The house featured in the Businessweek article closed escrow today for $610,000.
It’s my duty to properly expose the property to the entire marketplace – and conducting open house during the listing’s first weekend provides maximum convenience for all.
There were two offers, both from people who attended the open house.
The first couple who attended expressed moderate interest to me, and then contacted their agent to handle the rest – which is the way it should be.
I’m not looking to steal buyers away from their agent, and I encourage their loyalty. I tell buyers who ask that there is no extra benefit by going direct through me, instead of sticking with their agent.
The second couple was actively looking to buy a home, and had their pre-qual letter and proof of funds with them. They didn’t have an agent, so I told them that I’d be happy to help them. Because I know the underwriting guidelines, I was able to determine their qualifications by asking the right questions.
What is the bidding-war strategy with this combo?
The first couple had sent in a full-price offer before I had a chance to meet my buyers later. I told their agent that I was going to write an offer too, and let’s just go to highest-and-best immediately.
I told me buyers to make the best offer they could, and told them about the comps and my opinion of value. They signed the $610,000 offer, with 20% down payment and conventional financing.
Later the other agent sent by text his buyers’ best offer; $615,000, financed FHA with 3.5% down.
The sellers had tried to sell last year with a different agent, and had three offers then. The set of buyers they selected did a home inspection that resulted in a 99-page report, full of assumptions and possibilities, most with no factual basis. It blew out the first buyers.
Their listing agent sent the report along to the other two sets of buyers, and both of them promptly lost interest.
An example of an item in the report. The previous owners had installed a doggie door in the back wall of the house. When they left, the stucco patch wasn’t that great, but it sure looked like a former doggie door to me.
The inspector said that the imperfection was probably due to a water leak, and there was likely to be mold inside the wall. Nice.
What do you do with a bad report?
You can’t assume that the buyer’s agent is going to take the time to read it, and then explain in carefully to their buyer. Because the report rides with the property, I told the sellers on my initial visit that I would ensure that the buyers got my thorough explanation of the report.
The sellers had already done their part – they opened the wall and proved that there was no water leak or mold, so that helped.
But they still had concerns, and I didn’t blame them – they didn’t have any positive experiences up to that point.
When we discussed the two offers, I am the listing agent whose job is to neutrally explain the good and bad points of each offer. I told them that it didn’t matter to me which offer they took, because if they wanted to take the higher offer, I would sell my buyers another house.
FHA requires the appraisers to scrutinize the condition of the house, make comments, and potentially require that repairs be made to complete the sale. Conventional financing does not have the same requirement.
The sellers decided that a conventionally-financed offer was their preference, even if they had to take an offer that was $5,000 less.
Game Agent, I owe you two t-shirts!
JtR qualifying the buyers on the spot:
If I did know any better the picture at the end looks like one from one of those stock photos.
As a seller I would NOT go with the 3.5% down offer either – feels like they are more likely to not qualify or fund the sale.
The photo is from the professional photographer and was in the article on page 2:
http://www.businessweek.com/articles/2013-04-04/the-hunter-s-dot-thompson-of-real-estate-chronicles-the-bust-and-boom#p1
a 99 page report, talk about trying to justify your job.
Thats a perfect example of a deal being blown up by a home inspection.
You handled it very well. Doest FHA have minimum property requirements as part of their loan terms?
I had a dream last nite where I was wearing a Klinge Realty shirt while I was watching the Chargers win on Monday Night Football at PB Bar & Grill. Looks like it was only half a dream!
Send me your address and shirt sizes and I get those to you – for guessing the sales price on the nose!
Congrats Jim! Another one in the books! How many is that closed for you this year? Keep on truckin’
I’m running at the same pace as last year, but it’s a whole new ballgame with the rapidly escalating prices and bidding wars everywhere. I don’t mind competition and the hard work though!
Thats a perfect example of a deal being blown up by a home inspection.
The previous agent could have gotten in front of it – heck, he had three offers on the table.
But this is what happens when you hire the big teams where assistants who aren’t salespeople are just processing the paperwork. They send off the previous report, and well, jeez, the buyers didn’t like it? Oh well.