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We have an offer

Posted by cas66ragtop (My Page) on
Sat, Oct 29, 11 at 10:35

I had this very lengthy thing prepared as a way to vent my frustrations. I decided to hold off on posting it - I didn't want to jinx myself with the negative vibes. Well maybe it worked - we got an offer. At first glance it seems low and somewhat insulting. After running the numbers its not all that bad.

They offered $20k less than list price, they want $5k towards closing, they want a home warranty and want me to pay for what I consider to be bogus inspections. By time I pay realtors commission and factor in the rent I recieved, we will be losing $30k. When I put it like that, I guess it seems like a no-brainer. The buyers should know what we paid for the house, but should have no knowledge of rent - so in their minds, they should be thinking we are losing $65k.

I am the most insulted by the closing costs and home warranty. These are items that I have always thought should be the buyer's responsibility. I have never expected the seller to help me with my finances and help me with cosing costs. I think you should have to pay your own way through life and not have to mooch off of someone else. Yes, I am sure buyers expecting closing costs is the norm, but it is still mooching. I just find it very insulting. Same goes for home warranty. Sure it only costs $500-$600, big whoop. It's just the principle. If you are so worried something is going to break and you need the security blanket of a warranty to help you sleep at night - then YOU pay for it, don't expect the seller to. I may as well wrap the house in bubble wrap so they don't stub their precious little toes. OK my ranting is done. My holding back of the negative vibes may have helped me get an offer, now the negativity kicks in to help destroy the offer I did get.

More info - this house has been for sale for 6 weeks. In this time, we have already had 14 showings - 4 of those showings were people who viewed twice, and were "seriously interested" and their realtors told our realtor to expect an offer. The other 2 have been dragging their feet, 1 bought another house and this is the first one to actually have the balls to make an offer. From what I understand, our house price was never what held the others back from offering.

Buyer 1 had been looking for 2 years for "the right house", and this one was finally "IT", but they had a 4-wheel ATV that is not allowed under our covenants. Why you would choose an ATV over the elusive house is a mystery to me.

Buyer 2 was $20k shy of qualifying for their loan ($20k shy of the full list price). I don't know why they never offered less - it suggests to me they knew the house was priced fairly and knew we were not going to take a lowball offer. They claimed they were going to try to get a bigger loan, but havent heard back.

Buyer 3 was an older couple who seemed to be unaware a 1 acre yard takes some time to maintain. They purchased another house with a 1/2 acre yard 30 miles away in another city and state.

I believe the other 3 would have bought if their own circumstances were different - it had nothing to do with our price. We seem to have no shortage of interested parties. 14 showings in only 6 weeks suggests to me that this house is hot - that there may still be a better offer out there. I have also heard the first offer is usually the best. I don't want to lose this sale because of my greed - but I also don't want to cheat myself of a better offer if it is still out there. We told our realtor to call the other 2 parties and tell them if they really want the house to hurry up and do something about it. I am really hoping to get ourselves into a multiple offer scenario.

The people who made the current offer have already stated that if we say "no" they have another house they will put a contract on. I suspect they are bluffing, I suspect they really really want our house, but will settle for another. If it were me, I would easily pay extra to get the house I really really wanted versus just settling for something else. I know thats all part of the game, but I also found that insulting to submit a offer such as this and then immediately make the threat that you will walk if told "no". As if you can't tell........I don't respond very well to threats.

Any thoughts/suggestions appreciated.


Follow-Up Postings:

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RE: We have an offer

Cas66 Wrote:
"We told our realtor to call the other 2 parties and tell them if they really want the house to hurry up and do something about it. I am really hoping to get ourselves into a multiple offer scenario."

