Blind Offer

In highly prized neighborhoods, it’s not uncommon for a local investor/contractor to come knocking on your door offering to purchase your home. Their pitch is usually something like this: “We will pay you all cash for your home, we can close in a very short time, and you won’t have to pay any broker commissions.” 

What could go wrong? Oh, a few things having to do with sucking up your valuable time, shortchanging you on potential profit and potentially leaving you exposed to legal troubles after the sale has closed.

A few months ago, a client was referred to me to potentially list the home of the family patriarch. It would be a Trust Sale as the estate was undergoing probate and they were looking to liquidate the trust at the same time.

The family attorney and son were both candid about having received an offer from an investor. The wealthy family was all about the bottom line and wanted to list with me only if I could ensure that they would net more than they would by accepting the investor’s offer. Fair enough, I appreciated the transparency, and they were friendly, respectful and professional. They both lived out of the area and they knew that having me nearby to oversee everything and to be the family’s advocate would be beneficial.

It was a lovely, if not tired home on a double lot in a quiet pocket of Studio City. I liked the family and the opportunity well enough to gather the facts and provide seller reports to help the family make a decision, even if that decision meant they would not list with me, and I, therefore, wouldn’t be compensated for the time and effort I’d spend.

My first question to them was, had they been given an offer in writing? They had not, the offer was verbal. I stated the obvious importance of getting the offer in writing before considering its worth, and I offered to review the offer once it was presented.

When the family came to town, I toured the home and set about collecting data, pulling title reports and visiting the local courthouse to review official city documents about permitted additions, current zoning laws, etc. I created a comparative market analysis – a valuation – for the property, specific to that pocket, in that neighborhood. I asked a favored escrow company to generate a couple of prospective itemized net sheets based on my two likely sale prices. I presented all my findings to the family so they would have all the facts in front of them – the bottom line, so to speak – on what the home might sell for, minus escrow costs, taxes, fees, and broker commissions if they listed with a Realtor®.

I also advised the family of the many benefits of using a professional real estate agent to handle the sale including the extensive marketing and advertising we do to ensure that we get the top price that the open market will bring, experienced negotiation skills, the handling of reports and legal documents that ensure the trust and estate are covered against later lawsuits for surprises after closing, and the oversight of the escrow process and the escrow company.

In the end, the family graciously let me know that although they appreciated the work I’d done, they had decided to go with the ‘bird in the hand.’

Naturally, I was disappointed, but I honestly wished them well.

Several months went by, and I occasionally checked the title on the property to see if their sale had closed successfully. 

Shortly after it did, I had a long conversation with the attorney who immediately professed her great regret for having not used me to handle the transaction. 

As it turned out, the investor who bought the property had a real estate agent handle his side of the transaction, but all of the necessary work that is usually done by a seller’s real estate agent was tossed onto the desk of the attorney. Legal documents and disclosures that she wasn’t familiar with, and which required information that she was not proficient at collecting needed to be attended to. The seller had submitted the offer on the wrong California Association of Realtors forms and had neglected to include relevant documents such as a Trust Advisory and Exempt Seller Disclosure. All of this was discovered late in escrow because the escrow company that the investor chose wasn’t familiar with Trust sales. The errors meant that all documents needed to be rewritten, all those replacement documents had to be signed by all parties and, naturally, everything was delayed. Deadlines were missed, and arguments ensued. After the sale closed, the buyer discovered personal items and furnishings had been left behind at the home.  They threatened to sue unless it was removed within 24 hours. No one had advised the estate that they needed to leave the home completely empty and 'broom clean,' and they ended up paying a hauling company a rush fee to remove everything and sweep down the floors.

Did they at least get market value for the home?  We’ll never know since it was never exposed to the market via advertising, marketing, and the MLS.  The attorney, upon comparing the value of her time spent on this fiasco, versus paying 2.5% seller’s commission revealed that the bird in the hand had been a contentious little bird who pecked at her palms and built a nest under her nails.

Sorry, not a pretty picture.

When you're ready to sell, contact a qualified Realtor® team like us.

Tell them a little birdie told you to call.