Rethinking the full-price offer
Buyer loses bargaining power upon defect discovery
By Paul Bianchina, Friday, August 14, 2009.Q: I am a first-time homebuyer. The asking price was $275,000, and I offered the whole thing. The home is in my son's school district and one of the only nice ones that have come up in months. I didn't want to lose out on the opportunity. However, the inspector found a few major problems, and my Realtor and I were present for the inspection.
First: The roof needs replacing.
Second: The seller's husband (who is now deceased) finished the basement himself. Apparently it isn't up to code and no permits were pulled. The inspector found no floating walls near the furnace. The dryer vent blows into the crawl space. There is no firewall or insulation near the hot water heater. The cold air combustion vent needs to be lengthened, and several other small problems exist.
Third: The man did all electrical additions himself. There are many copper (but coated) wires hanging, and many ground circuits are not there.
The seller agreed to fix the roof and electrical, but not the basement. As a buyer, I don't feel this is my responsibility to bring it up to code, but I have agreed to do so at the tune of a $4,000 estimate.
What do you think?
A: There is a basic tenet in real estate that says that a deal consists of an agreement between a willing buyer and a willing seller. With that in mind, there is no real right or wrong to what you and the seller agree to. If the sellers are desperate to sell for any reason, they may agree to do all of the repairs that the home inspector suggests. If the buyers are desperate to buy, then they may agree to take the house as is. ...CONTINUED
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Submitted by Steve Trang on August 14, 2009 - 12:44pm.
I fail to see how submitting a full price offer removes your ability to negotiate. If the property is good and priced well, it deserves full asking price. The inspection uncovered some faults, and she got it addressed. It would be quite foolhardy on the seller not to budge because they got a full priced offer. I believe you have fallen into the trap of seeing it only on the buyer's side, and not the seller's. The seller may now be thinking, "Oh no, I really messed up this house. Maybe nobody will buy it. I should sell it to these people instead of balking." This would be the bird in hand is better than two in the bush allegory.
Steve Trang
Tempe Real Estate
Chandler Real Estate
Gilbert Real Estate
Submitted by Maya Thomas on August 14, 2009 - 1:28pm.
You are feeling buyers remorse. It happens to practically every buyer. It will wear off soon. The seller probably has seller's remorse right now. This also happens to practically every seller. The seller probably thinks that they priced the home too LOW and that they are giving it away and at this very moment are probably questioning their sanity for agreeing to pay for repairs. Celebrate your good fortune finding a wonderful home in the right location for the right price when interest rates are at historically low rates.
If the home is wonderful (and it sounds perfect for your needs) and priced properly (it sounds like the best thing you've seen on the market) it will sell for full price or close to it (in my market). If everything is fixed that needs to be fixed and you are comfortable with the repairs that you have negotiated then you have a bought a great house during the best buying opportunity in decades.
If I pull statistics in my area for any 3 month period during the last year there will be atleast 5 properties that have sold for full price or a few dollars over full price. I live on an island that is 2 miles by 4 miles and 1/2 of the island is military and this island is a tiny spec in the middle of the ocean. I'll see full price offer if I check the islands within 30 miles of my office too.
A full price offer is the very the reason that a listing agent recommends to a seller to price a home properly when they list the property. Maybe your agent can pull some sold statistics in your area so that you can see that you are not the only one making full price offers right now. Keep in mind that you could be buying a million dollar home or a 1/2 a million dollar home for .60 or .50 on the dollar compared to peak price. This market will rebound and prices will, over time, go back to peak rates in the future. You'll be thanking your lucky stars years from now.
Maya Thomas
REALTOR
http://www.ShowcasePortfolioProperties.com