Sunday, November 11, 2007

How NOT To Write An Offer

Ouch! I just received an offer on one of my listings. It has been on the market for three days. The price is aggressive and backed up by comparables. The offer came in with such poor terms, that even in this market, the buyer's agent has ill-advised his client and cast the offer, the agent and the buyer in a bad light from the seller's perspective. First, there was no earnest money deposit (called escrow in some states). Nothing. Now, how serious will that buyer look to the seller, when he has put down nothing of value hold the property, and loses nothing if he defaults? Next, the buyer, or more likely his agent, has crossed out the standard (for our area) contract term of seller making repairs up to 1.5% of the purchase price, and replaced that with 5%. Again, the seller is now on "alert" status since the buyer is pre-anticipating almost triple than standard repairs on a house that has been completely remodeled. It makes one think the home inspection might be a set-up. Next, the buyer's agent has deemed that he is entitled to the commission on the home warranty, despite the fact he is requesting my seller to pay for it. This is a no-no. Ethically speaking, the agent whose client pays for the warranty is entitled to the small referral fee paid on the policy. Further, the buyer has asked for the seller to pay all closing costs, even his pre-paid insurance policy, his lender's charges, which are undefined and without limit, his VA funding fee, again undefined, as it may range from 2.15% to 3.3% depending on whether this is a first or subsequent VA loan, and on and on. To top it off, the agent included a cover letter stating that this house would never sell in six months if my seller does not take the offer. The agent stated the house was about 25% overpriced, and included a market analysis that excluded higher-priced homes with similar attributes. Can this deal be salvaged? I have advised my seller to counter the terms with reasonable and stated limits. Oh, I forgot to mention, the buyer has even asked for the mattress that has not yet been moved. I'll let you know how this drama plays out...

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