What is a Blind Offer in Real Estate?
If you watch HGTV, notably the show Flip or Flop, you have likely heard the term “sight unseen” when they are putting in an offer on a house to flip. “Sight unseen” is interchangeable with the term blind offer, which is an offer to purchase property without seeing the home’s interior. Can you really put an offer on a house without seeing it? Are blind offers good or bad? This article will dive into the logistics of what a blind real estate offer is and compare the advantages and disadvantages blind offers hold.
What is a Blind Offer?
A blind offer in real estate is a purchase contract written by a buyer without seeing the property. This is common in commercial properties such as apartment complexes, and it’s not uncommon in multi-family homes such as duplexes and fourplexes. It’s not typical in single-family homes or apartments.
Blind offers are a quick and easy way for buyers to bid on a house. It saves buyers and sellers massive amounts of time by skipping inspections or appraisals. In plain terms, it’s a chance for purchasers who can’t or don’t want to visit a property in advance to have their offer considered.
From a seller’s perspective, accepting a blind bid is also a quick and easy option to get the best and highest price for their property. Some sellers may be hesitant to take a blind offer, but it should be addressed on a case-by-case basis.
Are Blind Offers Bad?
Blind real estate offers are risky because they limit the buyer’s capacity to investigate the property thoroughly. They’re also dangerous for the seller because they can tie up the house with a buyer who may or may not be willing to complete the transaction once the home is eventually seen in person.
Choosing to make a blind offer can be very dangerous, and most real estate agents do not recommend it. For example, suppose a house goes into foreclosure. In that case, some tenants may be upset about the situation and intentionally damage the home along with other issues that were not taken care of.
These offers could also affect the buyer’s ability for their bid to be accepted. A seller may not be as inclined to sell their home to someone who has not toured the house. The buyer did not do their due diligence by seeing the home, which is only the first step, they may be inadequate to deal with in escrow, and the buyer may not even entirely like the home.
Advantages and Disadvantages
There are a variety of advantages or disadvantages that could come into play when writing blind offers. Time being the biggest advantage. Don’t have time to see houses? Make a blind offer on the property you want, come to see it, and then back out if you don’t like it.
In contrast, a blind offer may limit the buyer’s ability to inspect the property thoroughly. That is, you will not know whether the materials are adequate, nor will you be aware of the construction’s strength and endurance. Perhaps they won’t even notice if something in the house is causing an allergic reaction. In summary, seeing the property in person is critical and easily the safest option that exists.
Blind Offer Examples
For example, let’s say person A is looking to invest in a property. They want to purchase something relatively cheap and fix it up to sell for a profit. Person B is also an investor looking at the exact property to do the same thing. Both write blind offers for the home without seeing it which induces bidding wars between the two for person C’s house. This bidding process can be referred to as blind bids. As the potential buyer’s bid, person C consults with a real estate agent for advice and accepts the offer for the highest price.
Here is a more textbook example. Mr. Smith is relocating for a job and needs to find a new home fast. In the process of getting everything prepared for his move, he cannot travel to his new city to look for homes. So, Mr. Smith decides to virtually contact a real estate agent to look at some real estate properties. Though he does not get an authentic feel for what home will look like in person, he saw it on the website and talked with the listing agent about it. He decides to write an offer despite it having other potential buyers. This scenario would also be categorized as a blind offer because Mr. Smith did not see the house in person before submitting his offer.
What to Know as a Real Estate Agent
While blind offers are not the most common way for a buyer to submit an offer on a home, you will likely come across some in your real estate career. Most buyers choose to go the traditional route when searching for a home, especially in a normal market, but its best to be prepared for anything.
With anything, you never know what you may encounter or what the housing market will be like. There are a variety of different situations and circumstances, as in the scenario with Mr. Smith, a blind offer might be their best option. It is important to stay open-minded and knowledgeable as to what may be best for each situation.
Just remember to stay cautious when using this type of offer. If a buyer is not able to see a property, it is probably best to submit a blind bid, although it could get rejected as they did not do their due diligence by visiting the property. In addition, it could limit the buyer’s inspection leaving the property a bad choice, to begin with. That is a risk a buyer must be willing to take when submitting a blind real estate offer.
What to Know for the Real Estate Exam
For the real estate exam you will need to be knowledgeable about blind offers. A blind offer is a purchase contract that is written by a buyer when the property is “sight unseen.” These types of offers can be good or bad and have a number of advantages and disadvantages. Blind offers typically are not recommended, but they may be a buyer’s best bet due to different situations or circumstances. By keeping this in mind, you will be sure to excel on the real estate exam!