Special offer

Counter Offers Should Be in the Best Interest of The Common Goal - CLOSING the Deal

By
Real Estate Agent with ERA Herman Group Real Estate-NoCo

A few months back I was assisting a Buyer who was relocating to the Colorado area from Pennsylvannia. Her home in PA was valued at about $750k of which she had over $450k in equity not to mention all the other assets she was liquidating to move here. Point is, she was coming with cash in her pocket and money to spare.

SELLERS and BUYERS - this article is also written for you. Make sure that when you are in negotiations that your counter offers, are in the best interest of the goal in which you are trying to achieve. Either selling your home, or buying one. It is NOT about winning, but about business and closing the deal.

Gary and I had worked with our Buyer, a young widowed woman, who was relocating since her daughter was going to a college in our area. So for several months Gary and I had looked and previewed properties, spent time on the phone with her and took her out to see the cream of the crop on her quarterly visits. Of course, until her home was in contract, it was just looking. But what it did was give us a real sense of what she wanted, the type of neighborhood, the quality of home etc..

A few months later her home went into contract (it was a mostly a cash purchase so the loan was minimial for her Buyers). They had strong credit, relocators themselves who wanted a quick close. Therefore, they put a little more pressure on our Buyer to relocate to Colorado but the deal appeared to be very strong.

Having said that, she started to send us homes she really liked.  She was in the low $350k but could do more.  She found a home she really liked.. She love it. So Gary and I went out there and took more photos, looked at the neighborhood, researched the community, property to get a better feel for the home. It was new on the market and come to find out, the Seller had already relocated and needed a quick close.. PERFECT!! so we thought,

Our Buyer wrote a full price offer, paid the $4,000 in Earnest Money, it was to be a cash deal, we requested no closing cost concessions but did state there was a contingency on the offer providing that loan conditions were finalized on the home our Buyer was selling. My Buyer needed a 45 day close however, if possible wanted to move it up sooner. I fully expected a counter offer with a "right of first refusal" on it and that was it.

What I got was a counter offer that looked like this.

  1. Must close in 21 days
  2. Earnest Money to be $20,000.00 

The Listing agent called me and said we are not comfortable with your Buyer not seeing the home before writing an offer. I explained that we have been working with her for several months and we provided her with whatever information she needed to feel comfortable in doing so. We sent over our Buyer's purchase contracts for her home and everything they requested. I stated that it was NOT noted in the MLS that out of state Buyers will have to pay a $20,000.00 Earnest Money deposit but a local Buyer only has to pay $4,000.00.

The Listing agent said that the Buyer needs to close in 21 days because the Seller wants to not have to pay for an empty house. I said we couldn't do that but as soon as possible thereafter we will. The Listing agent wanted my Buyer to close earlier and rent it back, even if she wasn't moving out for a few more weeks, basically my Buyer to pay for an empty house. I explained that we needed to want until her home closed to fund the cash purchase.

My Buyer was so insulted about the Earnest Money she walked away from the deal. She felt like the house had been tainted. It was a back and forth issue between that agent and myself. It was if my Buyer was being punished because she was coming from out of state. The Listing agent said well the deal could fall throught. Absolutely, but so can the first time home buyer that writes an offer and there is a loan issue a week before closing. My Buyer was cash. All deals have the potential to fall through.

I went and found her another house which was $15k more, same deal and it closed without issue in less than 40 days. Right around the time of our closing, the previous agent called me back saying that would still love another offer from us. I said, had you not countered the way you did,  you would have been closing on your Seller's home right now. My personal opinion it was not the Seller's idea to jump up the earnest money so much, but her agent's... That killed the deal.. My Buyer had the money, but it was principal in which she said - No Way!

I don't know about everyone else, but I know there are a lot of relocators that buy a home site unseen for a variety of reasons. Should they be punished with excessively high Earnest Money? Can not a local deal fall through just as easy? Maybe this is common practice in other places, but it is not my common practice.  Any comments??

