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Need advice on a real estate sale - house might sell above asking price
Old 06-05-2019, 05:22 AM   #1
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Need advice on a real estate sale - house might sell above asking price

Hi friends,

I could use some advice. The situation is as follows: My DW inherited her mother's house a while back, and now that we have finally sorted out the estate and sold/donated/given away/thrown out her belongings, we are ready to sell. I decided to handle that myself, as the RE market here in the cities of Southern Germany is, frankly, crazy. It's a real seller's market. Prices increased around 8% p.a. for the last 10, 12 years. I have experience from doing a self-directed sale of our first apartment a few years back, which went extremely well.

It's a nice, rather large house on a decent-sized lot (bigger than they build them these days). The location is not A+ prime, but it is in a nice neighborhood. The house is 40 years old, though, and quite a few things are dated. Bathrooms and windows have never been renovated, for example. I have been following the RE market around here for a few years, so I think I have a decent understanding of market prices. I also used an online estimator (for a fee) that returned a number which I believe to be wayyyy too low (let's call this estimate 100,000€. In reality, it is a multiple of that. I'm not comfortable sharing exact figures here; hope you don't mind).

So we set our asking price at 126,000€. The thinking was, we would rather not go below 113,000; we'd be happy with 120,000€; so 126,000€ was really a bit of a stretch goal. I wanted to start negotiations with a price that is still somewhat realistic, but rather on the high side.

I put up an ad on the most popular German real estate website, wrote a nice exposé, put up a lot of good pictures. In the first two days, 1,600+ people read this ad, but just around 30 contacted me. A few were spammers and obvious hustlers, and I practically had to fight off real estate agents who wanted my business with a stick. One guy didn't like the exact location when I gave him the address, so I ended up arranging 11 showings so far. At first, I was very pleased with myself because I felt the asking price was low enough to still draw sufficient interest, but high enough that the field of interested parties was narrowed down to a number I can handle in addition to my other duties as an employee, husband, father, etc.

I have done eight showings so far, and the feedback I get is VERY positive.
- The first family loved it and offered 120,000€ right on the spot, even saying 'let us know if there is a better offer and we'll see what we can do'.
- At least three other parties are highly interested, but haven't given me a concrete figure yet. One of those families/couples wants a second appointment still this week, and announced that they would give me their offer then.
- I have a feeling that two more parties like the house, but disagree with me about the need for renovations. I think they will make an offer, but it will likely be quite low.
- One couple said 'it's nice, but not for us', and one couple didn't exactly seem thrilled. I don't expect to hear from them again.

I'm starting to think that the house may actually sell at or ABOVE asking price. (Yes, I'm aware that none of this is binding in any way, and it's possible that I'm getting carried away here. Could totally turn out that they all like the house, but try to low-ball me. I wouldn't mind selling to the first party for 120,000€ at all, if nothing better comes up. And of course even they could quickly change their mind.)

It's obviously a good problem to have, but has anybody been in the same situation and can share their experiences? I'm especially interested in how you handled a situation where several parties offered to buy for the asking price. Did you succeed in extracting even higher offers? If yes, how did you handle a possible bidding process? I'd rather not let this turn into an open-ended auction with 1,000€ increases, so there would need to be some kind of structured format. And I would like to keep this a sale-by-owner.

Sorry for the wall of text, and looking very much forward to any replies you might have to offer. Thank you already in advance.
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Old 06-05-2019, 06:18 AM   #2
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Not exactly comparable, but we had a situation around 15 years ago when we sold our house (through a realtor). It was kind of a unique house, so attracted interest. We got two offers at our asking price on the same day, so we realized we had actually priced it a bit low, but what can you do?

We decided to accept the offer made earlier in the day, as that seemed the fairest, and we told our agent to take it. But before she could finalize it, we got another offer out of the blue for about 10% more. We agonized over that for a bit, but the agent said it was perfectly ethical to take the high offer since the earlier acceptance had not been committed to a signed agreement yet.

We notified all the potential buyers and gave everyone a chance to beat the high offer (even a dollar more would have worked), but they didn't bite.

So we sold the place to the final bidder and it worked out great. He still lives in the house and loves it. The funny thing is that he had never seen the place, since he lived over 2,000 miles away and just saw the pictures on the internet.
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Old 06-05-2019, 06:29 AM   #3
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When my parents passed away, my sister and I inherited the house. I bought out my sister and proceeded with a total inside remodel and new roof.

When I was done remodeling, I put a for sale sign in the yard. I had numerous phone calls within a couple of hours and an offer slightly below asking price. Contingent on the buyer getting financing. (buyer was a bank vp).

