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Selling house, low-ball offer received, need advice - long
Old 06-18-2009, 12:56 PM   #1
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Selling house, low-ball offer received, need advice - long

We put our house up for sale at the beginning of April for $299,900. It's 3 bedroom, 2 bath, 3-car, all brick on a corner lot. We are listed with a discount broker (on realtor.com and forsalebyowner.com and the house has its own website which I built) so we have done all the marketing ourselves. We are done with the OH winters and it's time to move back to FL. I am being laid off from my job (which is what I want) on July 7th. We will enter semi-retirment mode until I find another job in FL. We planned to live in the house until it sold no matter how long it took. We would not buy or lease anything in FL until we sold the house to keep our expenses low.

We refinanced the house 2 weeks ago (3/1, 4.25%) to a lower the loan balance to drop the payment about $200 per month. We had a 5/1 which was going to reset in December and I did not want to take a chance on a big jump in payment. The refi cost $1200 which was a 6 month payback period. When we refinanced the house two weeks ago, the appraisal came in at $270,000. We had commissioned a private appraisal back in February that came in at $268,000. I couldn't believe MY house was now only worth only $268,000 (paid $298,000 in December 2004 and then put in $15,000 of appliances and floors) but the refi appraisal confirmed the lowered market value.

Under the guidance of an interior designer, we painted and decorated all winter. The house looks fabulous and is professionally staged for sale.
It is a beautiful house in a beautiful neighborhood in a great location (relatively speaking) but we are rural so the area does not get tons of turnover and our house is at the top of of home values in the area. We have had about 30 people look at the house but we didn't really get the "I'm ready to buy" vibe from anyone until the couple this weekend. They have recently sold their home (now renting about 25 miles away) and are are looking to buy their "forever" home.

About the buyers...they are about 30 years old (both work) and they have a daughter about 2 years old. The wife grew up in the town 8 miles from our house and wants to move back to the area where the parents are still living. The wife wants to live in a sub-division and ours is a very nice one. As is typical around here, the whole family came to see the house on Sunday. Mom, dad, husband, wife, sister, BIL (the realtor), kids, and kid cousins. It was obvious they loved the house. The husband is a physics teacher who is not real handy so it is significant the house needs nothing done to it. Another plus for them is our back neighbors are the same age as the buyer couple and the neighbors have two daughters, one younger and one older than the buyers' daughter.

Now for the house's negatives. We have a large patio out back but a very shallow back yard. We have a corner lot so there is plenty of yard overall but very little in the back. This also means our back neighbors are pretty close. Second, we do not have a basement and people around here want basements. We have 400 sq feet undeveloped on the second level and a 3-car garage so there is plenty of room but basements are a big deal around here.

The offer is for $232,000, all cash, immediate closing possible. We had done some local research on the family and since we learned daddy is loaded, we expected the all-cash offer. I was a little surprised by how low the offer was but at least it's an offer! The BIL is representing them so 3% will be paid to him as the buyer's agent. Obviously, he will be giving it back to his FIL or to his SIL/BIL (the buyers).

Where do I go from here? We are motivated sellers and our mortage is well-below the $232,000 so being upside down is not an issue. We have until 5 pm on Friday to counter. I believe in the saying "the first offer is the best offer" so I'm thinking we want to make this work. I'm thinking of countering at $265,000 and seeing what they say. I discouraged my husband from selling our snow shovel in the neighbor's garage sale last weekend but maybe we will be in FL by winter!

Advice?
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Old 06-18-2009, 01:06 PM   #2
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Geez, the offer really is a low ball one...22% under the listing price?? If you are very anxious to sell, you can certainly accept this offer, but personally, I'd counter closer to the listing price and negotiate from there.
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Old 06-18-2009, 01:18 PM   #3
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Tough one...
I've only bought one house in my lifetime, and the previous owners needed to sell it immediately. And we knew that (from the realtor).
But we also needed a place within 4 months. We kept that tidbit to ourselves.
We lowballed by about 15%, did a few counters back and forth and settled in the middle.

A couple of questions...
- do the offerors know the full details of your reasons and desire to move?
- do you want to move right now?
- how "marked up" was the advertised selling price (edited: never mind, saw the appraisal data on a 2nd read) and who knows about those appraisals besides you?

