Party...Not Offer Like It's 1999

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Real Estate Agent with Client First, Realtors - Canton, MI
https://activerain.com/droplet/6Rp

Many people like to party like it 1999. However, some Buyers are also trying to Offer like it 1999.

Back in 99', a buyer with no down payment could Offer above asking and request up to 6% in concessions. The concessions would go towards closing costs and down payments. This mark-up strategy was based on easy mortgage money and almost unrestrained appraisals. Party

2011 is a MUCH different market. However, I am still receiving offers that are straight out of 1999. Last week one of my listings received multiple offers, and I advised my Seller to reject an offer that was $15,000 above asking but had $11,000 in concessions.  In the end we accepted an offer that netted my Seller $1800 less than the higher concession offer.

After rejecting the 6% concession offer, I received calls from the Loan Officer and Buyers Agent questioning our decision and pleading for their Buyer. They wanted to know why we would take a lower offer over their offer. Here is the list of rationale that I communicated to them:

  • 6% in concessions communicates that this could be a weak buyer with no cash.
  • There is concern that underwriting may reject a 6% concession offer.
  • There is a great concern that the house may not appraise for the higher marked up offer amount. 

 

 

Posted by

Scott A. Petersen
Client First, Realtors

www.scott-petersen.com

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Ambassador
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Scott, you have an excellent point and reasons behind not accepting the highest offer - because it is still not the best offer.

Feb 28, 2011 01:41 AM #1
Rainer
165,139
Chris Miller Nevada Land with Water Rights
Vegas Grand Realty and Property Management - Mesquite, NV
Land with Water Rights For Sale

The appraisers are for sure gun shy about that speculative value and you are right not to tie up the property just to go back on the market. 

Feb 28, 2011 01:46 AM #2
Rainmaker
43,939
Bill Lumpp
Century 21 The Combs Company - Rocky Mount, NC
Realtor, GREEN

Scott,

The best offer is the offer that closes! You and your seller did the right thing! I recently had a buyer offer the middle price point of three offers, they bought the home because of the terms they had. The higher offer was not the best offer, because it had risk.

Good blog.

Bill

Feb 28, 2011 01:54 AM #3
Rainmaker
89,468
Scott Petersen
Client First, Realtors - Canton, MI - Canton, MI

Praful: You are right the highest is not always the best.

Chris: Appraisals are definatly one of my biggest concerns these days.

Bill: You are exactly right, the best offer is the highest that will close. Closing is the goal of it all.

 


Thanks for you comments

Mar 01, 2011 02:29 PM #4
Rainmaker
1,230,387
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor

Scott--it is all about negotiating the best price AND terms for the client.  Sometimes the price and terms are not in line with each other.  Good post.

Mar 02, 2011 03:36 AM #5
Ambassador
524,744
Cindy Marchant
Keller Williams Indy NE 317-290-7775 www.marchantteam.com - Carmel, IN
"Cindy in Indy" , Realtor, Fishers Real Estate

I recently wrote a post on appraisals and made the same point you did...years ago we could "bake" closing costs into the purchase price and go on our merry way, not in today's market.  Good guidance you gave your seller!

Mar 10, 2011 04:19 AM #6
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