Then I get another call from a neighbor looking buy a place for their son in the same neighborhood. i told him I had a solid offer, but no contract yet. He insisted on making an offer and offered either asking price or above - I can't remember. No contingencies - no loan - cash deal.

I had a dilemma, so I asked my lawyer what to do. He said "Take the cash". I called the first offerer and told him I was going with a better offer. He was quite mad. Sale went through perfectly.

OP - In your case - yes a structure is needed for multiple offers. Here in Illinois, I believe an offer must be in writing. And I believe they all have expiration dates. I think there are standard offer forms.

If I were you, I wouldn't keep the original offerer hanging out there too long. See if you can get any more offers within a week, and if not, enter into a contract with the first offerer. If you do get additional offers, weigh the pros and cons of the offers before making a decision. But I wouldn't risk escalating a bidding war in fear of losing your first offerer.
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Old 06-05-2019, 06:32 AM   #4
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Thanks for sharing that, braumeister. Assuming the first bidder would have offered you one dollar more, what would you have done? Would you have accepted this new, highest bid as final, or would you have gone back to the second party and asked them if they also want to beat this new offer?
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Old 06-05-2019, 06:36 AM   #5
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The other thing to consider is the capacity of the parties to close the transaction.

If the total offers are similar I would go with the party who seems best postioned to actually close.
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Old 06-05-2019, 06:46 AM   #6
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Thanks Ron, very good input.

Quote:
Originally Posted by Ronstar View Post
OP - In your case - yes a structure is needed for multiple offers. Here in Illinois, I believe an offer must be in writing. And I believe they all have expiration dates. I think there are standard offer forms.
This doesn't apply to my jurisdiction. Nothing is legally binding until a contract is signed, in person, in the presence of a notary (who gets a fee of 1,5% of the sales price ). I've had one lady change her mind on the morning of our notary appointment during an earlier sale. You have no legal recourse against that. Even reservation fees are not legally binding unless notarially certified (which comes with, you guessed it, a hefty fee).

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If I were you, I wouldn't keep the original offerer hanging out there too long. See if you can get any more offers within a week, and if not, enter into a contract with the first offerer. If you do get additional offers, weigh the pros and cons of the offers before making a decision. But I wouldn't risk escalating a bidding war in fear of losing your first offerer.
Very much agree with that. I told everybody that I have set up showings until this Saturday, and that I will give everyone who has made an appointment so far the chance to see the house. Then I will make a short list of really interested parties, and ask for their offers. So the first bidder (let's call him A) is aware that I'm still in discussions, but I also told him I would give him a chance to beat any higher offer. The question is really what happens if there is one or more better offers - do I take them back to A just ONCE, or do I give possible parties B and C also a chance to beat a higher counteroffer by A?

I want to be fair, but I also don't want to leave money on the table. It's not even my house, so I feel responsible to be a fair agent and achieve the best result for my wife and her family.

Maybe this will not even happen, but I want to be prepared for the possibility.
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Old 06-05-2019, 06:50 AM   #7
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Originally Posted by pb4uski View Post
The other thing to consider is the capacity of the parties to close the transaction.

If the total offers are similar I would go with the party who seems best postioned to actually close.
Good point, of course money isn't the only consideration. Just the most important one probably. If I got two very similar offers, I would even suggest to my wife and her siblings that they should consider selling the house to the nice young family rather than the childless couple, all other things being equal.
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Old 06-05-2019, 07:04 AM   #8
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I’ve sold some homes by owner. I think, in addition to price, it’s important to gauge who actually will qualify for a mortgage, whether there are challenging contingencies (like the need to sell a home before buying yours), and whether all the decision-makers are truly on board. Then get to price. You can put a timeline like “all offers due Wednesday” and if you have more than one realistic attractive offer you can always go back to all and request “best and final offer.” Good luck!
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Old 06-05-2019, 07:10 AM   #9
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Quote:
Originally Posted by RISP View Post

I want to be fair, but I also don't want to leave money on the table. It's not even my house, so I feel responsible to be a fair agent and achieve the best result for my wife and her family.

