How Not to Buy a House

How Not to Buy a House

If you read my blog on even a semi regular basis, you know there is a major lack of housing inventory in North Oakland County and Lapeer County Michigan- specifically, Lake Orion, Oxford, Clarkston, Brandon/Ortonville, Lapeer, Metamora and Hadley areas. Prices were up last year but so were unit sales and with inventory as low as it is right now (about a 3-5 month supply depending on the specific area) it is not unusual to make an offer on a house and be in a multiple offer situation. In fact, if a home is properly priced, there is an excellent chance there will be multiple offers on it immediately. Especially if that properly priced home has the added attraction of being a normal (non distressed) sale. A listing that doesn’t come with all the headaches that can come with a bank owned or short sale.

Case in point:

Last Friday I listed a sweet 4 bedroom home in Clarkston, MI and carefully priced it so it would be attractive to buyers and still be able to appraise for the buyer’s mortgage. The listing hit the MLS with all 25 photos allowed about 10 pm Friday night. Saturday we had 3 showings. Sunday we had 12 more showings and 2 more scheduled for Monday. By Sunday afternoon we had 4 offers. All 4 buyer’s agents were informed that they would be in a multiple offer situation.

So wouldn’t you think all 4 buyers would put their best offer out there? I don’t know if there were 3 weak agents or 3 hard headed buyers who wouldn’t listen to their agents, or a combination of the two.

Let me backtrack for a minute. We have had major appraisal problems in Clarkston MI for quite a while now. And when a buyer is asking for closing costs, they are basically inflating the purchase price in order to finance a portion of their closing costs. Secondly, the sellers were asking for 45 days post closing possession because the house they are buying needs 30 days possession. Thirdly, the house is in a site condo community which means there are by laws that the buyer needs to approve.

The offer the sellers accepted was over asking price, gave the 45 days possession the sellers asked for, didn’t ask for anything the sellers weren’t offering (appliances, pool table, etc), didn’t ask for help with their financing (seller concessions),and had read and approved the by laws prior to writing their offer. It also helped that they were 20% down, conventional buyers who were pre-approved for a much higher priced home.

The offers the sellers didn’t even consider ALL asked for seller concessions- 2 of the agents told me they weren’t neededbut the buyers wanted them. Hmmm- and if the appraisal came in at the net amount was the buyer going to want to re-negotiate the price?

NONE of the 3 rejected offers met our request for 45 days possession. 2 asked for immediate possession and 1 offered 26 days possession. 2 of the agents told me we could work with the possession time. If they could work with the possession WHY NOT JUST PUT IT IN THE OFFER???!!!

None of the 3 agents requested the by laws in advance of writing the offer, and even though they didn’t make approval of the by laws a condition, by state law the buyer has a 9 day back out time frame after receipt of the by laws.

1 buyer asked for the pool table and foose ball table. 1 asked for the seller to pay for a home warranty. None of the 3 rejected offers were full price after subtracting the seller paid concessions.

Bottom line- Had we not received the 1 clean offer we would not have been able to accept ANY of the other 3 as written. Even if the sellers would have been happy with the prices offered, we would have had to counter things like possession, concessions or appraised value.

If you find a house you really want to buy, write as clean an offer as possible. Give the seller as much of what they’re asking for as you can, and save your negotiating for items you NEED. And if you are in a multiple offer situation, you may need to find another way to come up with those NEEDS (gift from a parent, double move to accommodate possession, etc.).

If you would like to work with a buyers agent who will not only look out for your interest but offer expert negotiating advise when you find the home you want, please don’t hesitate to contact me. Don’t be one of the 3 buyers above who will be out making an offer on their second choice.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407
email: Jackie@JackieHawley.com

Highest and Best Aren’t Synonyms

Buying a Fixer

The Difference Between Downpayment and Deposit

Choosing a Lender

 color drawing courtesy Firts Ahlefeldt