This is the first step that I would have done, and one that I do for my sellers. Especially on a "hot" listing.
If they are $20,000 off the list price with their first offer, then more than likely they are ok with splitting the rest of the difference. $10000 and $10000. I would say no to the HOW. I would say ok with the closing costs. Remember, it is ONLY the bottom line that you are interested in. It does not really matter how the #s are arranged above the bottom line. If you are not ok with this bottom line #, (meeting them half way), then do what you have to do, (add $5000 to your counter to cover the fact that they want closing costs paid) to be where you are comfortable. You do have some leverage, and your agent better convey the fact that you have had 14 showings with multiple second showings. I would be stressing this fact to the other side every time I spoke with them. Most buyers, once they have gone this far in the process, are emotionally attached.
Good luck.
BTW... what is your agent advising you to do?


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RE: We have an offer

Thanks for the response NC and thanks for not calling me that other nasty name (even though I invited it) haha.

Our agent made the comment that the price offered is more in line with what she thought the house was worth. So in other words, she is satisfied with it.

She suggested we don't mess around with closing costs. If they ask for it, that means they actually need it to close. Instead, just as you said, adjust the house price to cover closing.

My wife thinks they don't really need the money, they are just mooches. The other part of this deal - they are buying the pool table for $1000 - seperate from the house. I paid $3600 for it, was asking $1000, and they are paying me the full $1000. My wife wonders how they have the money for a pool table when they don't have enough for closing, and also wonders why they could give us full asking price for this when they are jerking us around on the other prices. She may be right.

I wonder if these closing costs are something they would ask of anybody or just me. I say that because 2 yrs ago when we were trying to sell (at a much higher price) we were upfront in offering $5k in closing. Their agent may have seen this and told them, "they offered it before, you should ask for it again".

I asked if we have a deadline to respond, all my agent told me was give an answer sometime today. I was told at 6pm Fri night, so I guess I have until around 6pm Sat night to respond. They actually signed a contract and sent it to our realtor. We have not officially met to sign any paperwork yet - this is just going by verbal communication. At about 8pm Fri night she texted me and told me not to make any decisions yet, we have another showing Sat morning (officially showing #14).

Another thing I thought we had going for us was the changing leaves. They were at their peak color and were absolutely beautiful! When you turn the corner and saw the house against the backdrop of fall leaves it was almost magical looking. Then today we get this freak snowfall - the first time it's snowed this early since the 1800's. We have about 2 inches as I write this, and it is still snowing steadily. The snow itself is pretty, but the leaves the snow is now hiding was a lot prettier.


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RE: We have an offer

Congrats on getting an offer, bottom line.

Just wanted to put my two cents in, that I think the weird part is asking you to pay for the inspections. The inspectors would then be working for you and you would "own" the reports. Theoretically, although unethical, you could determine what the inspectors reveal to the buyers since you're the one paying them. That is weird.

I've always felt that the inspections were part of the investment that the buyers are putting into getting the contract completed. They've got some earnest money in, sure, but it's pretty easy for them to get it back. Otherwise, the seller is putting everything on the line - house off the market, getting ready to move out, repairs, value possibly dropping, etc, and the buyer can back out and lose nothing in the end?
(This is coming from someone who had a real buyer do something minor to drop their credit score a few points and have the bank back out on the day of closing, while the market was dropping so fast that when we put it back on the market that same day of the non-closing, we still had to drop $10K listing price after 30 days being off. In the end, they were able to purchase at the $10K lower price a week later and less concessions from us in closing costs. This was in MD where the stinking closing costs are so high, that it is absolutely normal for buyers and sellers to split the closing costs.)

Hope you got some nice pictures with the fall leaves. Sounds beautiful.


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RE: We have an offer

I sold 2 houses last year. Seems all buyers now ask for closing costs (must be because they see it on HGTV!). I've bought and sold half a dozen houses over the years and it never occurred to me to ask for closing costs. Now it seems the norm.


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RE: We have an offer

Cass66,
In your property's price range, almost 100% of buyers ask for CC. Don't sweat it though, as it is the bottom line # that you shoulf be focused on. I am assuming you are going to counter offer, right. That is what they are expecting... no buyer is going to offer their final price the first time out of the gate... unless you are really overpriced, which I suspect you are not.
If you do pay their CC, do not pay for the inspection. That fee IS part of their CC. And as C9Pilot says, as soon as they pay for the inspection, they then have about $400 of skin into the game.


