First time home seller - need advice

BRoetzerMarch 26, 2013

Hi

My house has been on the market for about 12 weeks. We have had 2 open houses, and plenty of private walkthroughs (usually 3 - 4 a week). But yesterday we finally got our first offer. I have only owned the home for 4 years, when I bought the house it was listed at 119k and I bought it for 109k (it had been on the market for over a year before I bought it).

When I first had the house appraised, my real estate agent told me the highest we could market the house was for 112k. I had the house listed at that price, and even though we were getting a steady stream of viewings, after only 3 weeks the real estate agent pushed me to dropping my asking price down to 106k.

My conern is that the 1st and only offer I have received so far is for 99.5k (CASH). I really need to get out of the house by the end of May as I have already accepted a new job in a different state. But at that price the seller is offering, theres no way I would make enough money to even pay off the mortgage. I'm not trying to make a quick buck or get rich off the sale of my house - I just want to get back atleast enough money to pay off the mortgage.

I asked my real estate agent what I should do for a counter offer, and she suggested maybe going up another 1 or 2 thousand, and even hinted at just taking the offer as it stands. But that doesn't really help me.

I went ahead and sent a counter-offer today that is a bare minimum of what I can accept. Actually I would still have to pay some out of pocket money to the lien holder, but wouldn't be breaking the bank.

I'm interested in seeing what others thoughts are, what you would do in my situation? If the buyer doesn't accept my offer, should I just let him go and pray I get a better offer soon or just suck it up and take what I can get.

Heres some more details about my situation:
My home is a 3br 2bath in nice neighborhood and best school district in the city
The city population is about 118,000
There is an Air Force base, so always families moving in and out.
The buyer who has made the offer is another real-estate agent, who claims to be buying the house for his uncle (who also is a retired real estate agent). So I'm sure they have done their research on my home before making the offer.

I have made some significant improvements to the home since I moved, but didn't seem to impact the appraisal too much. Added a large deck in the back yard, put in a brand new central ac and heater. painted the interior, fixed plumbing, etc..

So whats your thoughts, take the little money I can get and run, or wait to see if offers improve come spring / summer when schools let out?

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weedyacres

Ask your agent for a list of the sold comps in your neighborhood. I'd want to see the detail behind how she came up with the price.

It's hard to tell whether your agent is in the "price 'em cheap and get 'em sold" camp or is a good advisor of true market value. The way to tell is to look at the data. With that many showings and no offers, that seems to indicate it's priced too high. Ask to see what else has sold in your neighborhood in the 12 weeks you've been listed, and see what they sold for.

Data, data, data.

    Bookmark   March 26, 2013 at 7:02PM
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kirkhall

A REA making the offer is likely to low ball and know how to play the game. You need an agent who can likewise play and game and stand up for you, while getting the deal done for you (not chasing them away)...

    Bookmark   March 26, 2013 at 7:30PM
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ncrealestateguy

If you have to be sold by May, then you better make this deal work. It is almost May now. The buyers are expecting a counter offer. Come back at what makes you feel good. There is no reason this deal should not go to contract.
Only you can decide what to do in your case. You have all the facts you need.

    Bookmark   March 26, 2013 at 7:40PM
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littlebug5

Sounds to me like you are between a rock and a hard place, and the vultures (read - real estate agents) are circling. Not much you can do about it - if you HAVE to sell.

    Bookmark   March 26, 2013 at 9:36PM
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StellaMarie

Can you afford carrying costs if you can't sell by May? Can you afford those carrying costs plus taking a loss after May? If you can't sell it by May, can you rent it -- and, if so, do you want to be a landlord? (This may require using a management company if you are out of town, and you need to factor in costs of hiring out repairs while you have tenants and repairing whatever damage they might do.) I think things are starting to pick up in most places for spring, but keep in mind that getting from an offer to closing takes some time (even with a cash buyer). What is your market like overall? Is it getting steadily better year over year?

Also, keep the costs of selling in the back of your mind when making these decisions; it's not just about making your lender(s) whole.

