Accept Pre-Listing Offer on Home or Put it on the Market

[mitchjav]

Looking for some pearls of wisdom here...

We are buying a new construction home which we expect to be ready
to close upon in the May timeframe. We've hired a RE agent where we
live to sell our current house - her plan is to put it on the market
late Feb/early March.

She actually toured one potential buyer through the home already,
with the understanding that it was not yet "on the market" and that
we wouldn't close on it until mid-May. The buyer is interested and is
willing to make an offer at the listing price that the RE agent and we
were planning on going out at. They have flexibility in the closing date.

Question is - assuming all is right with the negotiated closing date,
contingencies, etc., do we take this offer? Concern is that if it is selling
at the proposed list price this early, and if inventory in this town is limited
(which it it), might we better off waiting and putting on the market as planned in Feb/Mar? Thinking we might get more if there are multiple bidders

Thoughts?

 

[OldShooter]

I would have your concerns. If I decided to take the offer I would negotiate the agent commission down to 50% of sticker price. If you have legally "hired" the agent then that contract will need to be amended.

Reason for the commission cut: She has done little work and she is not splitting the commission with a buyer's agent. Those are the two reasons that she showed the house. She didn't do it as a favor to you.

 

[MBAustin]

If you are dead set on getting top $$, then you should wait. If you are happy with the listing price and just want to get it over with, take it. Getting and keeping your house in "show" condition for weeks is no fun.

I do think OldShooter's suggestion to ask the agent for a reduced commission is smart. Personally i might propose that the difference go to a charity that you both favor.

 

[Aerides]

I agree completely with MB. Just because you have a great fast offer doesn't mean you'd get more if you wait. This might just be the perfect match.

If you did your research and priced properly to start, I'd go with it, assuming a rock solid buyer with mortgage approval, and a nice non-refundable deposit.
But only if you're the type that won't spend the next 6 months looking at comps and going coulda shoulda woulda.

You will save far more than a few grand in time and serenity.

 

[RunningBum]

I did this with a townhouse I owned that my son lived in. A couple other realtors got wind this was coming on the market and asked if they could show it, and one came back with an offer that was I think $2K over the price we were going to list it at, which my realtor thought was worth a shot but probably too high. Not long after the pandemic hit so I was really happy to have the offer and afraid it might get pulled, but it went through.

It wouldn't have been much hassle for us to wait because the house was vacant, but still there are utilities, taxes, risk of something bad happening like vandalism or a burst pipe. An offer in hand at an acceptable price is awfully nice. You might be able to list it and get a better offer, or you might not.

btw, my realtor did a lot of coordinating on the work that needed to be done to ready my place to be listed, so I definitely was not going to ask for reduced commission.

 

[Montecfo]

It's a full price offer.

I would accept it and go on with life

I liked old Shooter's idea on the fee.

 

[foxfirev5]

It's a full price offer.

I would accept it and go on with life

I liked old Shooter's idea on the fee.

Many years experience here. The first offer is usually the best offer. Make it work.

 

[Scrapr]

I'd want to see the offer. As in...are they going to close? Do you anticipate contingencies? Or inspection issues? I might hold firm on contingencies. (as in none or a very strong mortgage approval) And i would not "give" much on inspections. There are buyers out there that high ball offers then kill you on the inspection report. As in the buyers inspector is in their pocket. Offer $10k over & then negotiate $25k off

I just bought a home no contingencies (cash) & waived inspection. There was another offer "substantially" higher. I suspect it was $25k higher. The ease of selling & no negotiating helped a lot. I did have to send proof of funds

The home I sold had 13 offers. I did not take the highest offer but the offer that I thought would best fit in the house & neighborhood

 

[SecondCor521]

If I were in your shoes, I would probably try to find some way of getting a decent and fast objective appraisal. Maybe hire an appraiser but don't tell them what the offer on the table is at.

Realtors can do a CMA but they can be wrong by a fair amount or they might put their thumb on one side of the scale or the other for various reasons.

You can do your own CMA by looking at recent closed sales listings near your home that are comparable. You probably can't get down to $1K precision, but maybe +- 5%.

...

Once you figure out what the home is realistically worth, then you can evaluate the pending offer realistically. If I were leaving a few $K on the table and the buyers seemed like good eggs, I'd take it just for the convenience factor. If it's $25K (or whatever amount is "a lot" to you) and the buyers are not particularly compelling, then I'd be more inclined to list it and try to get a better deal.

You could read the second chapter of Freakonomics to get more insight into realtors and home pricing.

 

[pjigar]

I would have your concerns. If I decided to take the offer I would negotiate the agent commission down to 50% of sticker price. If you have legally "hired" the agent then that contract will need to be amended.

Reason for the commission cut: She has done little work and she is not splitting the commission with a buyer's agent. Those are the two reasons that she showed the house. She didn't do it as a favor to you.

And the fact that she was not transparent about the commission, I would not even use her as a listing agent when time comes. Typical sell contract with RE agent expires in 3 months but read your's to confirm.

