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Old May 2nd 21, 08:43 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

What a crazy housing market this is! My #1 son and his GF just
found out that their offer has been accepted.

Here is how houses are being bought these days…

First, I should note that the submission period for offers was the 48
hours after the house hit the market. This was one of those listings
where all offers would be reviewed at the same time and the sellers
would choose the one that they liked the best.

Since my son and his GF are relocating to a different state, they
haven’t even seen the house in person. Just pictures, a video tour
and their agent’s assurance that the house was listed at a great
price, way under what she expected it to sell for. (She was right)
They submitted their offer within a few hours of the house being
listed. There was a total of 12 offers submitted in that 48 hour period.

They submitted an offer at full asking price ($370K), no contingencies.
The offer included an escalation clause. The escalation clause would
automatically increase their offer to $1000 more than the highest offer
submitted, but not to exceed $410K. They also included an "appraisal
clause" which stated that they would give the sellers up to $15K above
the appraised value, not to exceed $425K.

Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!

So they may pay as much as $425K, but they may pay less than the
$410K if the appraisal is low – assuming it’s not so low that the seller
backs out. Their agent is sure that the appraised value won’t be low
enough for that to happen. The seller is moving out of town and needs
to get the house sold, thus the comparatively low asking price.

One other clause was a 15 day due-diligence clause, which was
accepted. Even though the offer was “as-is” and not contingent on an
inspection, they are still going to have one done and can use that to
negotiate repairs or get out of the contract if the seller’s disclosure form
is not accurate. They are hoping that at least one of them can be present
for the inspection.

If the house appraises at the $410K level, they will end up paying $55K
(15%) over the listing price. Holy crap!



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Old May 2nd 21, 09:33 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On 5/2/2021 3:43 PM, DerbyDad03 wrote:
What a crazy housing market this is! My #1 son and his GF just
found out that their offer has been accepted.

Here is how houses are being bought these days…

First, I should note that the submission period for offers was the 48
hours after the house hit the market. This was one of those listings
where all offers would be reviewed at the same time and the sellers
would choose the one that they liked the best.

Since my son and his GF are relocating to a different state, they
haven’t even seen the house in person. Just pictures, a video tour
and their agent’s assurance that the house was listed at a great
price, way under what she expected it to sell for. (She was right)
They submitted their offer within a few hours of the house being
listed. There was a total of 12 offers submitted in that 48 hour period.

They submitted an offer at full asking price ($370K), no contingencies.
The offer included an escalation clause. The escalation clause would
automatically increase their offer to $1000 more than the highest offer
submitted, but not to exceed $410K. They also included an "appraisal
clause" which stated that they would give the sellers up to $15K above
the appraised value, not to exceed $425K.

Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!

So they may pay as much as $425K, but they may pay less than the
$410K if the appraisal is low – assuming it’s not so low that the seller
backs out. Their agent is sure that the appraised value won’t be low
enough for that to happen. The seller is moving out of town and needs
to get the house sold, thus the comparatively low asking price.

One other clause was a 15 day due-diligence clause, which was
accepted. Even though the offer was “as-is” and not contingent on an
inspection, they are still going to have one done and can use that to
negotiate repairs or get out of the contract if the seller’s disclosure form
is not accurate. They are hoping that at least one of them can be present
for the inspection.

If the house appraises at the $410K level, they will end up paying $55K
(15%) over the listing price. Holy crap!



Crazy! My neighbor that sold his house the day after listing bought a
house unseen too.
The escalation clauses were unheard of when I was buying but seems to
have been good for them.

I bought here 2 1/2 years ago. If I bought today my old house would
have sold for more but this house would be another 5k above the
difference.
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Old May 2nd 21, 09:37 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On 5/2/2021 3:43 PM, DerbyDad03 wrote:

They submitted an offer at full asking price ($370K), no contingencies.
The offer included an escalation clause. The escalation clause would
automatically increase their offer to $1000 more than the highest offer
submitted, but not to exceed $410K.


