lowish informalish offer..what to do next?

erinb007September 22, 2009

Would love your expert opinion on something...I had a couple come through one their own last night (no realtor) who used to live in my neighborhood. They bought a house a few towns over, 1.5 years ago and say they made a mistake..they bought a two story and want a ranch and miss my subdivision (it's pretty popular) They haven't listed their house yet, she was a realtor when they lived in NJ and thinks it would sell pretty fast. They would not make an offer contingent upon the sale of that house...she says they have approval from the bank to buy another while they own that one. They asked if I would consider renting from them for a few months to give them time to sell. I have no problem with this and we didn't talk about the amount I would pay. I told them we needed to come to a more firm agreement on the purchase price first.

It was a very casual conversation...she was doing most of the talking and said, "We really like your house and would be prepared to offer 275-280k. What are your thoughts on this? " I said, I really want to get closer to 290k." She said, "well think about it and call us".

My question for you is this: I bought 4 years ago for 310 and the house appraised at 320k. Is a 30k hit (if I sold at 280) reasonable? I live in New Albany, Ohio (columbus) 10% in 4 years? I am just so confused. I don't know what my next move should be because she was all laid back about it. Obviously, I would have an attorney review the offer and would make sure it said that it wasn't contingent on selling their house and get the "rent" in writing with a limit to how long I would rent from them But I just don't know what my next move should be to get them to go higher. If they submitted a written offer, I would probably counter at 293k and see what they did. But since it was an informal conversation, other than saying, "please submit a written offer", I don't know what to do. I have to assume if 275-280 is the first number they threw out there, that there is room to negotiate? right?

Thanks much for any advice or ideas. I am doing a flat fee MLS and have been on the market since March. Aprox 40 showings, this is my first "offer"

Erin

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sylviatexas1

"think about it and call us"

Think about what?

She hasn't given you anything-

she hasn't made an offer;
she's asked you to make her an offer.

    Bookmark   September 22, 2009 at 10:21AM
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erinb007

True! Good point..the whole thing feels a little sketchy to me.

    Bookmark   September 22, 2009 at 11:22AM
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Billl

There is no rule prohibiting you from having friendly conversations about selling a house. Of course, they don't mean anything until you put it in writing.

If I were you, I would order an appraisal on your house. It will cost a couple hundred bucks, but it will be well worth it. If it comes back at 290k+, then you might want to hold firm and wait for a more suitable buyer. If you are under 290k, you might just want to write up a contract with your lawyer and present it to them.

    Bookmark   September 22, 2009 at 1:30PM
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landmarker

You do not state your motivation to sell. Attempting to decide what you think is reasonable to lose or what you think the house is worth is not what you should do.

In my state, all negotations are oral. You should treat this as a serious offer. You have been on the market for a very long time so it in your best interest to arrive at a price from this person, and then make your decision about whether to put it in writing. I would call her and say, "after thinking about our discussion, i decided I'm willing to accept X". I would suggest X to be lower than $290 to show you are "moving'... Let her come back one more time with a counter. Tnen you do a split the difference. Bottom line is you should get her to a price (whatever her top is), and then make a decision (if the $ is acceptable). Then immeidately talk to your attorny as to what you should do next (i.e. present her with a contract).

Regarding renting, this seems unusual to me. But if you are willing to do this to faciliate a deal, I would wait until she brings it up againd at which point you should tell her "yes I am willing to consider this. Please let me know exactly what you propose (time, $ etc)".

In a buyer's market, it's more up to you do react / decide and negotiate against the buyer's proposals then to demand your own.

    Bookmark   September 22, 2009 at 2:02PM
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erinb007

I am torn on the appraisal thing...it will be $300.00 that I am not certain gives me a clear picture of my home's value. I have heard that appraisals can vary quite a bit on the same house? Especially in this market when there is not much recent activity to compare to. I know that eventually the house will be appraised in order for a buyer to obtain a loan... I had asked a realtor friend about getting an appraisal and she said don't waste your money...a house is worth what someone is willing to pay at any given time. Then you have to hope that it appraises out at that level. It's such a strange market right now, I am not sure what to do...Thanks

    Bookmark   September 22, 2009 at 2:27PM
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sylviatexas1

"don't waste your money...a house is worth what someone is willing to pay at any given time."

Well, *that's* a relief!

I can stop doing all that research on closed sales to find comparables for my sellers!

Seriously, did your Realtor not do any kind of market analysis?