PS: I have bought and sold prelisting houses in the past but my agent charged me/seller 2.5% in those scenarios.

 

[W2R]

If you are dead set on getting top $$, then you should wait. If you are happy with the listing price and just want to get it over with, take it. Getting and keeping your house in "show" condition for weeks is no fun.

I do think OldShooter's suggestion to ask the agent for a reduced commission is smart. Personally i might propose that the difference go to a charity that you both favor.

+1

Waiting while a house sells is worth a certain amount of money to me - - it's stressful, expensive, and no fun! So, if it was me I'd lean towards getting it over with, unless the amount offered is painfully low.

 

[travelover]

The amount offered is the listing price - how can it be painfully low?

If the real estate agent provided a very wrong valuation either through malice or incompetence.

 

[SecondCor521]

If the real estate agent provided a very wrong valuation either through malice or incompetence.

Or a combination of economic self-interest and a lack of professionalism, which is probably between the other two you mentioned.

 

[Letj]

I'd want to see the offer. As in...are they going to close? Do you anticipate contingencies? Or inspection issues? I might hold firm on contingencies. (as in none or a very strong mortgage approval) And i would not "give" much on inspections. There are buyers out there that high ball offers then kill you on the inspection report. As in the buyers inspector is in their pocket. Offer $10k over & then negotiate $25k off

I just bought a home no contingencies (cash) & waived inspection. There was another offer "substantially" higher. I suspect it was $25k higher. The ease of selling & no negotiating helped a lot. I did have to send proof of funds

The home I sold had 13 offers. I did not take the highest offer but the offer that I thought would best fit in the house & neighborhood

Agree totally. I’ve bought and sold several houses and I know a lot of the tricks of the trade. OP has received really good advice. Accept the offer and propose a limit on what you would pay for inspection items. The first offer is often the best. I wouldn’t ask the agent to reduce the commission. Why should it matter how hard the agent works. The agent brought you a buyer and that’s what matters. You would have paid the commission anyway. You don’t want to come off as a miser or petty. That’s how it works sometimes. If they sell the house quickly in-house, they should get all the commission. It’s the way the business works. As Scrapr said, there are buyers who offer over listing and then try to nail you on the inspection when they think they have you in a bind. I just had this happen and I refused to budge because their demand after inspection was ridiculous. I released them from the contract. It was frustrating because I really wanted to sell the house but it was not my primary home and I didn’t have much carrying costs.

 

[nwsteve]

I'd want to see the offer. As in...are they going to close? Do you anticipate contingencies? Or inspection issues? I might hold firm on contingencies. (as in none or a very strong mortgage approval) And i would not "give" much on inspections. There are buyers out there that high ball offers then kill you on the inspection report. As in the buyers inspector is in their pocket. Offer $10k over & then negotiate $25k off

I just bought a home no contingencies (cash) & waived inspection. There was another offer "substantially" higher. I suspect it was $25k higher. The ease of selling & no negotiating helped a lot. I did have to send proof of funds

The home I sold had 13 offers. I did not take the highest offer but the offer that I thought would best fit in the house & neighborhood

Scraper has the right idea IMHO. I would take the offer but ask for a quick close and a $10/mon rent though May. It seems time often is a villain in a good deal going bad. Think back to March 2020 and how abruptly COVID changed how most people looked at the world.

 

[jollystomper]

It truly depends on how much of a risk you are willing to take by waiting. My siblings and I had a similar situation when we put our parents house on the market, the agent came in with a solid (cash) pre-market offer. But, we had done research and saw comparable houses in the neighborhood had been selling for higher, and though the agent recommended we take the offer, we were not in a hurry and turned down the offer. We ended up getting close to a dozen offers and ended up gaining 15% over the pre-market offer. But again, we had no need to rush, and were willing to cut the price if offers did not come in.

In your situation, though, I agree with those who say to evaluate the solidness of the offer and potential contingencies/inspection issues, as well as the ability to pay rent between the closing and when you can move into your new home.

 

[CaliKid]

I would take the deal (assuming price good) and I would close escrow. Just do a rent back. Take some gains off the table.

 

[Morgan22]

Many years experience here. The first offer is usually the best offer. Make it work.

Take it. My friend had same situation, had an full price offer before it hit market. Got greedy and decided to list. Home finally sold months later for $20k under listing price.

 

[38Chevy454]

I would take the deal (assuming price good) and I would close escrow. Just do a rent back. Take some gains off the table.

My thoughts as well. Take the money now and get the sale done with rent back until May or June. If inspections uncover anything, you can always say no or limit the reduction/repairs. Agree to ask realtor for reduction since she's getting both ends of the comission, with almost no expenses.

In short, take the money and be happy.

It is also in buyer's interest to lock in the low rates and less busy sale time now, vs what it could be later.

 

[pb4uski]

+1 with others.

First, have a local appraiser do a market value appraisal... IIRC the last appraisal I had done was ~$400 but that $400 will give you peace of mind that you are agreeing to a fair price and not being taken advantage of. Tell the appraiser that you just want an analysis and the fair value and that you don't need a fancy report with pictures and all and they might be able to haircut the appraisal cost some.