That sounds like a system ready to be "gamed" --much like the people who
bid on their own stuff on ebay. Both the buyer's and the seller's
agents have an incentive to sell at a higher price. I'm not saying
anything shady might happen, but I don't like it! : ) If they want to
auction the house then (IMO, they should) auction it in the "light of day"!

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Old May 2nd 21, 09:42 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On 5/2/2021 3:43 PM, DerbyDad03 wrote:

Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!


I'll assume my previous message has been read. Color my cynical but all
I have to say is "what a coincidence!". That said, I congratulate the
buyers on their new home. The way property is appreciating, it will
surely be a great investment in the long run, and you can live in it!

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Old May 2nd 21, 10:44 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On 5/2/2021 4:42 PM, Bill wrote:
On 5/2/2021 3:43 PM, DerbyDad03 wrote:

Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!


I'll assume my previous message has been read. Color my cynical but all
I have to say is "what a coincidence!".** That said, I congratulate the
buyers on their new home. The way property is appreciating, it will
surely be a great investment in the long run, and you can live in it!


I wonder in 3 to 5 years if the house price today will still be a good
investment when interest rates are back up.


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Old May 2nd 21, 10:59 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On Sunday, May 2, 2021 at 4:37:40 PM UTC-4, Bill wrote:
On 5/2/2021 3:43 PM, DerbyDad03 wrote:
They submitted an offer at full asking price ($370K), no contingencies.
The offer included an escalation clause. The escalation clause would
automatically increase their offer to $1000 more than the highest offer
submitted, but not to exceed $410K.

That sounds like a system ready to be "gamed" --much like the people who
bid on their own stuff on ebay. Both the buyer's and the seller's
agents have an incentive to sell at a higher price. I'm not saying
anything shady might happen, but I don't like it! : ) If they want to
auction the house then (IMO, they should) auction it in the "light of day"!


Yes, it could be shady, but part of the process is that the seller has to
show them the offer (or at least a picture thereof) that triggered the
escalation clause.

Of course, as I joked to my son "Oh, you mean the offer that the
seller's sister submitted right after they had read yours?" ;-)

The California Association of Realtors says this in a FAQ:

"Should the buyer include a provision that allows for verification
of the next highest competing offer?

Yes. Since the buyer is making an offer dependent upon the
offers of other buyers, it makes sense that the buyer should be
able to verify that those other offers were in fact bona fide offers.
The buyer may include language such as: "Seller shall, upon
acceptance, provide buyer with a copy of the highest offer received.
Buyer has a right to contact that prospective purchaser making
that offer, or his or her agent, to verify the validity of that offer and
that the other offer is in fact a bona fide offer."

While still ripe for gaming, once you start getting third parties
(especially licensed agents) involved in the scheme things can
get trickier for the schemers.

This was for a house in Indiana. My #2 son is an RE agent in
Nevada. Escalation clauses are not legal there. I'm not sure
of Nevada's exact reason, but from my reading it appears that
some jurisdictions don't allow escalation clauses in a real estate
offer because there is no firm dollar offer being made.
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Old May 2nd 21, 11:11 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On Sunday, May 2, 2021 at 4:42:22 PM UTC-4, Bill wrote:
On 5/2/2021 3:43 PM, DerbyDad03 wrote:
Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!

I'll assume my previous message has been read. Color my cynical but all
I have to say is "what a coincidence!". That said, I congratulate the
buyers on their new home. The way property is appreciating, it will
surely be a great investment in the long run, and you can live in it!


Yes, it could be shady, but part of the process is that the seller has to
show them the offer (or at least a picture thereof) that triggered the
escalation clause.

Of course, as I joked to my son "Oh, you mean the offer that the
seller's sister submitted right after they had read yours?" ;-)

The California Association of Realtors says this in a FAQ:

"Should the buyer include a provision that allows for verification
of the next highest competing offer?