A friend of mine is going through the same situation, but for entirely different reasons. She lost her selling advantage when she disclosed too much to her own realtor. She has refused all ridiculously low offers to date. She still lives there and has plenty of time to play with.
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Old 06-18-2009, 01:21 PM   #4
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Given the two appraisals the offer truly seems lowball. But then again, your asking price is too high. Maybe counter at 268,000 and see what happens?
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Old 06-18-2009, 01:22 PM   #5
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Since it is appraising out at $268K-$270K, I'd counter at $269,000 and see what happens.

Well, actually I would use a realtor to help me with the value of my home and the negotiations, because I am likely to lose more in negotiations than his fee, myself! Good luck to you and I hope you can sell for a satisfactory price!
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Old 06-18-2009, 01:22 PM   #6
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I'd say your counter in the $265 -270K range is as low as you should go if that low. Way too early in the game to go below what two recent appraisals showed is market value. It is very likely they (daddy maybe?) are fishing with a lowball offer to see what you will do. If 'the kids' like the house as much as you think, they will likely get daddy to pay the going rate.

Your recent refinance indicates you didn't expect a quick sale. Don't get pushed into taking a beating on the selling price when you don't have to move now. Patience, patience...
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Old 06-18-2009, 01:42 PM   #7
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Not sure where you live in OH. I looked at the most recent Case Shiller data - which is Cleveland and surrounding area, although the rest of the state seems to be quite similar. It shows a decline from 12/04 to 5/09 of around 19%. This is based on actual price data and does not adjust for condition. You would want to adjust your assessment for improvements above the average in your area.

The buyers feel they are in a position of strength - and from a market perspective, they are. You have positive equity so you are not the disadvantaged seller they are looking for.

Do you have comparable sales data from the surrounding area?
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Old 06-18-2009, 01:47 PM   #8
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Based on what you said, unless you have desperate cash flow reasons to get out of this house yesterday, that sounds much too weak based on the appraisal and the work you've put into it.

There are a LOT of desperate sellers out there, and they are probably hoping you are one. If you're not one it could be harder to sell your home competing against them.
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Old 06-18-2009, 02:04 PM   #9
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I was told by our agent that most homes sell within 10% of their listed price, and that a low ball offer 20% below often would adjust up. Your home would sell for $269,100 if you let it go 10% below list. You can bet the buyers agent knows this and they know the home market value is around this figure. Their offer is $37,000 below market value. If your house payment is $2,000 a month it will take 18 months before you put another $37,000 into it.

I guess it comes down to your desires. Do you want to give this guy $37,000? Do you have such a desire to move and financial conditions are so good the $37,000 means little to you? i.e. I want to get to FL now and I will pay an extra $37,000 to do it!! Do you like making other people money? They will most likely flip the house in a year, unless they really are interested in being there 'forever'.

My guess is you know the answer to your question already. The offer is too low.
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Old 06-18-2009, 02:50 PM   #10
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The last two houses I sold I got low ball first offers . I countered and in the one case countered again . It's pretty miserable in Florida right now 90 and up plus the job market is flat but houses are really a bargain so good luck on your counter offers .
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Old 06-18-2009, 02:51 PM   #11
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I recently bought a house for a low offer... but they, like you had the original asking price WAY to high... based on what they paid for it 5 years ago and the money they spent to improve it...

In the end, they were still offering it at $10K over the 'real' price... I offered $10K under and would not budge... the house had been on the market for over 200 days and I felt I could wait them out or find someplace (or someone) that was more desperate...

The one thing you will have to worry about from someone else is if they will qualify for a mortgage.... from what I heard from my realtor... many potential sales have fallen through because of financing... and the second was because of the appraised value (they will not lend over whatever it appraises for)...

Like others, I would come back in the $266K or so range... but do not expect them to come up much higher... probably their high is $245 to $250... basing this on how low they started...
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Old 06-18-2009, 03:13 PM   #12
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I forgot to put in the original posting we dropped the listing price to $279,900 about 3 weeks ago. I knew I might as well go ahead and do it because of the $268,000 and the $$271,000 appraisals. Their offer is $47,900 below the current list price or 83% of list price.

We are in the NW corner of OH. Very little appreciation (if any) in the last few years but that doesn't mean we don't get dragged down with the rest of the state. The president of the CU where we did our refi said our county had not been labelled as a "declining market" as other surrounding counties have been. He said sales have been steady but in the $150,000 range. The February appraiser said homes over $200,000 were getting hit hard.

