Thoughts on No-Show Offers

[Laura P.]

I am trying to buy a multi family home or duplex around Salt Lake City and I am finding that many of the properties posted for sale don’t allow a showing until an offer has been made. Is this common? I can’t seem to understand how a motivated seller is more concerned with bothering their tenants rather than making money on their sale.

Thank you!

[Kris L.]

They might be trying to limit tire kickers.

[Bjorn Ahlblad]

@Laura P. That is common in our area too. As a prospective buyer I like it.

[Laura P.]

@Bjorn Ahlblad is that because is weeds out the people who are too lazy to put an offer or it gives less competition?

[Matt Castle]

How do you know they're motivated? Unless they put it in the MLS description or agent has their permission to verbally communicate it potential buyers, they're not motivated.

Showings only after offers are accepted is a common practice in a seller's market. I see it once a week, where it used to be once a month. 

Think of it from the seller's point of view: why waste their time, the realtor's time, the tenant's time, etc., on 10+ showings a week. At the very minimum, most investors with tenants in place should require written proof of funds for all cash offers or proof of loan pre-qualification with proof of adequate down payment. 

This way, you don't unnecessarily disturb tenants by weeding out the tire-kickers and looky-loos as much as possible and find the serious buyers who are ready, willing & able to buy the property. 

I'm not trying to be harsh, but the reality is that showings disturb tenant's lives and courteous landlords do that as infrequently as possible.  

But most importantly to your scenario, think how it benefits you -- the buyer! If your competition is weeded out by 90%, the fewer offers you have to compete against!!!!! 

[Bjorn Ahlblad]

@Laura P.Yes people who are not serious or don't have money are a distraction for the seller; and if I am making a serious offer I want his/her focus on me. 

[Cherie Orellana]

Many times tenants are not aware of a sale. 
personally when listing a multi unit I make one unit available to view preferably vacant. Otherwise I would list on a Thursday and do an open house on Saturday to get everyone through in one shot to minimize disturbing the tenants. I would also offer them a gift card to go get lunch during the open house I was holding. In today’s market, if priced correctly it should only take that one open house. 

I do notice many agents listing as make an offer subject to inspection.  Personally I don’t think it eliminates the tire kickers. I think it encourages anyone to make a full price offer just to secure it then renegotiate after viewing. I wouldn’t recommend that strategy to my sellers. 

[Corey Hawkinson]

@Laura P. I toured a 4-plex where the tenant (could only view 1 unit) stated that they had over 100 showings. I believe the tenant was exaggerating, but you could tell they were annoyed at having so many people come through. Sellers will typically want to avoid this annoyance on their tenants. I’m not saying that’s the best practice, but that’s typically the reason for the seller.

[Caleb Heimsoth]

@Laura P. This is super common in general. I expect it as the buyer and the seller. It’s a pain to bother my tenants repeatedly for tons of people. What’s the point on touring it if we can’t agree on price anyways ?

[David Klein]

@Laura P.

Totally makes sense, if you are buying a commercial multifamily (5+ units) then you are buying a financial asset. Therefore first and foremost the numbers have to make sense, and unless you have a background in handyman/contractor type work you’re going to have someone else do the physical inspection of the property and tell you what needs to be fixed. I think people get wayyyyy too fixed on this whole “go kick the tires” thing. Demographic information for the area can tell you much of what you need to know about the local economy. The inspector will tell you physically what must be done. What you need to do is run your numbers and see if this deal makes sense. Cause if it doesn’t what’s the point of seeing the property. And if you do get it under contract and don’t like it then you can back out during the initial due diligence period. Hope that helps

Dave

[Joe Splitrock]

@Laura P. I have had tenants move out because they were tired of buyers parading through their home. Although a seller is motivated to sell, they also want income on the property while they are trying to sell it. Desperate sellers usually list properties vacant.

I see all the time new investors talk about looking at 25, 50 or even a 100 properties without making an offer. There are so many newbies out there who have never done a deal and will never do a deal. Many are not even qualified to do a deal. So why disrupt a tenant when odds are good the person is just a looker?

Based on the neighborhood and numbers, I can determine if I will make an offer on a property. 

Run the numbers and submit your offer with inspection clauses. Do a walk through and adjust your offer if there is something unexpected.

[Andrew Syrios]

It's not common here. Just make sure you have an inspection contingency and don't put down an earnest money before you view it.

[Ben Leybovich]

So, here's the thing - you shouldn't need a showing to make an offer. Why?

IF you are on top of your game:

1. Property taxes are public record, and you know how the sale will impact.
2. You should know what units will rent for.
3. You should make good assumptions about CapEx.
4. You should know the operating costs.

In other words, from the seller's point of view, you shouldn't need to see the inside to make an offer. SLC is one of the country's hottest growth markets...