When Buyers Pay OVER the Asking Price...

By
Real Estate Agent with Keller Williams 414-525-0563 57026-90 Broker

 In many parts of the country, neighborhoods here and suBidding bucksbdivisions there we are seeing bidding wars....with homes getting multiple offers and over asking offers.   The wars are a result of "Thinventory" or fewer houses on the

 market than people have seen for a very

 long time.  The very powerful laws of supply and demand are at work.  In Wisconsin, the next step after getting an accepted offer, is to have an inspection by a state licensed home inspector. The top to bottom examination from the roof to the foundation includes the mechanical systems - plumbing, electrical and exterior paint, stain, material condition, drivhouse tug of wareways and sidewalks. This investment needs to also be a "healthy" one...Buyers reassured that they are getting the house worthy of the price tag they chose to inflate.

      The Buyers may choose to write to the offer that includes items that the inspector has uncovered and issues that they would like addressed from chimney cleaning and furnace tune ups to mudjacking and building code issues...the amendment is sent to the Buyers to have repairs done and lien waivers sent to them  prior to closing.  Sellers may choose to sign the amendment and agree to the repairs..substitute credit for some repairs....do some and not others or any combination thereof....with some risk.  If the Seller chooses not to repair what a Buyer may call a defect in the property....the Buyers can send a Notice of Defects and a Cancellation and Mutual Release calling the offer null and vDefensiveoid.

     Uh Oh....Now...the over asking, faster closing offer becomes no offer at all. And....the Sellers must reveal on a revised condition report for all future buyers to see...the condition that they chose not to corrrect causing the deal to fall apart.  Agents can become defensive rather than the objective voice of reason needed in negotiations involving the inspection.

   The better thing to do is work at "keeping peace" and using the objectivity of a professional.  The Sellers got more than they asked for...the Buyers want repairs done...and the Sellers still netted more than they asked for with the original list price.  Common sense, the spirit of fair play, less greed and more equality....all come into play when crafting amendment responses.

     Sellers...do the right thing...respect the offer that exceeded your dreams...let your agent show the Selling agent and the Buyers how much you appreciate their offer.  Buyers...be realistic in your requests for repairs and replacements when you amend the offer you believed would win the war.

      If you or anyone you know is looking for experienced Realtors who know the winning ways to negotiate to begin your "Happily ever after" as a Seller or a Buyer in southeastern Wisconsin, call the Hansons, we are honored to be of service for all things real estate.

 

 

Posted by

Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS


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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Steffy Hristova 03/18/2016 10:57 AM
  2. Winston Heverly 06/02/2016 09:28 PM
Topic:
Real Estate General Information
Tags:
buyers pay over asking price
sellers negotiate repairs fairly

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Rainmaker
2,085,056
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Sally. You shared a lot of common sense and wise advice for anyone in this kind of situation.

Have seen a number of appraisal issues when there is a bidding war on property.

Mar 18, 2016 08:12 PM #31
Rainmaker
3,896,499
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Sally and David.  This is excellent advice that hopefully will be read and understood by sellers in this enviable position.

Mar 18, 2016 09:29 PM #32
Rainmaker
1,055,178
Kat Palmiotti
Grand Lux Realty, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

There is definitely a happy medium of buyer requests and seller agreements that can make a deal work out for everyone. If the sellers are getting more than they expected in terms of money, and the buyers have some reasonable repair requests, I would suggest the sellers go ahead and make the fixes. Everyone wins.

Mar 18, 2016 10:22 PM #33
Rainmaker
2,074,927
Nina Hollander
RE/MAX Executive | Charlotte, NC - Charlotte, NC
Your Charlotte/Waxhaw/Fort Mill Area Realtor

This issue of "thinventory" is definitely causing many agents and buyers and sellers to rethink the entire negotiationg, inspection, and appraisal process. I recently suggested to my clients that they withdraw an offer for a townhome that had gone into multiple offers and where the seller selected our offer, but got a little too full of herself in her demands. This week we found another townhome, paid $5K over ask and got the house against 7 other offers. But at least the seller was realistic on terms... we gave in on her need for a slightly extended closing date; she provided a good allowance towards a home warranty. It's all still give and take even in a hot market.

Mar 18, 2016 10:57 PM #34
Rainer
92,138
Chris Shull
ColumbiaLand Realty - Columbia, SC
Your Realtor For Life!

