Selling home, as is, to neighbor (appraisal, investment, commissions, mortgage)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
A few months ago, I posted about being contacted by someone in my neighborhood about buying our home. We have already moved two hours away and due to finances being tight, we would prefer to sell as is. I mentioned previously that the home needed some work and updating.
It turns out that many of you kind folks that responded to my questions were right...they do want to purchase the house primarily as an investment, not as a new home for their daughter as they initially said. Not that it really matters to us, but they did make an offer that seemed very low. I did as many of you suggested and got an appraisal of the house in order to make a counter-offer. The difference between their offer and the appraisal is 80,000. We're prepared to go lower than the appraisal in order to just get rid of the house, but how do we determine how low to go before we just say "the heck with it" and list with a realtor. I guess what I'm asking is what kind of things do we need to be thinking about for our counter-offer. How do you put a value, in terms of dollars, on things like a cash offer, not worrying about an inspection, getting rid of the mortgage on this house, etc. which are some of the pluses in this particular deal. We don't want to be stupid and get taken advantage of, but it sure would be nice to have this done. Any help you can give would be great. Thanks.
You've never given any indication of the price range of your home, so a discrepancy of $80K could be 10%, 20%, or even more, off the appraised price. So any suggestions will have to be somewhat vague as well.
Take into consideration the possible commission paid to Realtors, carrying charges for 3-6 months (mortgage, utilities, insurance, maintenance) and look at what other potential buyers might want you to take care of before (and the cost for that). Add it all up and see what the difference is. You mentioned that money is tight - is the difference huge? Can you counter?
Also consider that getting a mortgage isn't as easy as it used to be, so a cash offer is definitely a big plus in your case, as is the condition for an "as is" sale.
Again, we don't know enough since you have given no other numbers/valued, therefore the above are only general tools for you to evaluate your situation.
The 80 thousand dollar difference is over 40 percent off the appraised value. I think it may be too big a difference to negotiate even if we come down from the appraisal but we want to make an attempt.
One more thing to look into: How much inventory is there?
If turnover is low and there is lots of inventory, the property may sit on the market for a long time--adding to the "holding costs".
...they do want to purchase the house primarily as an investment
Not that it really matters to us, but they did make an offer that seemed very low.
That follows suit.
Quote:
...got an appraisal of the house in order to make a counter-offer.
The difference between their offer and the appraisal is 80,000.
...over 40 percent off the appraised value (120 vs 200?)
That's below par for an investor to justify the purchase. But not all that low.
The other question is the quality/accuracy of the appraisal.
Quote:
We're prepared to go lower than the appraisal
...but how do we determine how low to go
...what kind of things do we need to be thinking about for our counter-offer.
Think about THEIR view and intention and business plan.
Quote:
We don't want to be stupid and get taken advantage of, but ...
Then think about YOUR intention and cash needs to NOT accept.
Counter offer. Split the difference at $40,000 off that appraisal.
See how they respond.
The appraisal should have taken into account the updating that is needed, so it should already be below value of other homes in the area that have been updated. You don't want to discount twice. It sounds like you're ok with going even lower than the already discounted price, and you just need to do the math as suggested above, like how much are the commissions worth to you, or to do absolutely no repairs worth to you...
"The other question is the quality/accuracy of the appraisal."
Well, I hope it's accurate. We picked an appraiser with 30 years of experience and she seemed to note all the deficiencies in the house.
"Think about THEIR view and intention and business plan."
Funny you should say that. I think that's exactly what they want us to do. They wrote a 2 page letter with their offer stating all the improvements they wanted to make and how much they would cost to justify the offer. All that's fine, of course. It's not really any of our business what they want to do, but do they really expect us to reduce the price in order to pay for all their high-end updating?
They also seem to thing we should reduce the price to cover things that may go wrong in the future. Mentioning things like the furnace, septic system, etc. even though all the major mechanics of the house are fine. I mean, aren't those things we all take a chance on when we buy a house?
Well, while you're thinking, be nice to them. Thank them, smile at them, say you're looking at it carefully and trying to get together with advisors/spouse/etc. Don't upset them while you're thinking about it.
Just wanted to thank everyone for their replies. We did split the difference between their offer and appraisal and they accepted. It is a done deal. Still feel that they got the better deal, but we can live with it. And for me personally, considering everything going on in my life, living with the price is all I wanted. Again, thanks for all the advice.
Just wanted to thank everyone for their replies. We did split the difference between their offer and appraisal and they accepted. It is a done deal. Still feel that they got the better deal, but we can live with it. And for me personally, considering everything going on in my life, living with the price is all I wanted. Again, thanks for all the advice.
Glad to hear that it worked out. Peace of mind can be worth a lot.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.