I rent a duplex through property managers. The owner/investors
decided that they wanted to sell the property, but gave us first right of
refusal, offering the house at 120k, which they say is below what they
would list it on the market for.
We submitted an offer for that price, contingent on the property being
appraised at 120k or above. However, the owners counter-offered
saying that they would only pay $300 in repairs because the property is
being offered "below market value".
My question is: why would they put that limitation on the transaction
before the value of the property has been established? An outside
realtor gave a market evaluation of 112k, and the tax appraisal is under
110k. It is not a given in my mind that the property is being offered
below market value.
Is this kind of stipulation normal? What could the purpose of this be, if
not only for the sellers to maximize their value? It is my current
thinking that I will turn down their counter-offer as I would greatly
prefer not to pay for a home inspection just to find out if their offer is
Did you know what the outside agent thought it was worth before you submitted your offer?
It sounds like the seller has accepted your above price offer with the contingency that it appraise for that amount. Why they would counter with the $500 in repairs added is odd. As soon as they countered - in my state at least - the original offer was dead and this is a new ballgame.
I would talk to a real estate agent about the property. Not only should you be concerned about the appraised value by the home inspection.
REL and IR will chime in soon with additional comments and concerns.
Fun and Info
Thanks for your advice.
I DID know what the outside agent thought it to be worth before the offer, but I was told that the seller would reject anything below the asking price, as they thought they could get more on the open market. I figured the other agent's evaluation was simply an opinion, and if they house was able to appraise for the asking price, I was fine with it. I also figured that if it were appraised BELOW the asking price, the seller would/should simply lower the price, as trying to sell it on the open market would likely yield the same result.
As far as I'm aware, the seller has NOT accepted my offer. They have counter-offered the offer itself. Everyone I've spoken also agrees that this is odd behavior.
I'm speaking with my realtor tonight, but this realtor is operating as a dual agent for both sides of the transaction for a discounted rate, as I did not want to go out-of-pocket on a buyer's realtor. Hence my quest for some outside opinons.
You have a right to "buyers' agency". I keep saying that over and over on these boards. Get your own buyers' agent. Working with the sellers agent - yes, dual agency-means just that - possibly "duel".
A buyers agent will review all sold comps with you..help you structure an offer and submit accordingly..usually at no cost to you. Consult with a buyers' agent before going further on this property, as a counter offer "un"-accepted by you kills the deal.
Might be a better move for you to step back, take a look at what's out there, and start from scratch with a better deal.This message has been edited. Last edited by: real estate lady,
Barnacle, I would get me own agent and I would not work with that agent anyway. Either the property is listed or it is not. If the property is not listed the agent is probably acting outside the rules of the MLS. At this point he is treating this as a "pocket listing" which is against the rules in my local MLS.This message has been edited. Last edited by: Charming,
Fun and Info
Smart to ask for some other opinions, Barnacle, and I realize that you weren't really looking to get involved in the buying process ~ it was thrust upon you when your landlord decided to sell.
Do yourself a favor and obtain your own buyer/real estate agent ~ you won't be "spending" any more dollars out-of-pocket than continuing on the course you are on.
And, I do have an idea about why the sellers made such an "counter-offer" before the appraisal was even done. Think they are putting the "cart before the horse" and jumping ahead of the usual process and procedures.
Best to get your own agent to represent YOU - this one appears to be representing ONLY the sellers. Best of luck and let us know how it goes....
Thanks for the advice, all.
I'm curious how I wouldn't be "spending" more to get a buyer's realtor. As the situation was presented to me, the seller has included a 3% commission for the dual agent in the purchase price, which they are not wiling to alter. If I were to bring on my own realtor, the sellers would still give their realtor the full 3%, and I would be responsible for coming up with 3% for my own agent. This sellers could pay for this and I could roll it into my loan, but I would still be paying for it ultimately.
After speaking to the dual agent realtor last night, I was told that the figure of $300 was meant to indicate that they would not make large IMPROVEMENTS to the space, but if something is revealed to be broken upon inspection, they would still be open to fixing it, and the realtor agreed to change the language to something less limiting. I was also told that the owner/investors have determined that 120k is the lowest price they are willing to go with in order to recoup their investment. If the house appraises for considerably lower than that, they are simply not interested in selling.
This at least explains their motives in limiting the repair budget, but I still have to roll the dice in the hopes that there won't be any major problems revealed upon inspection, and that the house will appraise at or above 120k. I was shown other comparables with similar rent potential in my area that made me feel more confident in it's appraisal potential, and I'm considering moving forward. But again, not having any previous experience with all this - does this situation seem fishy?
It is every seller's dream to recoup their money when they sell property. Are you willing to eat the cost of the inspection and appraisal if things don't work out to your satisfaction?
You live there now. Are you aware of things that need to be repaired? Does it have ongoing maintenance issues? Do you absolutely love the place, and often thought about how you would like to someday purchase it?
No one can tell you what to do. The seller is setting the terms....take it or leave it. I would leave it.
The deal has a definite odor.
I'm wondering if the seller's agent (I won't say listing agent because it is not listed) is working himself into a whole heap of trouble if he is a member of his local MLS.
1. Ask this agent if the owner plans to list the property.
2. Ask the agent who he will be representing in the transaction.
The answer to question 2 is the seller. You do not want to be going into this without someone representing your interests.
I hope this agent (I hesitate to use Realtor) has explained to his seller that if the property does not appraise the banks will not loan the buyer the full amount. That means if a buyer was going for an 80/20 loan on a $120,000 property and it only appraises for $110,000 instead of putting down $24,000 and financing the remainder a buyer would have to put down $32,000! Plus the other closing costs typical for your state.
Look at this as an opportunity to purchase a home. Depending on your lease and the laws of your state, will determine if you have to move right away or if you can stay through your lease.
Fun and Info
Sounds like a discount agency who lets the seller name their price, regardless of comps. You did in previous post refer this agent as your Realtor. Not so. Do not sign anything without attorney drawing contract, or hiring an agent in this case. No representation could cost bigger bucks than their fee.
I'm not understanding the negativity toward pocket listings. I see lots of them in my area, I know many people involved are happy with their transaction.
If the buy is inexperienced and uncomfortable I do advise avoiding it, but telling him to bring in his own agent expecting the seller to pay is asking for trouble.
and yes, I'm referring to Realtors.
This is one area where I do not see CA as a shining beacon of best practices.
That agent is only interested in doing what is best for his client - the seller. No one is looking out for the best interests of the buyer. The OP could be out quite a bit of money - from the home inspection to the bank fees and appraisal for something he may not be able to purchase.
If both parties are equally knowledgeable and are equal parties to the transaction - fine. But the buyer is not equally knowledgeable or represented in this deal.
Fun and Info
Here in Florida, pocket listings are no more than an open listing, or an exclusive listing, both not in MLS. In both cases, to show, agreements are signed by the parties, as well as cooperating agents.This message has been edited. Last edited by: real estate lady,
If you are looking for professional opinions on this you could also use RESAAS, a platform where only official realtors answer questions. Give that a go here: http://rebla.st/qbxxhkt
Hope it helps!
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