Then assuming that the price is fair, accept the offer and negotiate a 6 month lease (6 months in case your new build isn't finished on time) at low end of market rent if you can.
That arrangement might be a problem if they are getting a mortgage that requires the property to be owner occupied. If you can't do a sale/leaseback then get a very significant deposit... significant enough that they won't want to default on the contract.

While it is true that the realtor isn't doing a lot of work here at the same time they are bringing you and easy sale... I'd ask that they haircut the commission a little... and that haircut will cover the cost of the appraisal and then some I would think.

Sounds like a possible win-win-win to me.

 

[Sunset]

OP - My biggest concern would be that you didn't have other agents view the house for possible listing, and show you why the price at $x is the "right" price.

If you are confident about the price because you had other opinions (estimations) then just the timing and commission are an issue.
I like the rent it back cheap idea, so you close the sale.

On our house purchase, the seller had an issue, so we rented the house for $1/month until they got the issue resolved. Turned out to be nearly 6 months of $1 rental

 

[Music Lover]

If you can determine that the price is fair, sell the house if you're comfortable with the later possession date.

As to giving some of the commission to charity, I can't think of any reason why any charity should be involved in the normal sale of a house.

 

[OldShooter]

... I wouldn’t ask the agent to reduce the commission. Why should it matter how hard the agent works. The agent brought you a buyer and that’s what matters. You would have paid the commission anyway. You don’t want to come off as a miser or petty. That’s how it works sometimes. If they sell the house quickly in-house, they should get all the commission. It’s the way the business works. ...

I don' understand this at all and I think it's a bit idealistic.

OP hired the agent to sell the house. Her role is legally as a fiduciary, to get the OP the best deal regardless of her own financial interests. I'm sure there was also the usual sales pitch for her skills, her resources, etc. and how hard she would work.

Bringing an offer like this is suspiciously close to being a breach of fiduciary duty, by avoiding exposure to the market and ensuring that she gets both sides of the commission. And, as someone mentioned, did she lowball the asking price to make the property easier to move? Hard to tell.

So for the OP to negotiate for a reduction of thousands of dollars in commission is neither petty nor miserly. His fiduciary agent is asking to be let off the hook on really working the listing and optimizing the price, plus she is feathering her nest by arranging to not risk having a commission split. (@Letj, if you think worrying about a few thousand dollars, please send me your petty cash.)

One tack I might take is to say "Gee, this is great. We got a full price offer before the property was even exposed to the market. Let's raise the price when you publish the listing." At that point she will be well set up for the commission negotiation.

And, who cares about being viewed as petty or miserly? This is almost certainly a one-time transaction with someone the OP will never see again. It is not happening in the context of a bigger relationship where what the agent thinks might matter. Negotiation is the way business works.

 

[ivinsfan]

I don' understand this at all and I think it's a bit idealistic.

OP hired the agent to sell the house. Her role is legally as a fiduciary, to get the OP the best deal regardless of her own financial interests. I'm sure there was also the usual sales pitch for her skills, her resources, etc. and how hard she would work.

Bringing an offer like this is suspiciously close to being a breach of fiduciary duty, by avoiding exposure to the market and ensuring that she gets both sides of the commission. And, as someone mentioned, did she lowball the asking price to make the property easier to move? Hard to tell.

So for the OP to negotiate for a reduction of thousands of dollars in commission is neither petty nor miserly. His fiduciary agent is asking to be let off the hook on really working the listing and optimizing the price, plus she is feathering her nest by arranging to not risk having a commission split. (@Letj, if you think worrying about a few thousand dollars, please send me your petty cash.)

One tack I might take is to say "Gee, this is great. We got a full price offer before the property was even exposed to the market. Let's raise the price when you publish the listing." At that point she will be well set up for the commission negotiation.

And, who cares about being viewed as petty or miserly? This is almost certainly a one-time transaction with someone the OP will never see again. It is not happening in the context of a bigger relationship where what the agent thinks might matter. Negotiation is the way business works.

Being fair is nice though, who knows how many homes or how long the agent worked with the potential buyer? So that part of the commission is separate from the other part. We actually have no idea that the agent isn't bringing a great offer for both parties. In theory the agent will eventually sell the house hunter a home somewhere and get a commission. This breach of duty stuff is a little overblown.

 

[Letj]

Being fair is nice though, who knows how many homes or how long the agent worked with the potential buyer? So that part of the commission is separate from the other part. We actually have no idea that the agent isn't bringing a great offer for both parties. In theory the agent will eventually sell the house hunter a home somewhere and get a commission. This breach of duty stuff is a little overblown.

Exactly my sentiments. I have no idea how Oldshooter came to such a conclusion. Many agents work with buyers for months before they find them a house so she may have earned her commission and presumably the agent did a market analysis and presented it to the seller before they settled on a listing/sales price. She may have even helped the seller to stage and prepare the house for sale. We don’t know all the facts.