In a seller’s market, there is a practice known as ‘tying up the property’. When a good listing comes on the market, there can be a bit of frenzy. Everyone wants to get a look at it. The realtors want to do a good job and make sure that they secure the property for their client. No one really wants to get into a bidding war (except the seller of course), but everyone wants to be the winning bid for the property. Thus comes in the idea of tying up the property.
What this means is that some buyers will throw out extremely favorable terms or an incredibly high purchase price in an attempt to take all the other buyers out of the equation. When the seller sees the offer and finds that this particular one is so far head and tails above the others, it’s clear that they should accept it. The problem is that the buyer may not really be serious about buying the property. They may just be putting it under contract to buy themselves some time to see if they really want to go through with it. They could still be looking for something better, they could still be waiting to hear from a homeowner on a previous offer, or they could just decide that they didn’t want to pay that much. Whatever the reason, they tie up the property for a certain amount of time and then terminate on one of their contingencies, like inspection. This does not happen a lot with people looking for a primary residence, but happens more with investors.
This can really hurt sellers who may have their property off the market for two weeks or more during the peak of the selling season. The way to avoid this is for your agent to find out as much information about the buyer, their reason for buying, and why they are buying in this neighborhood. The agent should also speak with the lender and ask as many questions as they will divulge about the buyer’s ability to purchase the property. If you have any red flags, be cautious about accepting that offer. Remember the old saying, “if it sounds too good to be true, chances are it is!”
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