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“.
Blind offers in a more normal market
Even a normal but overheated market, though, some buyers will still write blind offers.
Why would anyone do this? One reason is speed. You can submit offers a lot faster if you don’t have to take the time to see the home or condo first. Another reason is laziness. The buyers may not want to have to put in the time to properly house hunt prior to getting into contract. They’d rather see the offer accepted before visiting the property. If they don’t like it, it’s easy to back out of the deal, right?
This is a bad idea, though. Listing agents here in Silicon Valley know how to read the lockbox and will know if your agent has brought you through the property or not (not every home has an open house). When your offer is received, the listing agent and seller will not be terribly interested in accepting a blind offer because they realize that (1) you don’t even know if you like it and (2) clearly don’t do your due diligence, and may be terrible to deal with in escrow.
Want your purchase offer to be accepted? Go the extra mile. Seeing the property is only the beginning, the very first step. From there you have much to do to be the winning bid in our multiple offer climate. Don’t blow it by writing blind offers. You’ll lose the house, but also the respect of the seller and listing agent. And you may run into that agent on the next house you want to buy! It’s not worth it.