Out of State or Out of Area Buyers WNC Real Estate - Properties Won't Wait for Your Visit - Sight Unseen Offers

WNC Real Estate Sight Unseen Offers

If you are one of the thousands of out of state or out of area buyers looking to purchase a house in the Western North Carolina mountains region, you may have begun to notice a pattern.  You are receiving daily property alerts showing properties hitting the market which may meet some or all of your criteria.  You save or "favorite" some of these properties and you have a planned visit to the area within a month or several weeks or even perhaps a week out.  The unfortunate reality is that those properties you saved will likely not be available when you arrive to the area.  In such a low inventory and very high buyer demand market as the Western North Carolina real estate market has been for quite some time, the very best properties go under contract almost overnight, otherwise within a couple days.

Buyers may find that all the properties that they "saved" for seeing when they visit the area are no longer available as they have either gone under contract or sold by the time they arrive.  Another common scenario is a buyer finally arrives to the area after having planned a trip to find their perfect property and there are absolutely no properties available to be shown that meet their criteria during the days they are present.  It is very important for out of state/out of area buyers to understand that the right properties that tick all or most of their boxes will not wait for them to come for a showing. 

As a regional real estate area expert, I often find myself having this conversation with my buyers.  My intention is to explain the market conditions of low inventory and very high buyer demand which precipitate properties going under contract very quickly and set expectations for these out of area buyers.  This is where I recommend that buyers consider leveraging the power of a "sight unseen" offer.

What is a Sight Unseen Offer?

A sight unseen offer is when a buyer has NOT actually physically seen the property and proceeded to submit an offer.  A buyer that has submitted a mortgage pre-approval letter to me (for those requiring financing) or "proof of funds" (for those purchasing all cash), can request a "virtual showing" where I will visit the property that has interested them and video record a showing for them. They can then decide if they would like to make a sight unseen offer.  Aside from the usual required offer to purchase paperwork from the state of North Carolina, the buyer would also need to sign a sight unseen brokerage disclosure/agreement form.  The sight unseen form basically states that the buyer understands the risks involved with a sight unseen offer/purchase and that the buyer represents that the decision to purchase the property is not made in reliance on the agent's observations or representations of the property, and that the buyer client waives any claim or cause of action against the brokerage/Agent related to the purchase of the property sight unseen.

The benefit of a sight unseen offer and going under contract sight unseen is that the buyer will secure the property that they are highly interested in.  The buyer will have a due diligence period (usually 2 to 4 weeks negotiated as part of the contract) in which they can visit and physically see the property and have the property inspections performed.  At risk is the due diligence money paid directly to the seller upon contract formation.  A due diligence fee to the seller is basically something of a "take off the market fee".  The due diligence money the buyer pays to the seller will be credited towards the purchase price at closing, however if the buyer decides to terminate the contract (buyer has until 5 pm on the last day of the due diligence period), the seller keeps the due diligence money.  Buyer will have the earnest money being held in their attorney's trust account refunded.

A Sight Unseen Offer Example

To illustrate this, let's use an example.  A buyer finds online the "perfect property" they have been looking for, yet they are out of state and their planned visit is not for another 2 weeks.  Property list price is $500,000. Buyer submits their mortgage pre-approval letter to me or provides me with the required proof of funds for a cash transaction and requests a virtual showing for the property that ticks their boxes.  I go to the property and provide a virtual showing for them.  They wish to proceed with a sight unseen offer.  I will advise them on a competitive offer price, a suggested due diligence fee to the seller (anywhere from .5% to 1% of the purchase price) we will use $2,500 in this example.  Also a suggested earnest money amount to be deposited in their attorney's trust account upon contract formation (2% of the purchase price in this example) $10,000.  I prepare all the paper work and submit to the buyer for electronic signatures.  I then present my buyer client's offer to the listing agent representing the seller and we receive the good news that the seller has accepted the offer and signed and now we are officially "under contract"!

I notify and congratulate my buyer client and ask them to overnight to me the due diligence money check directly payable to the seller(s) and the earnest money deposit check payable to their chosen local real estate attorney's trust account.  I receive the overnight package with the buyer checks.  I hand over the due diligence money check to the seller's agent who will in turn provide the check to their seller.  I then visit the buyer's selected local real estate attorney's office and have the earnest money check deposited in their trust account.  I will then urge my buyer client to come and see the property in person as soon as possible as time is of the essence.  We also then arrange for the standard home inspection, septic inspection (if on a septic system), well inspection (if on a well), wood destroying insects inspection, radon inspection etc.  All of this needs to be done as soon as possible within the due diligence period.  For those requiring financing, your lender will be arranging for an appraisal as well during the due diligence period. 

If the buyer arrives and upon seeing the property in person does not like the property, they may terminate as long as we provide written notice to the seller no later than 5 pm on the last day of their due diligence period.  The buyer will then forfeit the due diligence money paid to the seller ($2,500 in this example), however will be refunded the earnest money ($10,000 in this example) deposit being held by their chosen attorney. 

On the other hand, the buyer may very well love the property after seeing it in person and everything moves forward and closes on the purchase of the house that was perfect for them!  Both due diligence money and earnest money are credited at closing towards the purchase price.

Out of state buyers should keep an open mind and consider a sight unseen offer to secure their perfect property as their "perfect" property likely will not wait for their planned visit.

If you have any additional questions about sight unseen offers, feel free to reach out to me at 828.542.0084.

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