Sourced from various real estate pros all over the country, this recurring column features stories of what agents are seeing on the front lines and what others can draw from those experiences.
We don’t talk about it except amongst ourselves, but we have what’s known as “dead files,” and they get a little bigger each year.
The files are electronic and securely stored and backed up automatically. If last year’s files were paper, I would need storage space and a more robust shredder to dispose of them once they pass their retention date.
The dead file is filled with the hopes and dreams of homebuyers, sellers and their real estate agents. There are tears in those files, sweat, disappointment and some anger too. There are offers in that file that are the culmination of many private showings over a period of months or even years.
Some of the offers were written by agents during family vacations and on long hot summer nights when everyone else in the house was sleeping. They also represent the hard work of an agent who didn’t get paid.
A tougher market
The contracts were never executed. They died. The offers that lost out in multiple-offer situations and the offers that our homesellers received but rejected for a better offer go to the dead file.
State law requires that we keep documents that never became real estate transactions. The minimum retention period is six years. Each year I start a new dead file for the year, it feels like a fresh start. Prior to about 2015, there were far fewer dead files than there have been in the years since.
We advise our clients on how to win in a multiple-offer situation, but they don’t always take our advice, and even if they do, there are no guarantees that theirs will be the winning offer. I used to be proud of the fact that most of the offers I wrote became closed sales. These days, I try not to think of what could have been. It is best for all if we don’t get too attached to our offers.
In a market where the number of homesellers continues to reach new lows while the number of buyers keeps increasing, there are going to be multiple offers. And when there are multiple offers, only one will survive. It seems like the seller’s market from hell until the next new listing comes along.
Some of the dead offers are from people who needed to learn that in a seller’s market the lowball offer only works if the house is overpriced and has been on the market for a year or so, and even then, it can backfire.
There are dead offers from buyers who insisted on lead-based paint inspections on 100-year-old houses. Sellers didn’t want to have anything to do with having their house tested, especially when they had six offers the first week the house went on the market.
Buyers who offered more than the house would appraise for on a 5 percent down conventional loan and asked the sellers for help with the closing costs had offers that were dead on arrival.
Dead offers are created when the buyer outbids the competition and then develops a severe case of buyer’s remorse and withdraws the offer before sending the earnest money or scheduling the inspection.
We wonder if the buyer’s agent pressured them or maybe they jumped on it because they were afraid, they would miss out.
Some offers make it to the inspection, but the buyer cancels after the inspection and others ask for so many repairs that purchase falls apart and when it is canceled, we suggested the buyer look for new construction which doesn’t actually exist but should in theory.
Fodder for a reality TV series
When an offer on a listing falls through, we tell our clients that we are sorry that it didn’t work out but not to worry we can sell it again the next weekend and who knows the next offer maybe even better. Sometimes we need to sell a house three times before it all works out but that doesn’t take long.
There is a certain amount of peer pressure and a lot of competition among home buyers. In fact, one of my buyer clients admitted that a house becomes more desirable when it is at the center of a lot of activity.
Agents like to create excitement around new listings. Personally, I can’t handle any more excitement than an above the asking price offer, with a huge down payment and no contingencies within 48 hours of going on the market. I don’t see the value in collecting ten extra offers for the dead file.
Buyers still expect to be able to negotiate when they buy a house. Oh, how I wish there was some negotiation. Usually, the seller takes the best offer and the rest of them go to the dead file.
Sometimes when I see what people actually paid for some of the real estate in my area that sold with multiple offers, I feel like it was a win for my client who lost out and ended up with a fine house that was within his or her budget.
There is a lot of drama in the dead files and some good stories too. Maybe even the title for one of those “reality” TV shows about buying real estate. Occasionally dead files come back to life.
Teresa Boardman is a Realtor and broker/owner of Boardman Realty in St. Paul. She is also the founder of StPaulRealEstateBlog.com.
