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When Houses Sit

By Frank Rizzo

Real Estate Broker/Owner with Cornerstone Realty Partners

January 27, 2008 11:47 AM

I had the distinct pleasure of working with a referral customer this weekend. We had spent some time together at the end of last year, but with her husband involved in contracting and the slow down in the marketplace they were too nervous to own a home at this time.

This week, with rates dropping and some inventory that my office had reduced, I reached out and found their dream of home ownership had been re-ignited. We spent time together on Saturday viewing some new construction, and newly renovated homes and found something that will work for their growing family. With some builder incentives that had been discussed as options we put an offer on paper and I personnally presented the offer this morning.

Here's where it gets interesting. The builders are still thinking about it. I know them, and understand their thinking - "I SHOULD GET MORE... I REJECTED A HIGHER OFFER LAST YEAR... MAYBE I CAN JUST CALL ONE OF THE OTHER INTERESTED BUYERS..."

Bottom line, the house for various reasons, has been on the market for 18 months. This offer, while lower than previous offers is fair, and the buyers are motivated. Sometimes it pays to move on. A vacant house that sits costs, either in interest payments or opportunity costs (and there is tremendous opportunity out there). It's just ironic as they say get me any offer, what they really mean is get me any offer that I REALLY want. I will meet with them tomorrow and go over what their cost may be to wait another 2, 3 or 4 months with this home. Because 3 months from now, today's offer will be worth so much more...

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Audrey June-Forshey

RE/MAX Realty Services - Darnestown, MD

GRI, Gaithersburg, MD

I had this same scenario. My seller was insulted at an initial offer. I told him not to be, they are fishing, counter back. He did. The offer went back and forth a few times, I told him he needed to take the offer, it is a quick settlement. He refused, I was amazed. He now has the house listed at the same price as the final counter and he has been carrying the house. I was very frank with him. He knows now. The sellers should take the offer and run!

Jan 27, 2008 11:54 AM

Frank Rizzo

Cornerstone Realty Partners - Staten Island, NY

Would of, could of, should of... We've all been there, but let's look at what is, and what we need to do. Buyers are well aware of the perception of this market, and will look further if you delay longer. So as a seller I ask, what's your real motivation here.

Good Luck

Jan 27, 2008 12:00 PM

Kay Perry

Kay Perry, Broker - College Station, TX

The moral to this story is that sellers should give stronger consideration to a lower offer if it comes at the beginning of the listing period.

Jan 27, 2008 12:06 PM

Ryan Hukill - Edmond

405home @ ERA Courtyard - Edmond, OK

Realtor, Team Lead

You're so right. They want an offer, but not just any offer. Many times, sellers just don't really look at the big picture of carry costs and end up losing their shirts by the time it's all over. Great post.

Jan 27, 2008 12:20 PM

Jim Albano

Prudential Damiano Realty - Little Falls, NJ

Team - Jean-Marie Vantuno / Realtors North Jersey Real Estate

It really depends on if the offer is reasonable and what the sellers motivation is. I have a listing (400K) that's been on the market for 4 months. The first offer we received near the beginning of the listing came in at 90K under asking. The seller countered at asking price, the buyer walked, clearly not serious, just looking to steal a property. The second offer came in at 40K under asking, the counter was 10K under asking, the buyer walked. 2 days ago we got the third offer, 15K under asking - offer accepted. Now we have a serious buyer.

Jan 27, 2008 12:23 PM

Gaye Granice

Robert Defalco Realty - Staten Island, NY

Associate Broker

18 months and they're giving you a hard time. That's ridiculous - I just had the same experience with a new construction, listed for about 18 months ( 7 by me), good buyers with a lot of money down and they were actually giving them at least $20,000 more than the house is worth. The negotiations lasted 2 months because the builder kept changing his mind and reneging on what he was giving them. I could not believe the buyers did not walk away because the builder was totally unreasonable on every issue. But i guess the wife really wanted the house so the buyer hung in there and signed the contract last week. Let's hope the builder signs this week.

Jan 27, 2008 12:24 PM

Kay,

After 18 months they missed their higher lower offer. Now we have a decent offer, let's make it work,

Jan 27, 2008 01:05 PM

Ryan

You're right - for investors (flippers) the key is to keep the chain moving and not try to max out each piece. That money you "leave on the table" can be made up on the next go around.

Jan 27, 2008 01:06 PM

Jim,

Good story. These buyers are serious. Here's to pushing forward.

Jan 27, 2008 01:08 PM

Gaye - Builders have to remember there is a lot of inventory out there, sometimes you get more by getting less. How much did that house cost over those months?

Jan 27, 2008 01:09 PM

Lance Winslow

The Car Wash Guy - Malibu, CA

These stories are getting to be more and more common, you are obviously correct here, and if I were the builder, boy would I jump on it. Thinking too long, could cost them even more time and more money. Lance

Jan 27, 2008 04:45 PM

Gary Bolen

McCall Realty - South Lake Tahoe, CA

CRS - Lake Tahoe Real Estate Information

Frank - I like the concept of "opportunity costs" as you describe it here. Sometimes we run into someone who actually realizes there is value in reducing time, and angst, and stress, and taking advantages of other opportunities elsewhere. Good thoughts you have here, and like you taking the time to comment on our seer article this past weekend, it's appreciated.

cheers

Jan 28, 2008 12:12 PM

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Frank Rizzo

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