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RE: We have an offer

My wife thinks they don't really need the money, they are just mooches

I don't understand this thinking, and you are taking this offer way to personally!
For the buyers where is the downside in asking for closing costs, home warranty, etc? Their goal is to buy the house with the least amount of money out of their pocket. Of course your goal is to sell netting the most money possible. It's a business transaction. Keep your feelings out of it.


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RE: We have an offer

Can you structure the agreement so that they have to front the inspection and closing costs (appraisal, mortgage app, etc.) and they only get them back if you do close. In other words don't do all there financial work for them and risk the chance that they bail or can't get a mortgage and you have to not only have the property off the market, but also pay for the pleasure of doing so.

I think I'd be willing to be more accomodating with these expenditures if I knew for sure that they'd only come out of my wallet at the point when I was also putting a large proceeds from sale check in my wallet.

There's much a would-be buyer can do to scuttle a mortgage app. process these days if they want to wriggle out late in the deal. And if they can't get a motgage then they're out of the deal almost scot-free. Not fair that you have their back in that case.

Maybe you can use the storm to buy yourself some more noodling time as you mull the offer.

Good luck.

L.


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RE: We have an offer

I like what Liriodendron said because every time I lose one of my buyers at the last minute because they couldn't get their mortgage, I'M the one who's out money. One time the people got me to buy special heaters we didn't need because they thought they needed them for an FHA loan and then when they couldn't get the loan for some other reason, I was stuck with these heaters that cost me almost a grand and that we never needed and never used. They were supposed to reimburse me for them at closing but since we didn't close, they never did. This deal I have going now is shaky and if the guy doesn't close, I'm out the money for the septic, well, and termite inspection (which is the norm for sellers to pay for in Virginia). I should have built these things into the contracts that if we don't close due to the buyer's fault, the buyer is responsible for paying. It's not fair for me to keep having to take this place off the market and have to pay these things and then the buyers don't perform. And like one of the other posters said, not only do I lose because I take it off the market, but every time I put it back on, I have to put it back on for less money because the market is still dropping. If I want to stay competitive. So be careful of all that. Ask for some protections.

In the past, no one ever asked me to pay their closing costs but every single one of them asked me this time. But like NC said, it doesn't matter how it's done, what matters is the bottom line. I think they do it because it gives them more money to put down. My last buyer asked me to pay for a home warranty. I said no way. They're a waste of money. Let them get it themselves if they want to waste money.

Also keep in mind that sometimes buyers ask for more than they expect so you have room to negotiate back and forth.

Anyway, it's great that you are getting all this action! Pick the one who is most likely to get a mortgage! I went through the process three times already. Now I'm about ready to drop the price again and say cash buyers only.


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RE: We have an offer

Lirio,
Conventional RE contracts do not have the seller paying for anything for the buyer before closing. If the seller agrees to pay for the buyer's CC, it is done at the time of closings. Most inspectors, surveyors, etc., will wait until closing.
Also, if a buyer can not get a mortgage late into the process, conventional RE contracts state that the Earnest Money Deposit is handed over to the seller. Sounds like your and LITH's contracts are not written up in a way to protect the seller very well.
LITH, I do not see why you would be out of the expense of the septic, well and termite inspection just because your buyer walked. Why can not you use them for the next buyer? If you do enter into another agreement with another buyer, get as large of a deposit as possible, and have a financing contingency. Did you get any deposit from your current buyer? Is there a financing contingency?


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RE: We have an offer

Thanks guys for all the nice comments and show of support. I really appreciate it.

LITH - I have been following your saga for a while now. I feel really bad you have had to deal with all this stuff. I know it has to be very frustrating, probably 10 times worse than what I am going through. I hope the sellers you have now will continue to go forward without any more glitches. I know this whole process has put you under a lot of stress for a long time, and I hope you are finally about to be done with it.

