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My house went up on the MLS on Friday. We've had three showings so far - two on Saturday and one on Sunday. Apparently the Sunday person is interested and may submit an offer today/tonight.

There's not even a sign in the yard yet, and it may sell already! That's exciting.

I'm a little nervous about considering the offer and how to decide whether to take it, if it is lower than asking.

My situation is this: I bought the house in 2000. Paid $168K. Put down about $100K. I have paid off about $25K in mortgage. So I only owe about $43K on it. (Currently have a 12 year mortgage for 3.89%)

The realtor listed the house at $225K. We think this is a decent price, and maybe even a little low. The comps for the area that includes surrounding neighborhoods would probably have it listed a bit higher, but unfortunately a house really close to mine sold for only $185K within this past year. That house is smaller than mine, has a smaller lot which backs up onto a supermarket parking lot, and the kitchen is a lot smaller and a galley style.

Anyone looking at the two properties closely would know that mine is worth more, but on paper it seems like a big price difference if you don't look closer.

My realtor did also say that in the area homes are going for about what the city assessments for them are, and my city assessment is currently $222K.

I somehow have it in my head that I'd like to walk away with $160K cash, but I'd need an offer of something like $222K given commissions and fees.

My carry cost is about $1100 a month ($500 in mortgage, $400 in taxes, $200 in utilities). I can easily afford it. I'm living with my fiance (we're getting married in three months) and we both make pretty good money and have nice net worths and no debts (other than our mortgages).

So I can carry it as long as I need to. However, it is probably silly to carry it if the offer isn't that bad. I don't like making dumb financial decisions, even if I can afford to. Plus there's the hassle factor of having to maintain things - mow the lawn, etc. (It is only a few miles away so not a huge burden). And just because someone wants it right away doesn't mean other people would be lining up for it. Although personally I think it is a super great house (I'm very sad to leave it) and is in great condition.

Any thoughts on how low of an offer I should consider taking?
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Any thoughts on how low of an offer I should consider taking?

It is impossible for us to give you valid advice given that we don't have the comps and know very little about the property/area. Remember, you can always counter if it comes in too low. Your agent should also contact the other agents to let them know an offer has come in and if their client is interested they need to submit their offer.

It is tempting as a seller to say that the property just went on the market, higher offers will come in. Truth is that the first offer is often your best offer. A buyer typically will pay a premium for a property that has just gone on the market. Guard against thinking your house is a castle, vs the commodity it is. I can't tell you how many properties we have put a bid in on, which was rejected as too low given how recently the property was put on the market, just to have the place eventually sell for less than our offer. Well, actually I could, since I do track the eventual sales price of properties we have put an offer for, but I'll give you that generality rather than take the time to look up the specifics.

Try to stay in analysis mode rather than get emotional. Distance yourself emotionally from the sale and you will make wise choices.

Best of luck,

IP
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First pass is easy. Since you want 222k and can justify it, then if you get a lower offer, just counter at 222k. If the buyer accepts, congrats! If the buyer counter-counters, your best bet might well be to just go with that, but you can decide that when the time comes.
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It is tempting as a seller to say that the property just went on the market, higher offers will come in. Truth is that the first offer is often your best offer. A buyer typically will pay a premium for a property that has just gone on the market.


I just wanted to add a bit to this. I think that sellers sometimes think that because they get an offer as soon as the property goes on the market, then it is a hot property and will generate many/more/better offers, and want to wait for that. But you don't know how long the buyer has been looking, and that can have a lot to do with it. When we bought our previous house, we had actually been looking to buy a house for about 9 months, so we had seen everything there was to see, and at that point, we were seeing new properties as soon as they came on the market. We bought our house the 2nd day it went on the market, and for the seller, that was a very fast process, but for us as the buyers, it had taken 9 months to get there, and we finally found something that suited our needs.

The OP seems to have some info on the expected value of the house based on comps, location, features, etc., and I would say that negotiating to get that price would be what I would be doing.
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Update: Two new showings just scheduled - one for today and one for tomorrow.

My Realtor just texted me and said we might be getting two offers today. Apparently someone may write an offer sight unseen. A local Realtor lady's daughter and son-in-law are moving here from out of state and she knows the area and really likes the house from the listing and photos. They're going to do a Skype walkthrough with them today. Love modern technology!

Fingers crossed for competing bids!
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Fingers crossed for competing bids!

I would say beware of a sight-unseen offer. Most people are probably going to put in contingencies, and just because an offer is the highest doesn't mean it will close. And it's easy to put in a high offer when you haven't seen the place if you know you can get out of it through the contingencies.

Having more than 1 offer is great because you could always play them a bit against each other. But keep in mind, an offer price is one thing. You also have to consider which offer looks the most likely to close - and with as few post-offer costs (such as inspection repair requests) as possible.
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...might be getting two offers...

That's very nice, but keep in mind that what you actually have in front of you, right this second, is zero offers. So don't get too excited yet.
And: when you do get an offer, if it's just one offer, treat it as your only offer, because that in fact is what it is, regardless of what other offers are in the pipeline that "might" come in.

If you do in fact receive multiple offers, then let me second: consider which offer looks the most likely to close...

When my house was on the market for 199k (I thought it was worth 210k, but wanted a quick sale), I got two offers:
(1) Full price contingent on prospective buyers' selling their current house, which wasn't even on the market yet. I ignored this offer, figuring that if they were indeed serious about moving they would have listed their house already.
(2) 170k offer from a couple in an apartment. I countered with 198k, they counter-countered with 195k, I said OK. So it sold for 195k.

Good luck!
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My Realtor just texted me and said we might be getting two offers today. Apparently someone may write an offer sight unseen.