Maybe you should think about getting a Realtor who offers more services than the one you have now - or at least going into a different contract with that Realtor so he/she will do the work you need (market analysis, guidance on handling "offers", etc).

I wish you the best.

    Bookmark   September 22, 2009 at 2:58PM
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sweet_tea

Get an appraisal ASAP. Your realtor friend's suggestion means that if someone wanted to pay $150k for it, then it is worth that? You know this is wrong.

I think you should let the folks that are interested to submit an offer in writing(hopefully you have a blank contract to give them or can refer them to an attorney (that you have discussed the price for contract creation).

I think you should contact them in a few days, AFTER you get the appraisal. You DO want to follow up, these are live buyers. Don't tell anyone you got an appraisal, unless you are selling for lower than the appraised amt.

If you don't want the formal stuff yet as far as a contract, tell the buyers to submit an offer in email informally and you can counter back in email. Then when y'all get to a final price agreement in the informal emails, have an attorney write up the paperwork.

You don't even have to talk price with them over the phone,, just say you are following up, and if they are still interested please submit and offer either this way or that way. (give emails, forms, attorney tel# or whatever needed.). maybe even ask them if they put their home on the market yet. This will tell you how serious they are.

Or maybe your flat fee MLS has a deal where the contract can be done via them for a fee?

I still think you need to get an appraisal. What if you sell for 285 but the place is worth 299? Or, what if you try to get 290k but the buyers won't budge over 280k and then you lose the sale because you thought it was worth 290k (but is really worth less.) The $300 spent on an appraisal may save you thousands...just get the appraisal.

Please note that I sold FSBO awhile back and originally had a real good idea of market price based on comps. But I spent the $300 for an appraisal and then dropped my asking price and sold quickly when the appraisal came back lower than I expected. The appraisal was lower because of some very recent low sales and I had to price accordingly if expected to sell. I knew about the new low sales but discounted them as "dumping" and selling too low because some others sold for more. But the ones that dumped low became the market price, whether us sellers agreed or not.

The other listed homes that stayed higher priced stayed on the market for another year. The prices dropped even lower during that 12 months so those that stayed high price were stuck with even lower market values if they ever wanted to sell.

    Bookmark   September 22, 2009 at 3:09PM
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mostone

In the current environment I would never waste my money on an appraisal. Over the past couple of months several people in my neighborhood (including us) got appraisals to do re-fis. They were totally random and had nothing to do with what those houses would sell for. Ours was way high, a couple were way low, and one friend had her house appraised twice in the space of a week - one appraisal came in at at abour 460 the other at 380. An experienced and truthful realtor would do a much better job of evaluating the true market value of your home.

    Bookmark   September 22, 2009 at 3:39PM
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brickeyee

"In my state, all negotations are oral."

This is more the exception than the rule.

    Bookmark   September 22, 2009 at 4:40PM
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landmarker

I agree.. the appraisal is a waste of time and money. You are attempting to use that to determine the likelhood of a higher offer in the future. You have been on the market since March with no offers. That is a pretty clear picture much more than an appraisal.

Your choice is to negotiate this person to their highest price, or wait for another offer. The next offer can be more, equal or less than what you may get out of this person. No appraiser, agent lawyer, or internet poster can tell you what your next offer will be or when you will get it. The choices are pretty clear... Your course of action should be based on your reason for selling.

    Bookmark   September 22, 2009 at 5:00PM
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sylviatexas1

landmarker, what state are you in?

    Bookmark   September 22, 2009 at 5:32PM
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mariend

Just a couple items I picked up. Is she going to sell her house? Rent it? Can she afford rent and mortagage payments? Is she still a realtor? Personally I would NOT rent to her or anyone else under these conditions. It is almost impossible to get renters out even if they are not making the payments. If you rented/bought without a contingenty, and someone else came along you would be stuck. Also, do you need the money from the sale to relocate? To me I see some red flags in her offer. Because living in a rural area in CA it took us almost 2 years to sell, and when it did, it sold fast with a 45 day escrow.
Just becareful. She seems like a fast talker and you could get hurt. Slow down and think about it. Do not trust someone that is this pushy. I had a realtor like this and it went no where but it did cost me 6 months of waiting.

    Bookmark   September 22, 2009 at 6:28PM
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erinb007

Hi, sorry if I wasn't clear. They say they would buy my house asap with no contingency on the sale of theirs. In return, I would agree to stay in my house for a few months and pay them rent..giving them more time to sell. I don't believe she is a realtor currently but was many years ago in NJ.

Thanks to all for your advice.

