Is the housing market getting stupid again, or is technology changing the way we buy homes? That’s still up for debate, but there are some troubling signs out there.
The latest is that one-third of home buyers made an offer on a property they didn’t even see in person, this according to a new survey from Redfin.
That’s up from 19% a year earlier and 21% two years ago.
The company polled nearly 3,500 individuals in 11 metropolitan areas that bought or sold a home in the past year, attempted to do so, or plan to do so in the near future.
Amazingly, 33% of buyers decided they were okay with buying a home they had never physically seen, touched, smelled, etc. That’s pretty bold.
Millennials Most Likely to Make Offers from Afar
Rather surprisingly, or perhaps not surprisingly, it was Millennials who were the most likely to make an offer sight unseen.
This group indicated to Redfin that they made an offer on a home they hadn’t seen at some point during their home search more so than any other demographic.
Nearly half (41%) of Millennial buyers made at least one offer from afar.
I say surprisingly because chances are it’s their first time ever buying a home, judging on their young age, but at the same time unsurprisingly because they’re the savviest group technology-wise.
This means they can search available properties using a variety of apps that provide lots of high-quality photos, video tours, important data, and so on.
You can’t fault them I suppose, given there’s a lot of great information out there nowadays. But I’m not sure I’d make an offer without actually seeing the place.
It’s kind of like dating where the person doesn’t always look like they do/did in the picture…
Meanwhile, only 30% of Gen-Xers made remote offers, and Baby Boomers did so in only 12% of cases. It’s clearly an age thing…but it’s also a sign of the times.
Hot Housing Market Calls for Lightning Fast Bids
You can hardly blame people for making what seem like impulsive offers. Because the housing market is red hot, you often don’t have time to view the property in person.
Often times when reviewing homes on Redfin, there will be a notice to get your offer in by X date, which is usually within a day or two (or less).
Or if you favorite a home, you might receive an e-mail from Redfin notifying you that the seller is reviewing offers tomorrow and to get in touch with the listing agent ASAP.
Seeing that the market is so competitive in some markets, prospective buyers may just want to get in the running and then decide once they inspect the property.
And that’s certainly one way to do it. Thanks to contingencies (assuming you keep those in place!), you can get into contract and then bail if you don’t actually like the property in person.
Yes, you can go smell and touch it after the fact and then head for the hills. The only real drawback is the extra legwork you’ll put in and the earnest money you’ll have tied up for a time before canceling.
Should You Accept a Sight-Unseen Offer as a Seller?
Now if you’re a home seller and someone makes an offer sight unseen, you may want to think on that for a minute (or longer).
As mentioned, these buyers can make an offer just to get in the door, then decide they don’t want anything to do with your home once they actually go through the door.
While a picture might be worth a thousand words, and a video is worth a million, actually being there must be worth a billion.
As a seller, you should know first-hand how different a home can feel in print or video versus in person. Something that looked like “the one” often turned out to be a dud.
Do you really want to go with the buyer that has yet to determine this, as opposed to the buyer who already fell in love, in person, and is making decorating plans?
While it might be tempting to take the highest offer, you should take the time to determine how serious your buyer is and how likely it is that they will close.
My guess is there’s some correlation between remote offers and tendency to fall out of escrow.