We closed escrow on 7208 Manzanita today.
This is the house where the owners had just paid $565,000 in September and began their remodel of its mostly original condition. Then job-perfect came calling, and off to the midwest they went.
But not before completing all of the upgrades, including new kitchen, bathrooms, roof, hardwood floors, etc – close to $70,000 worth.
When we listed for $649,000, they were hoping to break even.
I had planned for open house both Saturday and Sunday, and had enough calls immediately upon MLS input that I also conducted an impromptu Friday afternoon open house too, for those who couldn’t wait.
By the end of Sunday we had eight offers, and I politely asked all to make their highest-and-best offers. Unlike most listing agents, I give price coaching – and was telling people that it appeared it would take more than $700,000 to buy the house.
If you help give buyers a number to hit, it makes it easier for them to say yes or no. If all they have is a black hole, somebody who really wants it – and has the ability to pay whatever it takes – could short themselves. Buyers and agents are always appreciative of having some clue to what it will take to win.
On Monday afternoon, the sellers and I huddled at the house to make the decision. It came down to two – a cash offer of $724,000, or $731,000 with 50% down payment with no appraisal contingency that also included a bank statement showing that they could comfortably make up the difference.
We took the higher deal.
The extra $7,000 isn’t a lot of money, but cash buyers have the same remorse as anyone else – and there was no guarantee that the cash deal would have closed any easier.
The appraisal came in at $695,000, though there were no comps in the neighborhood over $600,000 in the last six months.
Because the buyers were putting down 50%, the appraised value didn’t matter much to the lender, though they were paranoid enough to insist upon an appraisal review just for their records in case Fannie/Freddie questioned it.
I did keep in touch with the agent who wrote the cash offer, and they were standing by in case the appraisal became a problem.
I told everyone from the beginning that the appraisal was going to be short – my guess was $690,000 – so there was no surprise when it did. The appraisal was a technicality needed for the bank’s file – it didn’t change anything for the buyers who were planning to put down the same amount of cash anyway. It was understandable that there had been a shortage of recent comps.
(There had been the usual smattering of fraudulent short sales over the last 12 months, but their impact will dwindle by the end of this year.)
All in all, it turned out well for everyone!
Here is the video tour: http://youtu.be/HO-52PWmYD0