    Bookmark   September 22, 2009 at 7:38PM
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graywings123

I am doing a flat fee MLS and have been on the market since March. Aprox 40 showings, this is my first "offer"

How much did you have the house listed for and how did you arrive at that number?

Getting an honest appraisal makes sense since you don't seem to have a handle on the market value. It is ridiculous to cheap out over the cost of an appraisal - it is 1/1000 the cost of the house.

The next step is to ask for an offer in writing - they may be all talk and no action.

    Bookmark   September 23, 2009 at 8:52AM
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erinb007

"Getting an honest appraisal makes sense since you don't seem to have a handle on the market value. It is ridiculous to cheap out over the cost of an appraisal - it is 1/1000 the cost of the house. "

Grawywings-what makes you so sure I don't have a handle on the market? I have access to the same comps as the realtors, can do the same math and pull the same arbitrary number out of my rear end that they do. Let's face it, it's not rocket science and there is a big element of guess work involved. I consulted with three different realtors and got numbers that varied by 30k in terms of a listing price. I would bet that if I had three appraisals, the numbers would vary by 20-30k as well. The fact of the matter is that no one really knows what houses are "worth" right now. Not the appraisers, not the realtors, not the sellers.

I averaged the three suggested listing prices together and priced it there. I have since dropped it by 20k.

Thanks to all for your suggestions..I ended up turning down their offer. They threw out a ridiculous number in terms of what they would charge me for rent (it was the same thing that I pay for my mortgage which includes taxes and insurance) and this made me realize that they are just looking for a steal. I would have been doing them a favor by staying in the house for 5 months and renting from them and their rental number did not reflect that..they were looking to make money off that transaction as well.

I will sit tight and will either get a better offer or take the house off the market for a year or so until things settle down.

Thanks again-appreciate all the insight!
Erin

    Bookmark   September 23, 2009 at 10:34AM
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terriks

Grawywings-what makes you so sure I don't have a handle on the market?

I'm guess it's the fact that you have been on the market for 6 months, have had 40 showings and just had your first offer.

They threw out a ridiculous number in terms of what they would charge me for rent (it was the same thing that I pay for my mortgage which includes taxes and insurance)

That sounds like a pretty normal amount. In a rent-back situation the rent is normally determined by what the new owner's carrying costs are.

Do you need to sell right now?

    Bookmark   September 23, 2009 at 1:01PM
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erinb007

Yes, but the rent back situation would be to help THEM out..I do not want to rent back for 6 months..I want to be free to take advantage of the low interest rates. If they were doing me a favor by renting to me, then I could see the high rent, but not when it would be the other way around.

thankfully no, I don't NEED to sell right now. And in our market, being for sale for 6+ months with no offers, sadly, is not that abnormal. I am certain I am priced right based on recent comps in my neighborhood. I have a ranch house that is newish that will be very appealing to a small percentage of the lookers. The rest want more space and prefer upstairs/downstairs. My target market is retirees or singles so it limits the pool. Good news is that for those that want a ranch, there is not much to choose from.

    Bookmark   September 23, 2009 at 2:48PM
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terriks

Are they interested in buying without you renting back for 6 months?

    Bookmark   September 23, 2009 at 3:42PM
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calliope

"I bought 4 years ago for 310 and the house appraised at 320k. Is a 30k hit (if I sold at 280) reasonable? I live in New Albany, Ohio (columbus) 10% in 4 years? I am just so confused. I don't know what my next move should be"

Uhm......are you saying you should be eager to sell at thirty thousand dollars less than you payed on the house four years ago? That depends on how much equity you have and how badly you need out of it.

I live in the general vicinity you do (within 100 miles, but in a rural area). The housing market stinks on ice here, but your market is probably hotter than mine, since your's is where there are jobs. LOL.

I have no idea at all when or the better question is IF housing in this state shall ever recoup to where it was and no crystal ball. Will you have to take money to the table on this? What are the benefits to you of selling at low tide, or near it? What am I missing?

    Bookmark   September 23, 2009 at 4:25PM
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erinb007

no, they are not interested in buying without the rent back clause...

Thankfully, I am not underwater..I guess that is something to be happy about. I like the "low tide" conmment...good phrase. I might pull out of the market until HOPFULLY things get better.

    Bookmark   September 23, 2009 at 8:30PM
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ncrealestateguy

While it IS "low tide" to be a Seller, it is "high tide" when it is your turn to be the buyer! This is a great market to sell and then buy.
If your heart says it is time to sell, then just do it.

    Bookmark   September 24, 2009 at 6:48AM
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