With the market back in full swing, we're seeing more than For Sale signs and daffodils popping up. In many zip codes, with varying price points, we're seeing buyers coming out of the woodwork. Over the past month, we've had 20 offers on several of our listings.
Buyers' agents are out and about showing many homes to their clients. Buyers, hopefully, have been taking all of the appropriate steps - getting pre-approved, looking at multiple homes, bringing family members to see that one special house. Their agent has prepared the offer and addenda, a massive document that could be 25 pages long!
The buyers are finally ready to pull out their checkbook and write the earnest money deposit. In many instances, the buyer will craft a personal letter to the seller telling them how they have fallen head over heels for the property. Once everything has been pulled together, they have their agent submit the offer to the listing agent. The next step - they wait for what seems like an eternity - and then...they wait some more.
The listing agent has also been busy - fielding countless phone calls, text messages and emails from co-op agents and prospects who want to know specifics of the property such as when contracts are being presented, the sellers' preferred settlement date, to name a few.
When the offers begin to arrive, they resemble a tsunami of paper with fax machines ablaze, while others are delivered to the listing agent in person. The mound of paper often resembles a stack of four Yellow Pages (as in phone books) stacked one on top of the other. The listing agent settles in for a long night ahead and begins to check the offers for all required documents and disclosures.
Despite the countless variables that go into an offer - price, amount of earnest money, settlement date, financing package, etc. - one thing remains the same. It's likely that 'all cash' offers (along with proof of funds) will go straight to the top of the stack. Not only that, but 'all cash' offers with no contingencies, a hefty earnest money deposit, flexible settlement date and accepting the property as is, is music to a seller's ears!
With so many offers on the table, what is a seller to do? It is often pretty clear - the seller goes with the most streamline offer, not necessarily the one that nets them the most in the way of proceeds - thus, CASH (and a streamline contract) is KING!
After the seller accepts the offer, the listing agent notifies the buyer's agent of the good news and delivers a copy of the ratified contract. The buyer with the winning offer is ecstatic - joyful sounds are heard throughout their community! Then the listing agent begins to burn up the phone lines (and/or email), contacting all the other agents who submitted offers to thank them for all their efforts and to let them know the sellers have selected another offer.
At this point, you may be wondering why CASH is KING? It's relatively simple - there's no financing contingency and no waiting on underwriters to give their seal of approval. Secondly, the majority of cash offers do not include an appraisal contingency. Even to this day, we're seeing a number of folks agreeing to pay sales prices only to learn later that the appraisal came in below the sales price. In the event of a low appraisal, the buyer and seller are back to the drawing board negotiating the sales price. If there isn't a meeting of the minds, the offer becomes void and the seller starts all over again.
Once the process is said and done, the listing agent feels as though they've run a triathlon. They then change the status of the property to "Contract" in the MLS and race over with their 'under contract' sign to proudly display on the sign post.
And then....hopefully, we get to do it all over again.
Glenn Lewis is the executive vice president and managing broker in the Arlington office of McEnearney Associates. McEnearney is a locally owned and operated, independent real estate company in the Washington, D.C. area. Lewis jumped feet first into the real estate business some 30 years ago as a property manager where he learned first-hand the importance of listening, patience, and balance. Other management positions he has held include Sales Manager of a small real estate firm, and in 2004, he accepted the position of Branch Vice President of Coldwell Banker Residential Brokerage on King Street, the firm's flagship office in Virginia.