Structuring offers and other relevant topics
If you’ve observed construction progress in phase 4, you know that homes have sold quickly in the last 45 days. Our Boise Valley continues to attract attention from both local and out-of-state buyers, and we are both honored and humbled to have a small part in this dynamic industry.
Since January 1, we’ve tracked the most commonly asked questions and unsurprisingly, most questions are related to availability. Blackrock Homes only accepts offers on move-in ready homes, uploaded on MLS. What was more revealing to us was how often the question of contract structure came up. Many asked how to structure an offer to give it the greatest likelihood of acceptance if found in a competitive situation.
First, it’s important to note that we are not seeing a multiple offer situation with every listing. The market is fluid and it ebbs and flows from week to week. While it’s always best to defer to your broker for guidance when structuring paperwork, we can share some insight on what we are looking for as Seller Representatives, beyond price and net proceeds.
Owner Occupied or Non-Owner Occupied: Blackrock Homes only accepts owner-occupied contracts. Buyers actually have an edge over investors (even the all-cash investors and otherwise) when looking to live in Blackrock communities.
Strength of Borrower: We cannot overstate this area enough; everything else is irrelevant if the buyer’s financing isn’t solid. Choosing a lender that you trust and who can perform is key to homeownership. Amount of down payment and a solid Pre-Approval Letter are also high considerations. All cash offers are rare in Verado. We are seeing an increasing number of buyers with parental financial assistance; our only stipulation is that the buyer and the parents are all named on the contract.
The Home to Sell Contingency: Blackrock will consider this type of contingency on a case-by-case basis, but these types of offers are generally at a disadvantage. We understand buyers want to avoid the interim housing step and don’t want to run the risk of being homeless, but we lean more toward the ready-to-go buyer that isn’t tied to another property selling first.
The Escalation Clause: To summarize, this clause is put into effect only in competitive situations, when there is at least one other offer in play. Every brokerage has their own language for Escalation Clauses, but in general, we like to see a clause that escalates the purchase price to go $2,000 above the next competing offer, up to a pre-determined cap established by the buyer. The buyer/buyer’s agent is always notified in these situations, and we prefer to see some reference to the buyer being willing to make up the difference in the event that the appraisal doesn’t come in at the new purchase price. If a buyer is willing to pay more than the asking price, then the buyer needs to be prepared to pay the difference in the event of a lower appraisal.
Offer Response Time: Blackrock requests a 48-hour response time, but occasionally will respond sooner if a strong offer is presented and ready to go.
Our practice for multiple offers: As a general rule, the contract that is solid with the greatest likelihood of closing on time, usually surfaces to the top. We realize that multiple offer situations are uncomfortable and we do our best to be sensitive and respectful to all parties involved. We do not issue Multiple Counter Offers simultaneously. In the event that two offers net the same proceeds to the seller, we contact the selling agents to verbally inform them of the status to see if they wish to modify their offers. Only about 50% of the time are buyers willing to increase or modify their offers. We do not disclose the status of the offers until the negotiations are finalized. If multiple offers are received, we generally put a deadline in the Agents Remarks of the MLS listing for receiving more offers, to respect the offers previously presented. Upon accepting a contract, we change the List Price in MLS to match the agreed-upon purchase price to support the appraisal.
Lastly, within the MLS Doc Tab we’ve uploaded a simple one-page Offer Instructions, along with three Addendums and two Disclosures, for agents to include with their RE-21 Agreement. Always feel free to call if you have any questions, we’re happy to help!