How Buyers are Dealing with a Hot Market
I’m going to write specifically about a trend I have seen in the Las Vegas market over the last 30-45 days, however, the same could be applied in other markets. I’ll start with a specific example from this past weekend. An agent submitted 3 offers to our firm on 3 different Las Vegas properties. All 3 offers had the same buyer name. Coincidence or was something fishy? To be fair, we have a lot of properties in the Las Vegas area listed under our firm, thus, having an agent submit more than 1 offer on our listings in 1 weekend isn’t all that noteworthy. However, 3 offers with the same buyer set off a red flag. So what was going on? Simple, the buyer had submitted many offers over the weekend. The buyer was waiting to see what got accepted and what was rejected. Based upon the offers that were accepted, the buyer was then going to choose to purchase the 1 home they wanted the most out of the accepted group. So how is this possible or even legal? The due diligence time period on the GLVAR gives the buyer typically 10 days to cancel the deal at no penalty. Thus, the buyer could cancel any accepted offer as long as they did so in accordance with the due diligence time period.
So now that we know the buyer isn’t violating any real law by doing so… how do I avoid this if I am a seller? There is not a perfect system to avoid this. However, there are clues to look for. The #1 clue is if the buyer made an offer site unseen. This means the buyer wrote an offer and they have never seen the property themselves. Secondly, many of these buyer’s either have 1031 exchanges or substantial down payments. (or both) The best course of action is that if you suspect the buyer has multiple offers out, just ask the the buyer’s agent. 99 times out of a 100, they will tell you.
So what is the real risk in this if you are a seller? The problem I see is that this particular type of buyer is always looking for the best deal available up until the last second. Thus, even if the escrow is opened, the buyer will keep their eyes peeled for other properties. If they find something else they like, they will look for a way out of your deal.
Hot markets are wonderful for a seller. Don’t get me wrong. However, use common sense and keep a lookout for a deal that seems too good to be true. IE.. a full price offer from a buyer who neither the buyer or his/her agent has ever seen the property.