Yes. Since the buyer is making an offer dependent upon the
offers of other buyers, it makes sense that the buyer should be
able to verify that those other offers were in fact bona fide offers.
The buyer may include language such as: "Seller shall, upon
acceptance, provide buyer with a copy of the highest offer received.
Buyer has a right to contact that prospective purchaser making
that offer, or his or her agent, to verify the validity of that offer and
that the other offer is in fact a bona fide offer."

While still ripe for gaming, once you start getting third parties
(especially licensed agents) involved in the scheme things can
get trickier for the schemers.

This was for a house in Indiana. My #2 son is an RE agent in
Nevada. Escalation clauses are not legal there. I'm not sure
of Nevada's exact reason, but from my reading it appears that
some jurisdictions don't allow escalation clauses in a real estate
offer because there is no firm dollar offer being made.
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Old May 2nd 21, 11:51 PM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On 5/2/2021 5:44 PM, Ed Pawlowski wrote:

I wonder in 3 to 5 years if the house price today will still be a good
investment when interest rates are back up.



I think it will likely, at the very least, hold its value appreciably
better than dollars in CDs. It has to be true that prices can't rise
above what people are able to pay, but in view of that it's remarkable
how housing prices skyrocketed in places like California....location,
location, location! : )

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Old May 3rd 21, 12:11 AM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

I'm top-posting.

Thank you for providing the additional details. It is an interesting
matter. I would like to see exactly what is at stake for a "shady" real
estate agent. With an "escalating clause", the buyer is saying that
they are willing to pay a certain price, and the real estate agents
facilitate the transaction. It could be very difficult to pin down the
crime, and ironically, even to draw much interest in it by those who
could enforce the rules. It appears that "escalating clauses" are good
for the industry in that they generate higher commissions. Anyhow,
thanks again DerbyDad for sharing the story!


On 5/2/2021 6:11 PM, DerbyDad03 wrote:
On Sunday, May 2, 2021 at 4:42:22 PM UTC-4, Bill wrote:
On 5/2/2021 3:43 PM, DerbyDad03 wrote:
Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!

I'll assume my previous message has been read. Color my cynical but all
I have to say is "what a coincidence!". That said, I congratulate the
buyers on their new home. The way property is appreciating, it will
surely be a great investment in the long run, and you can live in it!


Yes, it could be shady, but part of the process is that the seller has to
show them the offer (or at least a picture thereof) that triggered the
escalation clause.

Of course, as I joked to my son "Oh, you mean the offer that the
seller's sister submitted right after they had read yours?" ;-)

The California Association of Realtors says this in a FAQ:

"Should the buyer include a provision that allows for verification
of the next highest competing offer?

Yes. Since the buyer is making an offer dependent upon the
offers of other buyers, it makes sense that the buyer should be
able to verify that those other offers were in fact bona fide offers.
The buyer may include language such as: "Seller shall, upon
acceptance, provide buyer with a copy of the highest offer received.
Buyer has a right to contact that prospective purchaser making
that offer, or his or her agent, to verify the validity of that offer and
that the other offer is in fact a bona fide offer."

While still ripe for gaming, once you start getting third parties
(especially licensed agents) involved in the scheme things can
get trickier for the schemers.

This was for a house in Indiana. My #2 son is an RE agent in
Nevada. Escalation clauses are not legal there. I'm not sure
of Nevada's exact reason, but from my reading it appears that
some jurisdictions don't allow escalation clauses in a real estate
offer because there is no firm dollar offer being made.



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Old May 3rd 21, 12:20 AM posted to rec.woodworking
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Default OT: House Offer Accepted. What A Crazy Market!

On 5/2/2021 5:59 PM, Dave Marulli wrote:

My #2 son is an RE agent in
Nevada. Escalation clauses are not legal there. I'm not sure
of Nevada's exact reason, but from my reading it appears that
some jurisdictions don't allow escalation clauses in a real estate
offer because there is no firm dollar offer being made.


In other words, they came to the conclusion, probably through
experience, that it was too easy to generate a spurious offer if one was
needed. I like the quote: "Pop always said, Trust everyone, but always
count your change!". My dad didn't say that, but I live as though he did.

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