This is a little story, about a little condo, and a little greed. It has a happy ending though.
Last summer I had a first time home buyer put in an offer on a cute condo, priced under $50,000 (yes, we have condos that cheap around here). Although the seller was pretty firm on price, he did come down a little bit, and agreed to my FHA buyer needing concessions and some Nehemiah. It was looking good, until the property didn't appraise for over the list price, leaving us with a little problem: a difference of about $3300. This is not a huge amount. You'd think we could work it out. We tried everything possible, but the seller wouldn't come down, the buyer couldn't come up with the extra money, and the unit wouldn't appraise for any higher. It was a sticky mess for a while, trying to pull it together, and ultimately the deal fell apart. Everyone walked away feeling pretty down about it, mostly my buyer, who lost his deposit.
He spent the next few months saving up more money, and at Christmas time, I got an email from his girlfriend. They were ready to start looking again. I pulled up their possible matches, and low and behold! The same condo, now listed about $7000 less than before, was still available. And the buyer wanted to see it again. I called the listing agent with a, "you're not going to believe this," story, and she didn't. Kudos to her, for quick thinking, when she realized the original FHA appraisal was still valid for a few more days.
After a whirlwind day of showing my buyer every condo available, and talking about the pros and cons of whether or not to put another offer in on the first one the entire time, my buyer decided to go for the same one again at the new list price plus concessions. This needed consideration, because one of our major problems was the seller's refusal to hire an attorney. As an attorney state, transactions can get bungled up without one, just like our first offer had. Not having an attorney didn't kill the deal, but it didn't make it any easier either. We also had to consider that the condo's value was going to have to be re-certified, knowing that it could have possibly dropped, and we might end up in the same boat as before.
Our new offer was accepted, and the buyer quickly applied for a mortgage with a new lender that has lower closing costs. We had the original appraisal transferred over to the new lender, with scant hours to go before it's valuation was no longer valid. We're now on our way to closing (yeah!), and everyone involved in the process has learned something new. Financially, my buyer is buying the condo he wants for thousands less than he was originally prepared to pay, has lower closing costs, and didn't have to pay for another appraisal. The seller, however, is netting about $2000 less than if he'd given up the original $3300 difference of six months earlier. In the meantime, he's also paid six months more of HOA fees (about $1000), another year's property and school taxes (pro-rated to closing will cost about another $1000), utilities on a vacant unit, and has now hired an attorney for this transaction.
So, I realize that thousands of you out there have had the same scenario, except that it cost the sellers tens of thousands, or even hundreds of thousands, of dollars. But we can't forget that to some people, what we might see as a little amount of money, can be a big deal to others. The seller's original greed really created a bonus situation for my buyer, and he learned to not be quite so greedy. The buyer learned that good things really do come to those who wait. I've learned that it helps to have another strong agent on the other side of a deal. Without the listing agent pushing her seller to drop the price as time passed, or her excellent memory about the original appraisal date, this wouldn't have come together. I hope that the listing agent learned that I have a new appreciation for her skills. But just in case she didn't, I think I'm going to buy her a closing gift.
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