Maybe this will not even happen, but I want to be prepared for the possibility.
We sold in a similar situation and sellers market. The initial interest was stronger than anticipated, we received two offers at the listing price within days of listing. Our agent suggested a sealed bid auction. That is, contact everyone who made an offer or expressed the intention to do so, let them know there were multiple offers at list price, and ask them for their “best offer”. The agent committed to accepting the best offer with no further negotiating. For us it worked, the final price was above the listing and covered about 1/2 of the realtor commission.
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Old 06-05-2019, 07:50 AM   #10
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Thanks for sharing that, braumeister. Assuming the first bidder would have offered you one dollar more, what would you have done? Would you have accepted this new, highest bid as final, or would you have gone back to the second party and asked them if they also want to beat this new offer?
I don't know what we would have done. Everything was being handled between DW and our agent, since I was out of town at the time. My gut feeling is that I would have wanted to be fair to the first bidder and would have accepted the one dollar higher offer if he had made it. I think forcing a bidding war would have been greedy.
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Old 06-05-2019, 07:51 AM   #11
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Our agent suggested a sealed bid auction. That is, contact everyone who made an offer or expressed the intention to do so, let them know there were multiple offers at list price, and ask them for their “best offer”. The agent committed to accepting the best offer with no further negotiating.
I like that solution very much.
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Old 06-05-2019, 07:53 AM   #12
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I’ve sold some homes by owner. I think, in addition to price, it’s important to gauge who actually will qualify for a mortgage, whether there are challenging contingencies (like the need to sell a home before buying yours), and whether all the decision-makers are truly on board.
I'm thinking I might ask all seriously interested parties to provide a "Finanzierungszusage" (how do you translate that? A "promise to finance"?) by their bank.

We are in the comfortable situation that the house is empty, paid off, we are under no time pressure, and prices are not likely to decline any time soon.

Regarding "all decision makers being on board", DW is, and if one of her siblings starts action up, I'll just walk away and let them handle this themselves. I don't get paid for this, so no need to deal with any bullshit.

Quote:
You can put a timeline like “all offers due Wednesday” and if you have more than one realistic attractive offer you can always go back to all and request “best and final offer.” Good luck!
Quote:
Contact everyone who made an offer or expressed the intention to do so, let them know there were multiple offers at list price, and ask them for their “best offer”.
I think this is just what I will do. Thank you!!
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Old 06-05-2019, 08:13 AM   #13
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I don't know what we would have done. Everything was being handled between DW and our agent, since I was out of town at the time. My gut feeling is that I would have wanted to be fair to the first bidder and would have accepted the one dollar higher offer if he had made it. I think forcing a bidding war would have been greedy.

A very minor, technical point, but I think I would have asked the first bidder to match the higher bid; since they bid first, I wouldn't ask them to exceed the higher bid, even by a dollar, just match it. Because in a tie on the dollar amount, I would give preference to the person who responded first. Just my $1! Of course, the ability to close is a lot more significant, so cash and/or non-contingency offers would probably get preference, at least by a few thousand, if not ten thousand or more.
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Old 06-05-2019, 08:35 AM   #14
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That sounds like a normal real estate sale in my part of California. I see this often. You just ask everybody to put in their final and best offer within 48 hours. In California there is even a statewide form to use since it's so normal. Good luck to you.
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Old 06-05-2019, 10:42 AM   #15
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We have been in the sealed bid process. We once had a buyer screw around so long that we bought a different house. When she finally came back to take our offer we laughed. It had expired within 24 hours and then we waited another 2 weeks.
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Old 06-05-2019, 11:10 AM   #16
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Any advice on the ideal time windows for a first and possible second bidding round? Some realtors suggest 2-4 weeks for the first round, but that seems crazy long to me.

I have showings until Saturday. Would it be too quick if I afterwards asked for bids until, say, Wednesday at midnight? Should it be a full week instead?
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Old 06-05-2019, 11:12 AM   #17
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In California there is even a statewide form to use since it's so normal. Good luck to you.
Thanks, very interesting. You wouldn't possibly have a link to that form? I'm curious what kind of information they ask for.
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Old 06-05-2019, 11:50 AM   #18
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We were selling the family home. Three realtors made estimates and we chose the middle one (they were 499, 529, 549 thousands). The showings all closed after a week, and then offers were made 3 days later (all cash). The offers were 529, 535 and 555. The realtor told the low bidders they were low and would they revise their offers up (not specifying what they had to beat).

So we completed for $555k.

(They tore the place down and rebuilt a nice infill. It is currently value on Zillow for $2600k ten years later.)
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Old 06-05-2019, 12:02 PM   #19
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Bids by Wednesday is reasonable. If you wait to long buyers will disappear.
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Old 06-05-2019, 12:44 PM   #20
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We were selling the family home. Three realtors made estimates and we chose the middle one (they were 499, 529, 549 thousands). The showings all closed after a week, and then offers were made 3 days later (all cash). The offers were 529, 535 and 555.
What was your asking price, 529? Or did you not give one?
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