Update: I did give them a counter offer last night. I stuck to my guns on a few things, and caved on others. I'm not the least bit happy about this. I think they will walk. If they don't walk they will return with another offer I may not accept, so either way I think it is over.

My agent did call the other 2 "serious buyers". She said the one who didn't qualify for the larger loan is now out of the game completely. Something happened with their credit, and they are no longer looking at houses at all. Gee, you mean to tell me the bank prequalified someone for a loan that wasn't actually qualified at all? How many more times does this have to happen before all of us sellers band together and show up on the banker's doorstep with torches and pitchforks?? She told me the other "serious buyer" still is looking for an ATV-friendly place, and they were not going to offer very much either, so forget about them.

I had purposely priced my house lower than what I actually thought it was worth and a lot lower than other active comps that are actually less of a house than mine. I thought that would generate lots of interest (which it has) and a quick sale. Instead of people recognizing what a good deal it is, they still want more, more, more. I hate that.

I guess if these buyers are gone, others will show, and hopefully I can still get a good offer. If not, I guess I'm back to renting it out again.


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RE: We have an offer

Your mama wears army boots, you're ugly, and your breath stinks.

There, now you've been insulted.

If it were a sellers market, you wouldn't be PO'd that you had offers above the asking price, would you? Well, in a buyer's market, you are going to get offers below the asking price. Any offer on a home, even if much lower than you want, isn't an "insult". So get over thinking that. If you were buying, you'd put in the lowest possible offer that you thought you could in hopes they would take it. You'd ask for closing costs too because everyone does these days. Your realtor wouldn't be looking out for your best interests if she didn't act tough and "lowball" on offers. Their realtor is just earning her money here, just like yours would Don't get PO'd at someone who is trying to get the best deal that the market will allow him to have. After all, you want that too. I mean the best deal the market will allow you to have.


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RE: We have an offer

Haha holly - those weren't insults to me cuz they are mostly true! Except I did brush my tooth (get it I said tooth and not teeth) this morning.

I know people are trying for the best offer the same I am trying to keep most of my money. I take it personally becuase I work hard for my money and take offense to anyone else coming around trying to take advantage of me.

Anyway after all that, we end up with good news. Buyers countered, at a much stronger offer. They ended up being $2500 shy from my counter. For a brief moment I actually considered either standing firm or countering one last time and only giving $1000. Then I came to my senses or maybe I just finally gave up the fight and said screw it, its done.

Now we play the rest of the game and hope the house appraises and the inspections come up ok. Yay - the biggest hurdle is over........I hope everything else goes ok.


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RE: We have an offer

WOOOO - HOOOOO.
Sometimes if I have a listing that we priced aggressively right from the start, I will send the buyer's agent comps, back along with the counter. Very effective. Takes a lot of the emotion out of the fact that the buyers may have to pay close to full price, even in a sellers market.
It is magical how intelligent pricing works every time. Good for you being intelligent.
And yes, the toothbrush was invented by a West Virginian. That is why it is called a toothbrush and not a teethbrush!
Mother's Day was founded in WV too. And West Virginians love Halloween too because of the Pumpkin... I won't dare touch these last two here in a public forum.
Congrats Cas66.


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RE: We have an offer

NCReal Estate,

I can't speak for LITH, but my contracts are always written to require the sellers to pay their own costs, including closing expenses.

However, in VA (where LITH lives) some things like the water quality, septic and termite inspections are at the expense of the seller, and they must be done within a short time period just prior to closing (30 days?). So they only stay good for that specific window and must be done again once that time has expired. In VA they seem to function as a way of making sure sellers are selling a property which meets basic public health standards. I know in other places they are functionally more like radon or home inspections, in other words at the option of buyers to protect their own interest.

L.


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RE: We have an offer

If that is the case, then the Earnest Money Deposit negotiated from the buyer needs to be substantial in order to cover these expenses if the buyer does default.
I learn something new everyday in this profession... I love it!