 

 

Posted by

  

Comments (12)

Elizabeth Cooper-Golden
Huntsville Alabama Real Estate, (@ Homes Realty Group) - Huntsville, AL
Huntsville AL MLS

Sherilyn, I went through a similar process, except the sellers ended up rejecting our offer and ended up renting their home out.  The listing agent blamed ME for her losing the listing.  LOL.  Takes all kinds.  I"m so happy that you found your client the perfect home.  

Nov 12, 2010 03:19 PM
F U
nobody - Alamance, NT
Dead

to much, I hope you told her your buyer was happy you found her another home which she closed on in 40 days and you were on your way out to spend your well deserved check.........

Nov 12, 2010 03:34 PM
Sherilyn M. Whistler
ERA Herman Group Real Estate-NoCo - Loveland, CO
Need a Referral, Call Me !

Elizabeth: I am sorry about that - but why not counter the counter? I mean it is called negotiation.

Janine:  Trust me I wanted to say something but I just said - thank you but my Buyer found something else and she will be closing by the 15th (only 15 days after they wanted theirs close and they werent even in contract now.)

Nov 12, 2010 03:53 PM
Harry Logan
RE/MAX executives realty - Winnipeg, MB
Your Satisfaction is Guaranteed!

Ahhh! I hate it when the agent becomes the problem.

I think you and your client handled it the right way. Congratulations! 

Nov 12, 2010 05:26 PM
Alex Morris - Austin Real Estate Agent
Austin, TX

I couldn't agree more!  If you approach it with a "win-lose" proposition, "lose" may be the end result.  It can be a "win-win", and each side still get fervent representation.  I know this to be an immutable fact!!!

Nov 12, 2010 06:08 PM
Sherilyn M. Whistler
ERA Herman Group Real Estate-NoCo - Loveland, CO
Need a Referral, Call Me !

Harry:  I have to agree with ya on that one.

Alex: Absolutely - they could have had a deal that would have helped their Seller, get her out of the house, my Buyer in without any fuss!

Nov 12, 2010 08:50 PM
Tammy Pearce
Haute Realty 214-994-6474 - Dallas, TX
Tammy Pearce

I am glad you found your buyer another home and agree that she was right to refuse the unrealistic counter offer.  I hope that agent learned a lesson...

Nov 13, 2010 01:22 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

What a shame the agent got in the middle, and ruined the deal.   Glad your buyer found another home that worked for them!

Nov 13, 2010 01:25 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Sheriln, Wow I hope the sellers know/knew what/who killed the deal. When the listing expires they would be crazy to renew with her and not with you. I wanted to change something in your 2nd paragraph: "It is NOT about winning," change the winning to whining.

Nov 13, 2010 01:45 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

Sounds like a listing agent wasn't helping Mr. or Mrs. Seller realize a good deal when they see one.  Or perhaps the Seller's were just *****heads???? 

Nov 13, 2010 01:58 AM
Sherilyn M. Whistler
ERA Herman Group Real Estate-NoCo - Loveland, CO
Need a Referral, Call Me !

Tammy: I felt bad for the Seller because she was in desperate need for a contract because she had already relocated out of state ! My client ended up with a better home at the same price !

Joan:  I truly believe that agent TANKED that deal...

Bob: Thank you Bob - I tried to save it and eventually got the agent to recant her $20k EM request but by then my client has a sour taste in her mouth.

Paula: Somehow I think more agent because I doubt a Seller would know to raise the EM.. I called her broker and he said that was common practice for them but I don't believe that...

Nov 13, 2010 06:20 AM
Glenn Roberts
Retired - Seattle, WA

I don't know aobut Colorado, but standard earnest money around here is 2-3% with a lot of leeway given for certain conditions. It's worth mentioning that if in excess of 5% the court would label it "excessive" and not release it to the seller anyway in the event of default.

A smarter LA/Seller might have asked for a lesser amount of non-refundable earnest money since the buyer hadn't set foot on or in the property as yet.

Good luck on the next one, Sherilyn. Sounds like you have a buyer who trusts you.

Nov 14, 2010 12:03 PM