If you're in the market to buy a home or condo right now, you know you're competing against a wave of fellow buyers for a limited amount of available inventory.
If you're about to buy or have been making offers, there are things written into our real estate contracts that are in your favor. All Utah Association of Realtors real estate purchase contracts have language to protect the buyer and allow them to get out of the contract if A. the buyer doesn't like the seller's property disclosures and/or has the property inspected and doesn't like what they find, B. the property doesn't appraise for the agreed-upon purchase price and C. the buyer doesn't get final loan approval.
In this market, to win contracts, I'm seeing buyers giving up one, two or three of these rights to secure a property!
If you've never purchased a home, it's scary not to get a professional inspection to determine if the wiring is safe, the roof doesn't leak, there's no or low radon gas or if the property has high mold or allergen readings, hidden moisture in walls, a broken main sewer line or poor water quality. Yet some buyers are willing to risk buying a money pit to win the multiple-offer battle.
Appraisers right now are living in hell because homes are selling fast, and there are few comparable sales to support increasing high sales prices. I know of a home near the U of U that just sold for $300K over asking and an agent of mine sold one in Harvard/Yale for $115K over asking price.
As I work with more sellers than buyers, I try to suggest a list price that is fair and will garner the seller multiple offers. If the property is listed too high, the seller won't get to choose from as many offers, and multiples are what drive the final sales price up.
Some buyers are removing the "subject to appraisal" clause in their offers and making up the difference between an appraisal that may come in low and the final sales price. Yet, buyers who don't have the cash in hand drive up prices more hoping the seller will take the high offer.
Example: Seller asks $450,000 and there are 10 offers. Seller picks the highest offer at $500,000 and the appraisal only comes in at $460,000. Buyer must come up with $40,000 to make up the difference, when they had originally planned on putting only 5% down on the home. Worst of all, the buyer may not be able to qualify for a loan at the higher sales price, and the sale will fail.
Offers I see rolling into my office or that I'm writing may also tempt sellers with "non-refundable earnest money" from the buyer at signing of the offer and/or buyers offering to pay sellers' closing costs at settlement. Whoa! Will this ever stop? Not soon, in my opinion.