Require advice: unsolicited all cash offer to buy my condo

[caninelover]

Hi,

I have an inquiry into the broker but wanted to get some feedback...

I live in a condo complex, probably 100 or so units in total, 2 bedroom 900 SFish. Bought in '03 for $245K, current value probably around $190K and I owe $169K on it.

Today an agent from Coldwell Banker left flyers at all units saying he represents an all cash buyer looking to purchase any available units in the complex. There are two currently for sale, and he attached redacted copies of the purchase offers for those two units (with buyer's name and sale price blacked out) to prove they were serious buyers.

What does everyone think this could be about? A developer maybe wanting to convert the condos to apartments? A scam? Something else? Has this happened to anyone before?

Any help is appreciated, thanks!

 

[rodi]

I've heard of real estate investors targeting a condo community in order to create inventory. It happens here in San Diego in some of the higher end areas (Carmel Valley, Del Mar, La Jolla.) In one specific case I saw posted on piggington.com - it was a buyer looking for one unit, in a school district/area... There was ZERO inventory, so he was trying to create inventory. He targeted three condo complexes... and got call backs from 2 or 3 potential sellers. Last he posted, he was negotiating with one of them.

 

[brewer12345]

There are an increasing number of markets where there is just no inventory. So if you are an agent representing would-be buyers, you are probably back to the days of going door to door asking people if they would consider selling. Simple as that.

 

[MichaelB]

What Brewer said. We used to get that. It stopped, now it's starting again.

 

[Chuckanut]

Same thing in my area. The inventory of homes is low, and interest rates are low, so there is a shortage of homes for people to buy and take advantage of these wonderful low rates. Add in recent announcements of a hiring boom in some hi-tech fields and it is a seller's market at the moment.

 

[caninelover]

The agent called back, yes that is exactly what he said...no inventory and his buyer is an investor. OK I get that part now. He said they want to see the condition of the unit so are coming by Saturday at 10 am. He threw out a range of $170-$190 and they would consider a leaseback so I can find a new home.

It could be a good time to upgrade to a place with a garage which would be great (don't have one now)...what do you all think? Could I push them up to $200 or $210 if they are going to be getting rental income from me immediately...should i go for it and consider a larger place? I could do $350K w/o it being much of a stretch for me, have the down payment money in cash so about $230K for mortgage...that price should get me either a 3 bd 3 bath condo or potentially a small single family house...

 

[ShortInSeattle]

The agent called back, yes that is exactly what he said...no inventory and his buyer is an investor. OK I get that part now. He said they want to see the condition of the unit so are coming by Saturday at 10 am. He threw out a range of $170-$190 and they would consider a leaseback so I can find a new home.

It could be a good time to upgrade to a place with a garage which would be great (don't have one now)...what do you all think? Could I push them up to $200 or $210 if they are going to be getting rental income from me immediately...should i go for it and consider a larger place? I could do $350K w/o it being much of a stretch for me, have the down payment money in cash so about $230K for mortgage...that price should get me either a 3 bd 3 bath condo or potentially a small single family house...

Sounds like a break-even for you. You walk away with close to nothing. Plus, you never put it on the market to get competing offers.

What's in this for you? Do you want to move?

SIS

 

[heeyy_joe]

Don't forget to serve milk and cookies. You're being played...

 

[Accidental Retiree]

I have a realtor leaving flyers on my doorstep all the time. I told him I am gonna send him the bill for the fence I'm gonna build to keep him and his flyers off my porch.

But seriously, when things heat up, realtors are leaving stuff on my porch quite often. The Bay Area has gotten quite busy lately, even in our modest 'hood, and investors can't wait to pay cash in amazing amounts.

We are fixin' to do a long-overdue kitchen remodel, and once that is done, if things are still hoppin,' we may try and do a pocket listing with the Porch Buzzard. If we can get what we want, that is, in our next desired location.

Or maybe we'll just stay here and make them work hard for nuthin'.