Our house payment is only $1000 per month. Taxes ($2700 per year) and insurance ($325) are not escrowed. We have to pay to live somewhere so given the interest and taxes are deductible, we wouldn't be paying much less to live in FL. In addition, the cost of living around here is very reasonable. Basically, it costs us nothing additional (and maybe less) to keep living in OH versus FL but I will have one very unhappy husband if we are still living here when winter comes. We have no cash flow issues.

We have disclosed on our website we want to move to back to FL because OH winters suck! Nobody knows anything about the appraisals nor the fact I will be (happily) unemployed in a couple of weeks.

90% below current list of $279,900 would be $251,910. Aaargh! That's going to be a little low given there would also be $7550 in realtor fees to the BIL.

There are no desperate sellers near me in my price range. There have been no homes for sale in my subdivision for at least two years. The most comparable home (mostly brick, very nice subdivision) that sold was located about 5 miles away and sold in early April for $308,000 after having been on the market for a very long time (2 years, I think). It was listed for $328,000 and was a divorce house. It hadn't sold when I got my February appraisal but I had the February appraiser comp us against it at listing price. Accounting for the $308,000 sale price, we comp out at $264,000. The refi quote had us comping out at $281,000. Definitely more than $232,000 in both cases!

Dad is a CPA in the neighboring town. He was boasting to DH during the showing he and the wife had purchased a house in Tennessee and he had gotten a great deal because he made an all cash offer. "One guy couldn't get a loan, one guy wanted to trade property, but I had all cash." We were definitely expecting an all cash offer and a lowball offer but $232,000 was a surprise. I guess I shouldn't have been as Mom told me during the showing that the kids had made one offer but the sellers had never responded. I knew immediately what that meant - LOWBALL! We will definitely counter-offer. Just have to decide at what number.

I will bargain in good faith but I would not be disappointed if I had to keep living in the house awhile longer. I love this house. DH has already put on his FL fishing gear!
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Old 06-18-2009, 03:18 PM   #13
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Texas Proud - Having buyers qualify for a mortgage is definitely a big worry. The PMI folks are also being hard on folks. The fact our home is higher-priced means it is almost a slam dunk a buyer will need PMI.
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Old 06-18-2009, 03:25 PM   #14
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Rustic - I really do not expect them to flip the house. The wife grew up in the area, her mom and dad would be 8 miles away (3 stop lights), her job would be 3 miles away (2 stop lights), and her husband's job is only 25 miles (2/3 country roads) away. There isn't much flipping (if any) that goes on out in corn country.
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Old 06-18-2009, 03:30 PM   #15
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Buckeye,

If I wanted to sell it fast, I'd make a counteroffer between 50-60% of the difference between their offer and what you think it is worth. If not, I'd counteroffer at your current asking price and throw in a free home warranty... Sounds like they may just be bottom feeding.

jim
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Old 06-18-2009, 03:43 PM   #16
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Just curious , where in Florida are you moving to ? You do know that home insurance in Florida is pricey and property taxes are a strange situation ? Other than that it's a great place to live most of the year and especially in winter .
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Old 06-18-2009, 04:07 PM   #17
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I wouldn't counter at the current asking price, what is the point. And given the appraisals it is unlikely to sell in the near future for asking price.
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Old 06-18-2009, 04:08 PM   #18
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Based on followups and what you've said so far, I might be willing to go down to about $255-260K if you're motivated to get out before the leaves start to fall -- particularly if it's still an all-cash offer. The lack of contingency on financing is certainly worth something. I can't see going lower than that if there's little financial urgency. Maybe the first counter should be at around the current appraisals (around $269K)?

But in reality, only you as the sellers can determine the "value" you place on not facing another Ohio winter. That would have some bearing on how low an offer you're willing to accept.
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Old 06-18-2009, 04:10 PM   #19
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Strange? Moemg, you have a way with words. I would have said idiotic, moronic, dim-witted, dumb, stupid, asinine, ill-conceived, poorly thought-up, daft, senseless, ludicrous, half-baked, or completely irresponsible.
The only thing worse that the current system of property tax is the proposed reform.
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Old 06-18-2009, 05:32 PM   #20
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Originally Posted by jimnjana View Post
Buckeye,

If I wanted to sell it fast, I'd make a counteroffer between 50-60% of the difference between their offer and what you think it is worth. If not, I'd counteroffer at your current asking price and throw in a free home warranty... Sounds like they may just be bottom feeding.

jim

Sorry.. home warranty is cheap and it is expected by a number of people.. it would not make a difference with the gap that is here...
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