Ahhh, there's many a slip twixt the cup and the lip......

Until all contingencies (inspection, appraisal, financing, requirement to sell another house, etc.) are satisfied, you don't really have a buyer, you have a wanna-be buyer who may get cold feet.

I would add to the chorus of people saying that IF you get more than one offer, you need to choose the one that is the most likely to close, even if it's not the one with the highest price. And if you don't think that any of the offers you get are likely to close, then don't accept one just because "it's an offer" - if your house ends up in "pending sale" status for 3 - 6 months, you will likely have missed other better buyers.

AJ
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Any thoughts on how low of an offer I should consider taking?


You are paying your real estate agent some pretty significant money for their expertise so it would be good to pay close attention to what they say since you are paying for their advice.
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Thanks all for the advice!

Two offers came in last night, and apparently there may be another on the way. Of the 2 received offers, one is from a physician and his family who is moving here from out of state. The other is a guy who I think is single and from the area.

Both buyers have the standard inspection contingency, financing contingency, appraisal contingency. Both buyers are pre-approved for financing for over the price of the home - one is FHA (the single guy) and one is PhysicianLoans (the doctor). Both buyers have contingency of seller-purchased home warranty ($425) and radon check at buyer expense (radon is not a big problem in my area and my basement has a lot of exposure with windows, so we think it is unlikely to be an issue, but I never have had it checked).

Buyer 1 also has contingency of their current home closing. Their home has an accepted offer with all contingencies removed, scheduled to close May 28, and they've offered proof of that.

Buyer 2 has an additional contingency that I credit him $3500 toward closing costs.

Buyer 1 offer nets out to full asking price $225K. They are offering $220,500, and their Realtor (who is the mother-in-law of the doctor) is reducing her commission by 2%, which brings the net to me to the full asking price.

Buyer 2 offer is $213,500.

Buyer 1 has seen the property via FaceTime (and the mother-in-law has seen it a couple times) and said they loved it and wrote me a glowing letter about how the house is perfect for them. They will actually see it in person today. They put in their offer before the actual viewing I guess because they want it and knew that the other offer was coming in.

My Realtor recommends I accept Buyer 1's offer and counter Buyer 2's offer and put it into secondary offer position.
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My Realtor recommends I accept Buyer 1's offer and counter Buyer 2's offer and put it into secondary offer position.

Buyer 1, moving from out of state and with a sale pending will be very motivated and less likely to back out, unless of course the sale of his existing home falls through. Unfortunately, the completion of the sale of his house is not under his control. While it is less usual for things to fall apart at closing, it happens.

I've never heard of countering a second offer when accepting another. That's a new one on me. Did your agent let the 3rd party's agent know that offers are on the table and they need to get theirs in if they want to play? Do you have time to wait for the third counter? Another play is for your agent to let all the parties know that there are multiple contracts in and for them to submit their best final offer. Of course, if you are happy with the bird in hand, who cares how many there are in the bush? These additional plays allow time for those with contracts to back out, which can be done at any time before acceptance on your part.

IP
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Yes, I really hope their home sale does not fall through! If their home sale offer is accepted with all contingencies waived then I have to think it is unlikely to fall through. That said, I know that anything can happen!

The lady of the family did write me a nice letter telling me she loved the house and about how her family plans to use it and stuff. Seems like they really like it and want it.

I'd never heard of a secondary position offer either. Apparently it's something that can be done. You do tell that buyer that they are in a secondary position. They can continue to look for other homes and pull their offer if they find something else, or if your primary offer falls through then you have that secondary. My Realtor says it is "kind of like being the runner up in a beauty pageant." lol.

My Realtor had originally let both current buyers know the other offer was coming in, hoping to get them to make better offers up front than they might have. That third possible offer he did let the agent know that two offers were expected, but we haven't heard anything back on that one. That inquiry was in the afternoon yesterday, so not much time. Both current offers have deadlines of today.
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Excellent!

I'd wait until this afternoon (giving 3rd buyer a chance, but not pushing the COB deadline for buyers 1 & 2 too closely), then accept Buyer #1 as primary, and accept Buyer #2 as back-up. I wouldn't counter either regarding price, because generally with multiple bids buyers' first offers are their best and final.
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The lady of the family did write me a nice letter telling me she loved the house and about how her family plans to use it and stuff. Seems like they really like it and want it.

This is an emotional game to convince sellers who are too attached to their home to sell to the lovely family who will love their home as much as they do. It is manipulative, and you need to ignore it. You should not care how your house is treated after you leave it.

Hopefully all will go smoothly. It does more often than not, and I see no glaring indication that this should be a problem transaction.

IP
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...Buyer 1 also has contingency of their current home closing...

If this contingency was not there and the sale of their house fell through then it would be very likely that their mortgage lender would not finance the mortgage on the purchase of your house because that would change all their loan ratios.


Wouldn't that let them out of the purchase of your house because of the financing contingency?


If so then does the sale contingency really make a lot of difference?


Greg
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I would ask the realtor to show you the settled comparable properties for the sale price in the 185 range. If this property has a less desirable location and your property has more amenities such as an upgraded kitchen I would say an offer of 200-210 is fair. It depends how many more mortgage payments you would like to pay - if the carry cost is 1100 and you don't sell for a year you have spent 13000K+ it depends on how the market changes or stays steady in your area. At that point it depends on if your lifestyle permits the work of taking care of 2 properties or hiring someone to do it for you.

Make sure the offer comes with a letter of approval from the bank to show the buyers ability to get the loan. If the market is good in your area you can hold out for a full price or better offer, if it is slow you should consider that as well.

Or ask yourself: Do I want to be a landlord?

Good luck and hope youget a great offer.

Heeny
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