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A Counter-Offer: Offer More or Wait It Out?

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My agent notified me that I put in the second highest offer (the other one was “slightly” higher) for the property I talked about in my previous post about full financial disclosures. I am still in the running though because there is a sticking point with the top offer, though the seller agent didn’t identify it to us. It was never listed that the seller wanted to rent back until the end of July and we believe that’s the sticking point. The highest offer also disclosed that they have $350,000 in the bank, so the low appraisal and the lending issues aren’t a problem for them. Did we want to offer more? No, and here’s why.

My agent and her advisor both agreed that I would be in stronger shape if I put in an offer of $305,000 compared to my initial high point of $295,000. Both my girlfriend and I agreed that we weren’t going to break the $300,000 barrier because we didn’t like it that much but we needed to be reasonable – $10,000 when you’re already at $295,000 isn’t that much money.

1. The sticking point was in the rent-back. It’s very important to the sellers.
2. Slight means no more than $5,000 or so.

Reasons for Not Offering More:
The first thing I thought about was where did the $350,000 come from? If it came from a prior home sale, the other bidder may not have the convenience of waiting an additional month. They probably don’t want to stick around in a hotel for an additional month. If so, they withdraw their offer and we get the house for $295k.

Let’s say the $350,000 isn’t from the result of a home sale, they can still raise their offer above ours. We would be playing into the selling agent’s plot of getting into a bidding war we can’t possibly win. In this case, offering more wouldn’t help us.

So right now the only bargaining chip I have is the rent-back, which is something I can’t control. We’re going to stick to our guns and the $295,000 offer and we’ll let you all know what happens when 5PM rolls around.

Update: (8:42pm 5/10) I was at a work league softball game when my agent called, apparently the high bidder needed until 8pm (42 minutes ago) to talk to his wife. The fact that their married puts more credence on the “just sold a home” theory, hopefully one of them be tired and cranky by now and the thought of living in a hotel for a month with their stuff in storage is a miserable one for them. Still could go their way, who knows, but it at least makes our “strategy” appear to be the right one regardless of the outcome. It also turns out they want us to secure financing by May 24th. Yikes.

{ 4 comments, please add your thoughts now! }

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4 Responses to “A Counter-Offer: Offer More or Wait It Out?”

  1. Jason says:

    Good luck!

    It is amazing how different real estate markets are from place to place (OK, that’s probably obvious). In the area of Upstate New York where I am, there are NEVER bidding wars, houses NEVER sell for more than the listing price and marketing times are in the 3-9 month range! That is for all ranges of house – $40,000 and $600,000 alike. (And on appraisals, the market is always listed as being in equilibrium.)

    Once you have an accepted offer in place, how long is the time to closing? About 2 months is the norm here, with nearly all contracts having the standard mortgage and inspection contingencies.

    Again, good luck!

  2. jim says:

    Thanks for the well wishes Jason, the verdict is in but until it’s in writing and “official,” I’m not saying anything. (but I guess you can infer what that means)

    Howard County, MD is hot right now, to paraphrase a line from Zoolander, and homes list on Friday and offers are heard on Monday, with homes gone from MRIS by the next Friday. In the City of Baltimore, homes listed for three months are common. In Texas, you pay list if you really really want it. It’s all because of the location and the texture of the market. (I supposed that goes without saying.

    I don’t know how prevalent bidding wars themselves are but $300,000 seems like the equilibrium price for a townhome with 1700 sq ft; that’s why a 2400 sq ft. home at $295,000 is something to appreciate.

    The sellers want an accelerated closing schedule – within three weeks!

    Thanks again Jason.

  3. Tim says:

    So the outside looks really old, is the inside in good condition or does it need some rejuvenation on your part if you move in? Looks like the TH was built in the 70s from your previous posting pic…

  4. jim says:

    The inside is in immaculate condition. The outside looks old because of the color of the paneling and the time of day the picture was taken. When you come over and check it out, you’ll appreciate the value I’m getting out of it. And when I post the official article and the situation, you’ll more than appreciate the value. 🙂

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