the time period of the study (Nov+Dec 2017) made “Blind Offers” without seeing or touring the home.
With all due respect, I’m calling Bullsh*t on this one.
First off, 33% is literally 1 in every 3 buyers in their survey of over 1,500 respondents, and Redfin puts the share of millennials who have done so at over 40%.
Blind offering is not a new thing. Investors and flippers make blind offers and Robo offers all the time. These investors are putting forth lots of offers and paying cash. Seasoned listing agents who understand real estate treat blind offers skeptically as they have a much greater chance of terminating. It’s not uncommon for sellers and agents to refuse to accept offers unless the buyer has actually seen the property, especially on fix up properties.
Let’s focus on owner occupants then. In my experience, and I have worked with numerous relocation client buyers just in the past year during this survey period, and also a handful of millennial and young urbanite buyers, it just doesn’t pass the sniff test.
I only had one client for whom I resorted to FaceTime tours for, due to their work schedule and not finding a home during their initial visit. These relocation clients sometime have to resort to these FaceTime tours but I cannot imagine that this is a very big percentage of overall buyers.
The Problem with Blind Offering from a Buyer Perspective
- The problems with blind offering from a buyer’s perspective are many. With modern photography, while it is possible to get a better idea of a property from photos, photo editing and fish eye lenses have the ability to turn even a very rough property into a beautiful house. Secondly, flaws in a home are almost always omitted from photos and listing descriptions. When would you find these things out? During your $500 inspection, or maybe two days prior to closing when your $10,000 earnest money is at risk?
- Your earnest money would be “tied up” in a property that may in fact turn out to be a dud. Then if you inspect said property a few days after executing a contract, you are out another $500, plus it could be weeks or longer to get your earnest money back after terminating especially if the listing agent and seller really wanted to stick it to you.
- If you’re blind offering, your agent may or may not have even seen the property. These big “robo agents” are know for “writing offers,” not for putting a property through their expert professional lens.
- The potential for disaster here is tremendous. This is for most people their biggest asset. At the very least, it’s your biggest purchase, and there are lots of things that could wrong, from buying a real lemon, to overpaying, to having extreme buyer’s remorse. Remember Real Estate is an illiquid asset, and if you have remorse, it will be one of the most costliest mistakes you will make in your life to liquidate that mistake.
- In multiple offer situations, which are common, it is doubtful that a seller would take your sight-unseen offer seriously no matter how strong it is.
- If your agent routinely makes blind offers for you and other clients, they most likely terminate quite frequently. This is a business practice that will follow that agent and effect that agent from getting offers accepted in the future, maybe unbeknownst to other clients.
The Problem with Blind Offers from a Seller Perspective
- Many contracts terminate. Sellers know this.
- When a good listing agent is vetting a buyer, they’d want to be guaranteed that the buyer loved the home. Not having seen the inside would be a huge risk and red flag for a seller.
- 1st time buyers terminate in larger percentages, so if you had a young first time buyer who hadn’t seen the home, the seller would be wise to not accept that offer at least until the buyer had physically toured the property
- A buyer terminating on a seller can be very bad. It can set off a chain reaction of other events like maybe that seller is purchasing a new home and now they have to terminate their new home due to this. Maybe the buyer ties the property up for a few weeks and during that time the market turns and the other potential buyers have moved on to other properties.
If you are experienced in Real Estate, whether that is as a realtor or lender, or just as a consumer who has transacted several properties already, then you no doubt know that as a buyer you should always see a property in person, and as a seller, you would be very cautious to ever accept an offer from someone who has not viewed the property in person.
Sometimes a buyer’s circumstances dictate that its necessary for their agent to tour properties on their behalf and the latest in video conferencing, FaceTime etc make that pretty easy to do. However, to say that people will start buying homes sight-unseen in large-scale numbers in my opinion is quite overblown.
This is your biggest purchase and investment, and great care and attention should be exercised to the whole process.