What is a blind real estate offer?

Circle with slash and words Blind offers

A blind real estate offer is a purchase contract which is written by a buyer when the property is sight unseen. There are commercial properties, such as apartment buildings, in which this is the norm, and it’s not surprising for multi-family units such as duplex to fourplex properties. It is uncommon with single units or homes.

Right now we are in the midst of a Shelter In Place order due to the coronavirus pandemic. Current restrictions do not permit the showing of homes, inspections, or appraisals – though the latter two may change or get adjusted somewhat as this order persists. If you want or even need to find a property, how can you do it with this restriction? It is not advisable, but some would-be home owners are writing blind real estate offers.

It makes sense for a multi-unit property to be sold this way because the investor cares most about the numbers. How’s the cash flow? Are the reserves good enough? When will the driveway need repaving? All of these items address the question of whether or not it’s a good investment, a good business decision.

Blind real estate offer on your own future home

Buying a home that you are going to live in needs to make sense financially, but you also need to like it. You need to see if the home has enough light, if the rooms feel crowded or spacious. You must learn if there are floors out of level or odors or other issues undetectable from a virtual tour or series of photos.

Before the broad Shelter In Place order, I showed a home in Gilroy, and one of my clients had an allergic reaction in the house. Maybe it was the new carpet? Who knows – but it was imperative that we visit the property in person.

Blind real estate offers are dangerous since they curtail the buyer’s ability to have properly vetted the property. They are also dangerous for the seller, who can get the house tied up with a buyer who may or may not be willing to go through with the sale once the home is finally seen in person. If the Shelter In Place order continues for 2 or 3 months, which Governor Newsom suggested yesterday, it’s possible that access by appraisers or real estate agents may not be permitted for a long time. Long escrows carry their own risks.

For all of these reasons, I do not suggest that homes be bought and sold  “subject to inspection“. (more…)

Make sure that you and your agent see the home before writing an offer

ScissorsA few weeks ago, I had a listing of a house for sale in which my sellers and I received a lot of offers.  Let’s say, for the sake of example, that it was an even dozen.

 This is the kind of market where you really need to try harder if you want to get the home.  You don’t want to cut corners, and you don’t want your real estate agent to cut corners, either.

One buyer couple did come see the property during my open house. (A “blind offer” is when the buyers write offers on homes that they haven’t seen.)  Their agent never did, though.  She did not visit during the 2 open houses and she did not preview at any other time, either.  She did submit an offer on a property which was, for her anyway, “sight unseen”.

Let me tell you, that kind of thing does not impress a listing agent who wants to know that there’s going to be a solid professional on the other side of the transaction.   The listing agent is going to be less enthusiastic about working with someone who seems either unprofessional or lazy or unmotivated to do a good job.  (What kind of advice could she have given her buyers if she never saw it in person, never saw the neighborhood?)

Most of the time, the buyer’s agent’s laziness or lack of professionalism will not obstruct the transaction if the buyer has by far and away the best offer.  However, if it’s neck and neck, that’s the kind of thing that can get your offer eliminated.  Would you want to lose the opportunity to buy because your agent could not be bothered to drive over and take a look and hopefully advise you about what she had seen?

Sometimes when a buyer loses out in multiples, it’s not so much that it’s a bad offer as it is a badly performing buyer’s agent.  Want the house?  Everyone on your team must exert a little more – your buyer’s agent, your lender, and you.  Don’t cut corners.  In an appreciating market, those short cuts are mighty expensive.

More on buying a home in Silicon Valley:

Mistakes that buyers’ agents make which damage their clients’ chances of winning in multiple offers

5 things your Silicon Valley buyer’s agent can do to help improve the odds that your offer will be accepted

Do you have a strategy for buying a home in Silicon Valley?

A summary of tips for multiple-offer situations in Silicon Valley real estate contracts