Buying a house should be a relatively simple process. In a perfect world, the owner would list their property for x, a qualified buyer would offer y and, after some reasonable negotiation, they would both agree on z. A binder would be signed with good faith money put forth and the buyer would be secure in knowing that the house is theirs while they inspect and contracts are drawn. Wouldn’t that be nice? But we live north of New York City, or as I like to call it, the wild, wild West. We have no such thing as binders as they do in so many other parts of the country. And, in our current market, with low inventory and prices on the rise, buying a home can be anything but easy. In fact, it can be downright frustrating.
When a house is listed for sale that is priced properly, it often draws multiple bidders. At that time, buyers are often asked to put their best foot forward regarding price and terms. This process is often referred to as “sealed bids” as they are often opened together with the homeowner for a “final” decision, but until the contract is signed, anything can happen. (This is where the “wild” part comes in.) Inspections must be done, lawyers must draft/review contracts, and the contract must be signed by both parties and delivered before either party is secure in the knowledge that they have a “done” deal. The estimated time frame for all this fun? Four to ten days, and that can be a painfully long time. Enough time for any of the “losing” bidders to increase their offer or improve their terms, for new buyers to bid and buyers or sellers to change their mind. This type of pressure creates a frenzy in the real estate market and for everyone involved. Some of it good—some of it bad—but it wouldn’t be life here without it.
Deborah Doern is Manager of Houlihan Lawrence's Larchmont brokerage office.
The Danger of Overpricing Your Home