 

[Katsmeow]

How do you know your unit is worth $190k? To me the main issue is you finding out what your unit is really worth. Before I would take an offer like this unless I was really aware of comps for the area (and I mean very recent comps) then I would get an appraisal. It would cost a few hundred dollars but would give you your real value. Of course, bear in mind that if you listed your condo you would have real estate agent fees to sell and the current potential offer you wouldn't have those.

 

[bld999]

Redfin can be used to find comps local to you with many filter options. Decent place to start.

Real Estate Search | Redfin

 

[caninelover]

Hi all,

The unit above me (identical layout but mine is a little more upgraded with wood floors and plantation shutters) sold for $189K late 2011. Zillow and other sites are pretty consistently pegging ~$185K. Prices around the complex vary a bit, some that are closer to the park side sell for higher than the ones on my side of the complex. I almost refinanced last year before deciding against it, that appraisal came in at $180K. I think $185K to $190K is probably close.

I'm not sure if I'm getting played or not; I keep asking myself if I want to move. When I first bought this place, I thought I would sell it in a few years and get something bigger. Then the economy tanked, and I was underwater for some of those years, so I opted to stay. And I realized I like it here, it is close to shops and restaurants (walking distance) and other places around here are really suburban, so I'd have to get in a car and drive somewhere vs. just putting on some flip flops and walking down to the Mexican place for some tacos and a margarita. But my place is small, and I would really like to have a garage (I have a deeded covered parking spot right now). Also a second half bath would be a real help. But if this offer didn't come, I would not be thinking about selling.

I think I'll still talk to this guy on Saturday but I need to put some more thought into if I really want to move, and get the additional space I would like, but lose the location that I like. And if I do decide to move, as some of you have pointed out, maybe listing it is the way to go. This is a very easy deal though since buyer magically appeared with cash offer, no appraisal/inspection etc., fast escrow.

 

[Meadbh]

You are in the drivers' seat here. Before meeting with this realtor, determine the price that will make moving the obvious choice. Don't tell the realtor what it is. If he offers less, say no. If he really wants your condo, his offer may increase.

I had friends who were in this situation. They had not been thinking of selling, but they had recently become empty nesters and were vaguely thinking of downsizing. They did very well out of the deal. However, the market was very strong, and they ended up living with inlaws for several months before finding the perfect new smaller home.

 

[caninelover]

You are in the drivers' seat here. Before meeting with this realtor, determine the price that will make moving the obvious choice. Don't tell the realtor what it is. If he offers less, say no. If he really wants your condo, his offer may increase.

I had friends who were in this situation. They had not been thinking of selling, but they had recently become empty nesters and were vaguely thinking of downsizing. They did very well out of the deal. However, the market was very strong, and they ended up living with inlaws for several months before finding the perfect new smaller home.

Yes, that is the other thing that is making me hesitant here...if what the broker said is true than I may have a tough time finding a place to buy and competing with a lot of other offers. I think they would let me lease back for a few months at most, so a long protracted search would involve moving twice and that would be a huge PITA right now, w*rk is very busy.

 

[Texas Proud]

Not sure how your complex is.... but what would happen if a lot of units became rental units Would you still want to live there?

I would start to look on the real estate websites to see if there is something you might want... it might open your eyes to know what you need to get..



BTW, IMO if you really want to move to a better/more expensive place, it is best to do so before the prices start to go up... yes, your unit will sell for more, but the unit you want to buy will probably rise faster

 

[pb4uski]

I had an interesting thought. Around here it is common for a contract to have a clause where the deal is contingent on the buyer selling their property. I wonder if one could turn it around and make your closing contingent on your finding another place to protect you in case it is hard to find another house. I recall a recent 60 Minutes where someone in CA had made many offers, some at above the asking price, and still hadn't had an offer accepted.

