Feb 7, 2024
Many homebuyers revel in the hunt for the perfect home. From poring over listing pages late at night to hitting 10 open houses in a weekend, most buyers get to know every inch of a property before even considering making an offer.
Others, however, are content to make an offer without ever laying eyes on a property. When this happens, it’s called a blind offer.
Plunking down thousands of dollars on a home you’ve never stepped inside of might have you asking why anyone buys a house sight unseen.
Yet while some buyers see unnecessary risk, others see a golden opportunity. It turns out that a blind offer can be a clever tactic in a competitive market—as long as you truly know what you’re getting into.
The backstory of the blind offer
Blind offers are primarily used by investors and home flippers who care more about the bottom line and cash flow than finding the perfect “home” where they want to live.
However, blind offers also became popular for regular folks when the COVID-19 pandemic prevented them from touring homes in person.
“We did remarkable things with video, walk-throughs, and virtual tours,” says Wendy Gladson, a real estate agent and consultant at Compass in Los Angeles.
While blind offers were more prevalent during COVID-19, they still happen today.
“In some areas where inventory is scarce, and competition is fierce, blind offers may be more common,” says Fran Lisner, an agent with Daniel Gale Sotheby’s International on Long Island.
A blind offer allows a savvy buyer to skip a time-gobbling home tour and make an offer ahead of other would-be buyers.
What to know before making a blind offer
When making a blind offer, you’ll heavily rely on your agent. The pro may be able to do a video tour for you and point out the warped wood floors or peeling paint. Still, there’s more to consider beneath the surface.
“I could potentially miss something structural,” Gladson points out, “and I would not want to put my client in jeopardy.”
Indeed, only home inspectors and engineers are reliable sources when assessing a home’s true condition. As such, Gladson recommends that homebuyers “write their offer subject to interior inspection or a physical contingency” to protect themselves.
If any major issues are uncovered, you can then try to negotiate for repairs or back out of the deal without penalties.
“It’s like having a secret weapon that safeguards your investment,” says Lisner.
Buyers should also request a due diligence period to thoroughly examine documents, delve into property records, and uncover hidden gems or potential pitfalls.
“This process allows you to make an informed decision before fully committing to the purchase,” adds Lisner.
Making a blind offer on an ‘as is’ house
Imagine looking through listings and finding a gorgeous house, only to discover the seller invites only blind offers—and that the house is being sold as is.
The writing is on the wall: The seller is broadcasting they won’t be responsible for repairs, or give credits that could help pay for repairs. But legally, that doesn’t necessarily fly. Even if the seller initially seems reluctant to take responsibility, once inspected, they may have to fix unknown conditions with a title, property lines, or unseen property defects.
“If the buyer threatens to walk away from the deal, many sellers will compromise once a defect or condition is discovered because it becomes a disclosure issue for the next buyer,” says Gladson.
Advantages of a blind offer for sellers
If you’re getting ready to sell your house, you might want to consider accepting blind offers. Here’s why.
- Streamlined sales process: This is a big plus for sellers who want to move quickly and avoid lengthy negotiations. However, Gladson advises her sellers to offer an inspection contingency for liability protection.
- Competitive advantage: “Blind offers can create a frenzy of excitement among buyers, sparking a bidding war that could drive up the sale price,” says Lisner.
- Minimal disruptions: If you accept only blind offers, you won’t have to constantly prepare your property for showings or deal with the stress of open houses.
Disadvantages of a blind offer for sellers
On the flip side, there are some potential pitfalls associated with blind offers sellers should be aware of.
- Mystery buyers: “Accepting a blind offer means you might not know much about the buyer’s financial situation,” says Lisner. Making an offer is one thing, securing financing is a lot harder.
- Risk of undervaluation: There’s a chance you might sell your property for less than its actual value without a comprehensive understanding of the market.
- Buyer’s cold feet: Blind offers have a higher risk of falling apart than regular offers. Even if buyers make an offer without inspections or due diligence, there’s always a risk they could call off the deal once they discover issues.
The bottom line on a blind offer
When you see a home listing that checks all the boxes, it might be tempting to swoop in and submit a blind offer with no contingencies to stand out from other buyers.
Sure, a blind offer could work perfectly, but you would be remiss if you didn’t carefully consider the pros and cons.
“It’s extremely dangerous for a buyer who does not have any experience in structural engineering or home remodeling to buy a house sight unseen without an inspection contingency,” says Gladson. “If one of my clients resisted and wanted to go forward, I would have them sign a waiver that they were instructed to fully inspect a property.”
Source- https://www.realtor.com/advice/buy/what-is-a-blind-offer/
