Is ANY offer a good offer? (foreclosures, 3%, negotiations, agent)

[lucyhoneychurch]

Hi everyone--I have spent the weekend avidly reading this forum and think it is a wonderful resource and community. I am interested in your opinions of this scenario:

Our home was listed in San Antonio early March. Market here has flattened but not tanked like other cities. We are in a desirable part of town with excellent schools, gated neighborhoods. House is priced according to comps, realtor's advice. We are leaving the state and so told her we wanted to price aggressively.At the realtor preview they all said it shows beautifully and you wouldn't believe people were still living in it.

The 2nd day our home was on the market, we got an offer. We were terribly excited until we heard the terms: they were only approved for a mortgage at a price $17000 below asking. (This alone we probably would have accepted.) On top of that, they had no cash for closing and needed us to pay $12000 in their costs. Their financing was an FHA loan and they were only putting down 3.5%. Our realtor checked out their lender, who was a guy with a cell number as his contact info and a website screaming that you too could have a palace for the price of a cottage.

We countered by saying we would accept either the $17000 price reduction or $5000 off the asking price plus the $12000 in closing. They said they couldn't afford that, that they needed both, and negotiations ceased. Even our agent said the whole thing "smelled off" and she was confident we could do better.

We sort of felt like this was the kind of behavior that got people in trouble in the first place (overreaching for homes they couldn't really afford), but it was really hard to turn down an offer! So I'm wondering, what would you have done?

[Aibutiej]

I think when you get an offer matters. An offer on the 2nd day could well mean that you are priced right and that you will get another, better offer. By better, I don't necessarily mean more money, but better terms (buyers who are putting more money down and can easily get a mortgage for your house). A few months down the line, you might be more willing to come down and accept any offer, but remember that things can go wrong when the buyers are reaching to afford your property.

[Silverfall]

It makes no sense to take an offer that has no change of closing. I check out mortgage brokers that I am not familiar with all of the time. That preapproval letter is only as good as the mortgage broker issuing it.

[futurecruiser]

I think you did the right thing.

And I agree it's buyers like that (overreaching) is what got us into this mess.

Good luck!

[kevcrawford]

Originally Posted by lucyhoneychurch

Hi everyone--I have spent the weekend avidly reading this forum and think it is a wonderful resource and community. I am interested in your opinions of this scenario:

Our home was listed in San Antonio early March. Market here has flattened but not tanked like other cities. We are in a desirable part of town with excellent schools, gated neighborhoods. House is priced according to comps, realtor's advice. We are leaving the state and so told her we wanted to price aggressively.At the realtor preview they all said it shows beautifully and you wouldn't believe people were still living in it.

The 2nd day our home was on the market, we got an offer. We were terribly excited until we heard the terms: they were only approved for a mortgage at a price $17000 below asking. (This alone we probably would have accepted.) On top of that, they had no cash for closing and needed us to pay $12000 in their costs. Their financing was an FHA loan and they were only putting down 3.5%. Our realtor checked out their lender, who was a guy with a cell number as his contact info and a website screaming that you too could have a palace for the price of a cottage.

We countered by saying we would accept either the $17000 price reduction or $5000 off the asking price plus the $12000 in closing. They said they couldn't afford that, that they needed both, and negotiations ceased. Even our agent said the whole thing "smelled off" and she was confident we could do better.

We sort of felt like this was the kind of behavior that got people in trouble in the first place (overreaching for homes they couldn't really afford), but it was really hard to turn down an offer! So I'm wondering, what would you have done?

I would have kicked them to the curb quickly. I'm in SA too, and as long as your home is priced well, you'll be fine.

As we speak, I'm writing 2 buyer contracts, have another on the way, and have at least 2 offers coming on my listings. In addition to 4 currently pending and waiting to close. We're doing very well and the market is starting to swing.

[Lacerta]

I think most any offer is a good offer, because it opens up a starting point for negotiations. Offers that are fishing for a desperate seller can be bad for morale, though, when they come in way below asking price.

As for your situation. If your house is already aggressively priced for the current market, and isn't over a million dollars (arbitrarily chosen large number), I would say you were right to turn down the offer. If your house is over a million dollars, then remember that $29k is only about 3% off asking price, which isn't all that bad. Its all relative.

Your house hasn't been on the market very long. If you have an offer this early, I would bet you will have more.

As an afternote, $12k seems extremely high for closing costs. Did they have you paying points to get their rates down?

[tgbwc]

Originally Posted by Lacerta

I think most any offer is a good offer, because it opens up a starting point for negotiations. Offers that are fishing for a desperate seller can be bad for morale, though, when they come in way below asking price.

As for your situation. If your house is already aggressively priced for the current market, and isn't over a million dollars (arbitrarily chosen large number), I would say you were right to turn down the offer. If your house is over a million dollars, then remember that $29k is only about 3% off asking price, which isn't all that bad. Its all relative.

Your house hasn't been on the market very long. If you have an offer this early, I would bet you will have more.

As an afternote, $12k seems extremely high for closing costs. Did they have you paying points to get their rates down?

I bet the high closing costs are because it is an FHA loan. The buyer of our home has high closing costs because of that.

[Summering]

I wouldn't have offered them as much as you did.........You were gracious.
It is too much of a drop. Too costly for closing costs..........
This couple can not afford a home, and should NOT be buying one...........Exactly, what got America in this mess.
Good going...........you did the right thing.

[brookdaleresident]

You did the right thing. They can't afford the house. That's what annoyed me as a seller. I had a couple put in offers 3 different times; each the same. I countered each time. As soon as I had a solid buyer, I accepted. I suppose some buyers figure most sellers are desperate, but they all aren't.

[lucyhoneychurch]

Thank you all for your input--I do feel relieved knowing you all would have done the same. I think I have reading too many posts here the last few days, especially the ones about how you should only buy foreclosures and short sales and that certainly in this market sellers must have a $50000 cushion built into their asking prices and you can lowball'em with a 50% offer....I freaked out a little thinking I must have thrown away the best offer I was ever going to get if that is the way buyers are thinking...

The long distance purchase of our new home in PA has been very pleasant compared to the selling of this one (with 3 kids, an ancient cat, and a hyper dog)! LOL