Great post Sally & David! I know the biggest problem we see with this situation is the appraisal doesn't keep up with the demand and there are a lot of hurt feelings when this happens; the seller because the buyers can't pay the extra out of pocket and the buyers because even though the "won" the bidding war they lose the house in the end. I look forward to reading more of your insightful posts in the future!

Mar 19, 2016 12:09 AM #35
Rainmaker
1,411,855
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

I like these words.. Seller , respect the offer.  I think, regardless of amount this should always be the case.

Mar 19, 2016 12:37 AM #36
Rainer
1,756,848
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Sally Offers above listing price is only better than cash IF they can get it appraised.

Mar 19, 2016 12:39 AM #37
Rainer
193,009
Joy Bender
Pacific Sotheby's - La Jolla, CA
Who You Hire Matters

Good Morning Sally excellent post. Sellers should respect the offer if its highest and best and know it might not happen again.

Mar 19, 2016 01:06 AM #38
Ambassador
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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

You offer sound advise in a strong market for sellers.  Our market is so slow that sellers appreciate any offer and are usually most obliging to work with the buyer

Mar 19, 2016 01:20 AM #39
Ambassador
3,338,220
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

It's a shame when buyers and sellers are so commited to their particular agends, rather than trying to be a bit more objective and think about the long-term goal they both want - the house to change title. How about some common sense and objectivity?

Mar 19, 2016 08:23 AM #40
Rainer
418,894
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Any reasonable contingency should be considered, however, it's ultimately the sellers decision to draw the line so their agent can proceed to close. When a property has L3 and in a very desirable neighborhood, closing will occur rather quickly. The price will be determined by the amenities and value of the property, so, buyers will pay more to secure their lifestyle.

Mar 19, 2016 08:33 AM #41
Ambassador
2,594,292
Anna Banana Kruchten CRS,CRB
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana of Real Estate!

Sally we've been seeing a lot of game playing over the inspection requests this past few years. Far too many bogus items asked for (how do we know, we have homes pre-inspected) and the list of items asked for is ridiculous. If the seller knows their home well, and it's been pre-inspected and items repaired that puts them in a better negotiating position. I just wrote a long post about it last week. I could write one every week as it is seriously the biggest complaint our legal hot line has been getting 2 + years in a row.

Mar 19, 2016 08:55 AM #42
Rainmaker
1,321,335
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

"Respectful" and "realistic" - qualities that would serve the transaction well if ALL parties possessed them. 

Mar 19, 2016 12:43 PM #43
Rainmaker
1,351,853
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Sally and David - looking at the transaction in a rational business way is certainly great advice.

Mar 19, 2016 01:04 PM #44
Rainmaker
406,120
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

It's a sellers market here and in some areas, multiple offers and sales going $5000-$15000 over an asking price of $250K!!  It's very difficult to be a buyer in a market like that.  We also see a lot of flipped deals  as buyers get cold feet a few days later.  The inspections are important though and both parties need to work out a reasonable compromise.

Mar 19, 2016 01:13 PM #45
Rainmaker
2,460,062
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It's almost like passive aggressive in nature and I always have found it kind of weird.

Mar 20, 2016 04:15 PM #46
Rainmaker
2,460,062
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It's a sellers market in a lot of places more than a buyers market. I'm not surprised. Good luck! Mary Hutchison, SRES, ABR

Mar 20, 2016 04:18 PM #47
Rainer
140,689
Kathy Fuhriman
Bear River Valley Realty - Tremonton, UT

Although we are all excited to see the home appreciation happening finally we as Real Estate Agents should be mindful of the run up in perceived value before the market crash in 2008.  Overly optimistic buyers could find themselves doing a short sale in a few years. The business cycles of prosperity and downturn have occurred several times in history.

Mar 21, 2016 12:17 AM #48
Rainmaker
282,484
John Wiley
Jones & Co. Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

Sally & David, great post on offers that are over the list price. I like your point that after Home Inspection and request to repair have been made the Seller may not view the offer as so good.

We are called upon to be professional at all times and this may be the time to shine and help all parties concerned come to a reasonable agreement.

Mar 22, 2016 04:32 AM #49
Rainmaker
1,359,470
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

Definitely a lot of common sense in this - I always tell my sellers that if the buyer bleeds in making the offer, they are going to come at you during the inspection - life is a circle! 

May 26, 2016 08:52 PM #51
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Rainmaker
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Sally K. & David L. Hanson

WI Realtors - Luxury - Divorce - Short Sale
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