Finding a House (Part 2)

May 23, 2008 · 0 comments

After spending two 14-hour days looking at houses and talking to sellers/agents, we had finally put an offer on a house. On Sunday, while waiting for the response from the seller, we visited a couple more open-houses, and revisited “the Mansion.” We spent about an hour examining the house and talking to the owner. While the house was likely a good bargain, it was unclear how flexible the seller was, and it was clear that we’d likely have to put $20K or so into the house for new carpet, new paint, and various fix-up work here and there (the house was only 7 years old, but had apparently had little upkeep of the details). Nonetheless it was our Plan B.

At 3pm we heard back from the Estate House broker. To our surprise, they had another offer that had come in that day that was higher than ours. They also told us that, because the owner had to close on another house that following week, he didn’t want to spend much time negotiating and counter-offering. They asked for our best offer, and said they would decide between ours and the other offer they received. While I wasn’t happy with the lack of good-faith negotiation, we decided to put in an offer about 4% lower than the asking price and see what happened.

Our agent called the seller’s agent, and it quickly came back that our offer was lower than the other offer. Feeling that the seller wasn’t negotiating in good-faith, we refused to change our offer, and asked that they let us know by 5pm whether our offer would be accepted. At 5pm, the seller’s agent called back and told us that there was a new twist – they had received a third offer, and both were higher than ours. Again, we refused to counter-offer any higher, and started to accept the fact that we’d likely not get the house we loved. We were told we’d get a final answer by 9pm Sunday evening.

In the meantime, we decided to start executing on Plan B. We spent an hour putting together an offer for the Mansion house. I signed the offer, and my agent agreed to submit it at 9pm when we officially heard that our offer on the Estate House wasn’t accepted. We left the agent’s office and headed to the airport for our trip home.

At 9:15, while boarding our flight, we got a call from our broker. Our offer had been accepted! Apparently, one of the other buyers backed out on his offer, and the seller chose our offer over the other higher offer because we agreed to close within 30 days. While we weren’t as thrilled as we would have been had negotiation process gone as expected (we felt as if the seller didn’t negotiate in good faith), we were very happy to have a contract on our favorite house, and felt good about the fact that we got the house for well under what it would appraise for.

Only one issue remained…

Our house was on a corner lot of a subdivision with a very strict home owners association (HOA), and we wanted to ensure that we’d have HOA permission to build a fence to fully enclose our backyard. There was no guarantee that we could get this permission within the 21 day due diligence period, and without reasonable assurance that we could build a fence, we would likely have to back out of the deal. The seller had agreed to help obtain permission (and would likely have much more influence than we would), so we’d have to wait and see how that turned out.

Over the next couple days we signed and faxed stacks of papers, arranged property inspections, scheduled appraisals, finalized the loan application, locked in the rate, and my fiancee put together a formal request to the HOA for permission to build a fence.

Then we sat back, just waiting for everyone to get back to us…

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