Buyers are mad as hell, and they're not going to let sellers get away with it. People are filing lawsuits and lodging grievances with the Greater Nashville Association of Realtors. They're calling print reporters and television journalists, and are screaming from the rooftops. These particular people feel they've been screwed, and they want the world to know.
The reason for this venomous spewing is that these people tried but failed to buy homes across the city. Unfortunately, several other people had the same idea about the same houses at the exact same time. In other words, there were multiple offers for the homes and, when this happens, things become complex, emotions run high and tempers flare. After all, only one contract on any given house can ultimately be accepted.
Contrary to what most outside the real estate industry think, multiple-offer scenarios are the most uncomfortable and complicated situation real estate agents face. Many would think that the seller is in total control of the transaction, able to cherry-pick the best of several offers.
When there are several contracts on the seller's kitchen table, only one person will be happy with the seller's decision. The others will feel that the transaction was handled unscrupulouslyand, in some cases, they're right.
For example, one agent recently listed a house for what she considered a fair price. She advertised the home for the first showing to be on the following Sunday. Another real estate agent drove by the property and decided to purchase the home as her own residence and called the listing agent to confirm that no offers would be considered until Sunday. The listing agent confirmed that, and then the proverbial shit hit the fan.
An agent representing a builder that was going to demolish the house presented an offer for the asking price, even though this potential buyer hadn't even been inside the home. A few hours later, another builder had his agent submit another offer. This agent was unaware that another offer had been made. The listing agent then told both parties that she had two offers and would present them the next night when the owner returned to town.
At that point, buyer agent #1 increased her offer by $5,000 and demanded a response within two hours. According to buyer agent #1, the listing agent informed her that the offer was accepted. Case closed. House sold. Buyer #1 wins. Oh, not so fast.
Unaware that buyer #1 had raised his offer, the agent for buyer #2 raised her offer even more than buyer #1's offerthe offer that had been verbally accepted. According to many attorneys, verbal or oral "contracts" are bogus and unenforceable. So the listing agent and her clients agreed to take the offer from buyer # 2. The seller would be in town the next night to sign the papers. The agent for buyer #2 requested that the contract be faxed to the seller and said that the listing agent agreed to try to fax it. Case closed, house sold. Buyer #2 wins, right? No.
Along comes buyer #3 and his agent. Realizing there was a feeding frenzy surrounding the property, this buyer and his agent offer what is purported to be tens of thousands of dollars over the asking price and demand a signed contract immediately. This offer was accepted and signed. Finally, the case is really closed, and the house is actually sold. Except now other buyers # 1 and # 2 have sought lawyers to seeking recourse. Talk about buyer's remorse.
While this example is frustrating enough, it can get even worse. In some cases involving bidding wars, the buyer may present a "floating" offerone in which the buyer offers to pay a certain amount over the highest offer. For the floating offer to be valid, it must have a cap.
Buyers feel that they're bidding against themselves. They're not, of course, but it gets to them anyway. What they're really bidding against is the other offers. Multiple offers situations are not for the faint of heart. The buyer must be prepared to write a large earnest money check, pay more than the asking price and reserve few, if any, contingencies. To win the war, they must be forward thinking, and they can't look back.
The two most common but irrelevant questions buyers ask when preparing an offer are: 1) How much did the owner pay for it? And 2) How much money has the owner spent to improve it? It doesn't matter. The question should be, "What will it take to buy this house?" Next question: "Can I expect the same appreciation that this seller is realizing?"
The answer is almost always yes. Bottom line is, homeowners in most parts of Nashville will make money in real estate investments if they can manage to do one thing: keep breathing.
Richard Courtney is the Scene's real estate columnist and can be reached at email@example.com