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RE: We have an offer

Yep, Liriodendron is right. In Virginia, the seller is responsible for the septic, water, and termite inspections and it is only good for thirty days. My buyer's deposit does cover the cost of the inspections, but he has a mortgage contingency in the contract and so if he can't get the mortgage, he gets off scot-free. I guess I could have asked the lawyer to put it in the contract that if the buyer can't perform, I can deduct the cost of the inspections from his deposit, especially since I've already been through this twice already. But I couldn't believe it would happen three times and I was so relieved to come to an agreement on the offer that I was afraid to nitpick every little thing.

By the way, don't forget I also have costs to pay on the houses I've been trying to buy every time I sell this place. For example, I've done title work on the houses up north twice. I have to pay for that. No one works for free and it's not fair to them I can't get my deals closed.

Anyway, Cass, that is great! Congratulations!


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RE: We have an offer

LITH,
Never give a buyer until the day of close to secure financing! I have NEVER seen a contract written up this way. Shame on your Lawyer for not representing you better on this. Always put a date to where a commitment letter needs to be presented. After that date, it is up to YOU if the deal moves forward after this date. If you choose to terminate, you keep the EMD. Right now, your buyer is not in default, because there is no deadline for him to secure the financing. In fact, if you were to try to terminate the contract, would not YOU be the one in breech? Until the bank formally tells him in writing that they are refusing to proceed, I think you are under contract rather you like it or not.
Also, never perform title work until your contingencies are over. Never do a survey until the inspections are over. Always perform the contingency first, that is most likely to cause the deal to go south... usually the home inspections. Title work takes an attorney a fairly short time to perform. Next time, tell them to hold off until later in the process.
Hoping that your buyer pulls through. When is he due back from his leisure cruise?


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RE: We have an offer

He was due back yesterday NC. No communication from him or his bank yet. The lawyer tried as well.

He was required to close on the closing date and if he can't, he's in default. So he's in default. But you're right, it should have been in the contract for the financing to be secured well before the closing date. THAT is the main thing that has caused all the problems because we had to be ready just in case they came through. That's why I had to do the title work on the properties up north or else I wouldn't have been ready to close up there! Same thing with the water, septic, and termite inspection here. I actually waited until TWO days before closing because I was afraid it could fall apart and then I couldn't wait any longer or else I wouldn't have been ready if they did come through. Inspector took a fit--"Why'd you wait till the last minute?" The bank kept telling me it was looking good so I had to get going. I know. The lawyer should have advised me better. And I should have anticipated the problems this would cause. Perhaps, get ready, you're going to like this, an agent would have caught this! lol


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RE: We have an offer

Just signed the contract tonight. Now it's official.

They are not messing around - they are getting the well water tested, mold test, radon test and home inspection (all at their cost) to be completed by Friday. I'm not worried about any of the tests, Im sure everything is fine. The more money they have sunk into the house the less likely they are to walk. My biggest worries now are their loan going through and my house meeting appraisal.

Well I have run my mouth (or my fingers) enough about all this. I better just keep quiet about it and think positive. Thanks once again for all the help.


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RE: We have an offer

Congratulations! I hope everything runs smoothly throughout the rest of the process.


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RE: We have an offer

Cas66... Sounds good. Get ready for the home inspector to find plenty of items. They are good at finding items that you have overlooked. Just be prepared to repair anything that you would ask for if you were the buyer.
LITH, rarely is a closing date a "drop dead date" Niether party wants a deal to be over at that point just because a closing passes by a day or two. Most RE contracts I have seen have a clause that explains that a 7 or 10 day window can exist, as long as both parties are taking steps to move forward.


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RE: We have an offer

I hope everything goes well and you get this house sold.


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RE: We have an offer

NC, they're already two-and-a-half weeks past closing. Buyer reported today it's moving forward again. Next time I do a contract, I will give them plenty of time to get their mortgage commitment and then will put "to be determined" for the closing date. Get the loan secured, then we'll pick a date. This way I don't have to make any plans until I know it's going to go through.

Cas, this is so exciting for you! Good luck!


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