Buyers Cry Foul Over New Market Tactics | Print |  E-mail
Thursday, 01 November 2012 15:00

By Carl Medford, CRS

Special to the Times

I met with a couple recently — typical of many buyers, they’d been searching a long time and been blown out in many multiple offers. Frustrated, they finally submitted an offer substantially over asking price with all contingencies removed. Their offer accepted, 30 days later they moved in.

They began wondering what had just happened. They’d used another agent, and, confused, called me for advice.

Since they’d purchased with no contingencies, they relied only on seller inspections. They visited the property only once during a crowded open house and were unable to discern it’s less-than-prime condition. 

Carpets had been covered with runners, concealing spots. They didn’t do a final walkthrough and were astonished, when handed the keys, that the house was filthy and significant trash remained.

“What can we do?” they queried. “We don’t want this house.”

I ran the numbers and discovered that not only had they paid too much, but, in a rare happenstance, it had actually appraised at the inflated value.

Based on area comps, they’d have to wait a long time for the market to increase enough for them to liquidate and break even.

“What went wrong?” they asked.

Current market conditions are causing havoc for buyers: lack of inventory, escalating prices and cash-laden investors are making it virtually impossible to compete. Many buyers, exasperated with numerous failures, resort to desperate maneuvers. Sadly, some agents actually encourage this.

For Realtors, it’s really a Catch 22: You want your clients to get a home, but how far do you suggest they go in writing an offer? How high? What contingencies do you remove? What else do you do to get your offer accepted in the face of intense competition?

In a multiple-offer situation recently, a listing agent called me and stated, “We like your offer, but the sellers want the loan and appraisal contingencies reduced from 14 to 10 days.” I informed them, “You and I both know that’s physically impossible,” to which they asked, “Do you want it or not?”

Once again, it’s “Buyer Beware.” Since there’s no rescission period when buying a home, once it closes, that’s it. Similar practices in the heyday of 2004-2005 induced numerous lawsuits from buyers who, once the dust settled, had serious buyer’s remorse and concerns about their transaction.

Our recommendation? Regardless of how badly you want a home, be very cautious — the final price tag may be higher than you actually intended to pay.

Carl Medford is a licensed Realtor with Prudential California Realty in Castro Valley. This article is sponsored by the Central County Marketing Association at www.ccmgtoday.com.

 

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