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According to a recent article in Realtor Magazine“With limited housing supplies this spring in many markets, real estate investors realize they need to act fast, and some are willing to make an offer within minutes of a listing debuting – even if they are based on the other side of the country. These investors are making bolder, faster moves by relying on quantitative data and calculations to drive their decisions on whether to buy. They’re willing to offer homes they’ve never seen if their calculations point to a good deal.”

The article fails to mention that often these offers are solely to tie up the property only to renegotiate after the real estate investor’s contractors take a look at the home. Sadly, I speak from experience.

I just closed escrow on a mid-century fixer designed by Glen Elwood Smith, who worked as a Draftsman for architect Myron Hunt. I had nearly a dozen offers ranging from $400,000 – $655,000. All were cash; all were quick escrows. Unfortunately, I had not previously worked with any realtors who submitted offers.

The only logical way to select offers was to work our way through – each time selecting the highest price. The buyers did not forward their earnest money deposit to escrow the first two times. Although the buyers had already signed the seller’s disclosures, the buyer’s real estate agents attempted to renegotiate the price based on its condition. We refused as the buyer had not deposited their earnest money with escrow in good faith.

I regrouped with the heirs and real estate attorney. We agreed that we should continue working through the offers based on price. How do we decide that a high offer isn’t genuine? At what price point do we decide the offers are real? But we agreed that buyer #3 would need to do their inspection up front – there would be no investigative contingency. Buyer #3 waived their inspection contingency, but sadly they attempted to renegotiate the price before forwarding their deposit to escrow.

We worked our way down to a $600,000 offer, and fortunately, this 4th escrow closed with no further negotiation.

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