What I did, in a *declining* market when I really wanted to sell and really, really didn't want to be a landlord, was to take a cash offer and make it work (I had to bring cash to the table for a portion of the agent's commission). Mine turns out to have been the right choice, because the value of the place kept declining, but that was in the (relatively) early days of the tailspin in a housing market that was hard hit. I have friends who are landlords and friends who waited to sell (and then took the loss). I think they're okay with that decision, too, either because they think the market will rebound and they're happy with their renters, or because they feel like they got the best price they could by waiting (not sure I agree, but am not about to point that out!).

All that to say, I'm not sure there is a clearcut "right" answer, but I wanted to at least help by pointing you in the direction of some questions to ask yourself. :)

I totally agree that the data matters and I stalk comps like no one's business, but, at the end of the day, the old adage is true: your house is worth what someone will pay for it.

Good luck!!!

This post was edited by StellaMarie on Wed, Mar 27, 13 at 12:34

    Bookmark   March 27, 2013 at 12:30PM
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nosoccermom

How is the sequester/furlough going to affect your potential buyer base?

    Bookmark   April 1, 2013 at 9:10AM
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Tony2Toes

Old adage goes: First offer is likely your best offer.

In my experience, its 100% true.

Counter at what you are happiest with. Then be prepared for a second counter at what you can live with. Then have a final third counter with what you absolutely can't surpass as your lowest offer. Keep in mind that most buyers expect "the game" to have a meet-in-the-middle outcome. That means if they offered $99K and you are at $106K, they REALLY expect to meet you at about $103K.

You also need to figure in what your carrying costs are going to look like if you don't sell to these folks. Another 1-3 months of mortgage payments, utilities, etc. Plus the emotional angst of moving somewhere else and leaving your home unsold. You should also look at the value of being a "free agent" on your credit report by not having the mortgage debt when you go looking for a new place. All of these are personal factors, and you have decide if its worth $3-$5K in "emotional capital" to just get this thing off your back.

At $100K, you are likely paying a 6% commission so that nets you only $94K, less whatever other costs you have to pay to close (legal, etc.) with the buyer. You also may be liable to pay taxes due for the past calendar year (again, depends on where you are located). At your price point "only" a $1-2K difference can be material as $1K=1% discount. Some REA's don't seem to get that.

So get your pencil out and figure out your rock bottom. That's your line....don't go past it unless you absolutely have to and you've considered all factors.

This post was edited by Tony2Toes on Mon, Apr 1, 13 at 17:44

    Bookmark   April 1, 2013 at 5:31PM
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sameboat

Sometimes you have to take a small hit to get out, depending on the situation. I've tried to sell a real dog of a house in a bad location. We were young and title V had just passed. We took a hit and accepted an offer. I've also been in another situation where I was in a different "place" financially. The realtor pushed for us to accept a REAL lowball offer, actually exclaiming she couldn't BeLIEvE we weren't even going to counter. A couple of weeks later we got our price. If you have to get out, work with the buyers. If you can afford another couple of months for Spring buyers, then stick to your guns. A buyer will come along.

    Bookmark   April 1, 2013 at 7:37PM
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tinan

Tony2Toes, not necessarily is the first offer the best in our experience. We cold our condo last year but the first offer was a real lowball. We counter-offered close to our asking (which was very reasonable) and never heard from them again. They were just fishing for a desperate seller.

We had 2 more offers after that in the first week that were much better, but we were competing with the few remaining brand new units in the complex, and the sales office offered them even better deals and so 2 buyers in a row reneged on their offers. Finally, we sold it after about a month - for a good price and exactly what we were expecting.

So, first offer is not always best and sometimes cash buyers just want to get a bargain so they can flip the property.

If you MUST sell, then take the offer or counter only a bit more - better to take a known loss and have the transaction done quickly (cash) but if you can afford to wait a bit, it is not *necessarily* going to be the best offer. Cash offers are usually lower, they figure the speed makes up for the price.

    Bookmark   April 1, 2013 at 10:10PM
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