Tired of Losing Out, Home Buyers Are Bringing the Preemptive Offer Back
Over the last several months we have seen a huge upswing in multiple offers on properties in most price ranges. Buyers, tired of losing out in the multiple offer process have resorted to a strategy of market’s past, the preemptive offer.
The Customary Offer Process (if there is such an animal) –
We recently listed a home for sale in Palo Alto. In addition to our marketing program, the property was submitted to our local Multiple Listing Service on a Wednesday. It was open for the broker’s tour on Friday and we had a public open house on Saturday and Sunday. Based on buyer interest and discussions with our seller, we held off reviewing offers until the following Wednesday.
The Preemptive Offer –
On Tuesday (the day before our offer review date), we received an unsolicited preemptive offer from a well-qualified buyer. It was above our seller’s asking price and an all cash offer with a 2 week close of escrow. On the surface, it looked like a fantastic offer that our seller should jump on. However, things don’t always appear as they seem.
Why the Preemptive Offer Was Rejected –
Upon further scrutiny, the offer was rejected. Why? Well it turns out that the buyer was having trouble providing verification of the funds that were to be used to purchase the home. Even though there were no major issues with the home’s condition, the buyer didn’t know that because neither the buyer nor his real estate agent had downloaded or read the disclosure documents.
We had concluded that the buyer was intent on tying up the property before any other buyer had a chance to make an offer. Once the property was tied up, the buyer would determine if the property made sense to purchase. If we had ratified the contract with this buyer, we would not have had the option to take one of the other three offers that were presented the following day. This would have been a huge financial mistake for our seller.
The Successful Offer –
The seller took one of the offers that were presented on the offer presentation day. The eventual buyer was able to show our seller that they were knowledgable about our current market and housing values. They provided us all the necessary supporting documentation showing their financial qualifications. The buyer and their agent had read, signed and submitted a copy of all the disclosure documents with the offer. They knew what they were buying and were comfortable with it. Best of all, it was a very smooth escrow and closed in 3 weeks with all parties happy.
Below is a video on preemptive offers, pros and cons. I hope you find it informative.