 

[UserRequested]

Deduct from the $190 that you might get from the broker's client your selling costs of the condo (legals, other fees, removals etc)
Say your net proceeds are $180k, that's a whopping loss of $65k (26%)


Would your new $350k joint been worth more than $350+65 = $415 at 2003 prices

If it isn't then, IMO you're going even further backwards. You want to move to a place where the price recovery will be better than your current place.

 

[caninelover]

Not sure how your complex is.... but what would happen if a lot of units became rental units Would you still want to live there?

I would start to look on the real estate websites to see if there is something you might want... it might open your eyes to know what you need to get..



BTW, IMO if you really want to move to a better/more expensive place, it is best to do so before the prices start to go up... yes, your unit will sell for more, but the unit you want to buy will probably rise faster

Hi,

This complex was developed with City Redevelopment Agency funding, and there is a permanent owner occupancy restriction. It can be waived (with HOA and City approval) for a job relocation > 50 miles, foreclosure/bankruptcy, financial hardship and a few other cases, but it generally prevents investors from buying them as rental units. Of course given recent times, there are some cases were owners are renting out their units.

Now an investor can certainly still buy a unit and flip it later...

 

[caninelover]

Deduct from the $190 that you might get from the broker's client your selling costs of the condo (legals, other fees, removals etc)
Say your net proceeds are $180k, that's a whopping loss of $65k (26%)


Would your new $350k joint been worth more than $350+65 = $415 at 2003 prices

If it isn't then, IMO you're going even further backwards. You want to move to a place where the price recovery will be better than your current place.

Jags, I bought my current place in 2003 at $245K. By 2006, similar units sold for $350K. Then the market crashed and prices came way, way, down. The swings were influenced in part because my megacorp is the largest employer in this town (and the whole county) by far, and its layoffs (especially a large one around 2008) made the housing slump here worse. Kinda like a mini-Detroit I guess. On the other hand, that could be a reason not to spend more on a house here...if I end up as part of another massive layoff then I'm out of a job and my property value will tank

So, yes the $350K joint would probably have been at least $415K at 2003 prices, and probably more...

 

[caninelover]

I had an interesting thought. Around here it is common for a contract to have a clause where the deal is contingent on the buyer selling their property. I wonder if one could turn it around and make your closing contingent on your finding another place to protect you in case it is hard to find another house. I recall a recent 60 Minutes where someone in CA had made many offers, some at above the asking price, and still hadn't had an offer accepted.

I've never heard of this but maybe I'll ask the dude on Saturday...it would certainly go a long way towards assuaging my concerns about finding a new home, if I decide to do this...

 

[Brat]

Were I you I would look on line to see properties are on the market that you might buy. If there aren't any then don't sell.

 

[caninelover]

Were I you I would look on line to see properties are on the market that you might buy. If there aren't any then don't sell.

Yes that is what I'm doing now...only a few in my price range that good look. And by few I mean 4...

 

[jayc]

Beware. This is a way for the realtor to get listings. He presents the all cash contract and you have to list with him. Then the buyer backs out because there is usually a clause about approving the condo rules and bylaws. Tell the broker you just want his listing contract to last 2 weeks and for this buyer only. I bet he goes away.

 

[Texas Proud]

Hi,

This complex was developed with City Redevelopment Agency funding, and there is a permanent owner occupancy restriction. It can be waived (with HOA and City approval) for a job relocation > 50 miles, foreclosure/bankruptcy, financial hardship and a few other cases, but it generally prevents investors from buying them as rental units. Of course given recent times, there are some cases were owners are renting out their units.

Now an investor can certainly still buy a unit and flip it later...

Then I would question why a developer is buying up units From what you say, it can not be to rent... so what are they going to do with them?

I would also agree with jayc that there might be something else going on... so be careful...

 

[Accidental Retiree]

I've never heard of this but maybe I'll ask the dude on Saturday...it would certainly go a long way towards assuaging my concerns about finding a new home, if I decide to do this...

I have had 2 realtors tell me we could do exactly that, put a contingency in for our buying our next home. The buyers are even giving 30-60 days free rent-back so that they can buy in our neighborhood.