Got an offer...some questions

iradi8June 14, 2009

We received an offer last night on our house.

One question about the contract -- if there is a problem with the title and curative work is needed, then the act of sale can be delayed for not more than 45 days. The "45" days is a number the buyer's agent filled in. It seems like a very long time -- is this a customary number of days? Also, I do not foresee any title problems.

They want the sale contingent on the sale of their current house which is under contract. Their house would close on 7/21 and our closing would be 7/22.

We don't know where we will move yet and we will most likely be putting everything in storage after we close. So, I am trying to figure out how this will work. I haven't had to do this before:) So, we will most likely move our things out over the period of a week or two. This means that our house will be empty and the day before closing, if their current house does not sell then we are stuck with an empty house and all of our stuff in storage. This is a scary prospect! I don't see that we have a choice in the matter.

Also, according to the contract, they wouldn't need to get final loan approval until the day before closing. Is this customary? So, same as above, it is possible to not get loan approval the day before closing and we have an empty house.

The buyer's are applying for 96.5% of sales price of the house (~300k), they will give us a check for $2000 in earnest money and want us to pay all closing costs. It sounds like they cannot afford this house or are stretching it thin. If they can't afford it, I don't want to find that out after we move everything into storage.

Sorry so long...nervous seller here! Thanks.

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Not getting final loan approval til the day before closing would concern me. I'd not accept that contingency. Instead I'd ask for final loan approval within a reasonable amount of time, perhaps 10 days. I certainly would not begin moving anything out of my home until loan commitment from the lender.

You haven't accepted the offer yet have you? If you haven't you can counter with whatever will make you feel more comfortable.

    Bookmark   June 14, 2009 at 11:32AM
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You do not want to agree to that offer. The two closings are too close together. You want enough time to know that they have closed before you move out. They should be able to get financing way before the day before closing. They should also be willing to sign off on all contingencies before you move out.

I would not agree to pay their closing costs, especially as written. You would not know what they are until the day before closing. Their costs could be quite high, especially if they buy down the mortgage with points.

The title contingency needs to be modified. 45 days might be OK if there was a title defect that needed curing. If not, which is most likely, I would insist that contingency be removed at least ten days prior to closing.

Frankly, I would probably not even counter the offer. It's all their way and nothing about it seems equitable. It leaves you wide open for an indeterminate sum with the distinct possibility of having to move out and having the deal fall through at the last minute.

What does your agent say?

    Bookmark   June 14, 2009 at 3:31PM
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Two years ago we had an offer on our home, contingent on the seller selling their home, they already had a buyer. (this was kept from us as we had a no contingency clause in our contract with our realtor). Long story short their sale fell through!

The two realtors connived to to make their commission. We had signed closing papers, (California) moved out and relocated to another state. The 'for sale sign' had been removed by our realtor even though the closing date came and went without buyers closing.

We insisted on buyer making bridge loan, house to remain on market, $100 penalty for everyday passed closing.

The sale closed 30 days later.

You need to imagine the worst case scenario, and then put everything in writing.

Too many realtors are just looking out for themselves and $$$.

Good luck!

    Bookmark   June 14, 2009 at 5:21PM
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Iradi, it could be helpful to add what state you are in. Every state is different with real estate.

As far as their offer being contingent on the sale of their home; I probably wouldn't do it unless they were willing to rent back to me until I could move; and/or they allow you to continue to show the house and accept offers which would give you the option for them to remove the contingency.

The offer stinks for you.
Hopefully someone else can give you other ideas in addition to what's already been posted.

There are a few posts here where deals like this fell through after the seller already moved out.

Do you have an attorney?

    Bookmark   June 14, 2009 at 6:22PM
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Many thanks to all of you. After much thought and discussion, my dh and I realized that the risk to us was just too high. The risk to the buyer was none.

There were too many things that caused us to be concerned about this offer. We decided to just reject the offer.

Oh, my agent didn't sound too happy. It seems that she doesn't share our concerns. We have to do what it right for us, though.

Thanks, again.

    Bookmark   June 14, 2009 at 10:54PM
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I wouldn't completely reject the offer. I don't know about the real estate in your area but there are plenty of people right know who would kill for ANY offer. Your buyers are asking for everything they want - you can't blame them for trying. Work with your agent to do a counter offer that that you feel comfortable with. The buyer's financing is a very legitimate concern, especially with the rates rising. Ask for a pre-approval letter (not pre-qualifying) before you will accept the offer.

Good luck!

    Bookmark   June 15, 2009 at 7:12AM
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I think you made a wise decision. If your agent did not have any concerns with that offer, perhaps you should also have some concern regarding her.

    Bookmark   June 15, 2009 at 7:58AM
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You were right to be concerned. If your REA isn't concerned about that offer then he/she obviously isn't following what's going on in the industry right now.

There are plenty of other threads where I've chimed in, but my current sale just collapsed 4 days before closing because of an appraisal issue. This was from a buyer with good credit, a "pre-approval" letter for the actual sales price, and 20% down. We will know by Friday how it's going to pan out, but we are not hopeful.

My previous sale failed the morning of closing because the lender backed out, vaguely stating something about the buyers' credit score dropping (this was shortly after Countrywide collapsed and was a jumbo loan).

I no longer believe in "loan approval" until the check is in the bank!

    Bookmark   June 15, 2009 at 8:57AM
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I'm just a nieve home buyer/seller. but lets put the housing sale contingency in perspective....
Lets pretend it isn't in there, just a mortgage contingency. Yup normal contract provision all above board.

Guess where the down payment is coming from.... sale of the other home. the bank isn't going to approve the loan if there is no down payment. Also, even at no money down, the bank isn't going to approve most loans without the sale of the other house becuase they can't carry both houses and still be approved, if they're borrowing 300k on this house, my guess is they owe a similar amount on the other. Do you think they can carry a mortgage for 500-600K? most people can't. I guess what I'm saying is no matter how you slice it, they have an out if they're selling something. Unless you plan on making them sell the house, move into their parent's basement for 6 months while they search for a house.

    Bookmark   June 15, 2009 at 1:10PM
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I don't get why you would flat out reject the offer. I agree with your real estate agent that wasn't a good move. Why not counter with those items that concerns you removed or modified to work better for you.

I wouldn't be worried about 45 days for correcting any title issues. This is something you would have to do for the buyer and they gave you plenty of time. Not something that benefits the buyer necessarily.

For the closing date, You may need to pack things ahead, but figure how long it would take you to pack essentials and move everything from closing and ask for a rent-back or delay the closing by that many days from their closing on their house.

    Bookmark   June 16, 2009 at 8:23AM
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