House #13: Second Contract

February 15, 2010 · 5 comments

It turns out we never did receive that fourth offer on The Poor House over the weekend, but it turns out that it didn’t really matter…we countered the third-offer, and they quickly accepted. So, we once again have this one under contract, and we hope to close in about a month…

We were pretty stringent with our counter-offer, and had expected the buyers to counter again, but ultimately, I guess they didn’t want to lose the house. Our counter-offer was close to full-price (though still providing a good bit of money towards their closing costs), they agreed to use our closing attorney, they agreed to shorter their inspection and appraisal periods, and they agreed to increase their earnest money deposit.

Their inspection is scheduled for later this week, and I expect the appraisal to take place next week. I’ll have more to say once we get through those two milestones…

5 responses to “House #13: Second Contract”

  1. Bilgefisher says:

    Congrats. Here’s hoping this one closes and you get this headache over with.

  2. Luis says:

    In the last post you mentioned you wanted them to use your mortgage person, did this happen?
    I think that is a good suggestion but wonder what are sellers reaction when you require this?
    Also, do they have a financing contingency there and if so what is the length of that?

    Glad to see this under contract, sending you good vibes to see this through… 🙂

  3. J Scott says:

    Hey Bilge –

    I’m certainly not complaining about this particular property. Since it went on the market, we’ve only had a few showings, but of the six showings we’ve had, we’ve gotten three offers! I’ll take that batting average any day…

    But yes, after all the frustrations with our buyers the past couple months, we are hoping this one closes and we don’t have to put it back on the market.

  4. J Scott says:

    Luis –

    We never require that our buyers use our mortgage broker…because financing can be a very personal issue, we don’t feel it’s up to us to dictate what lender/broker they use.

    That said, we certainly encourage the use of our broker, and we also penalize those who choose not to by increasing their risk. Specifically, for those buyers who use our broker, we offer to pay for part/all of the appraisal costs and to pay for part/all of the inspection costs. Therefore, the buyers can potentially get through all their due diligence without any out-of-pocket expenses. This is certainly a risk for us, but the trade-off (they use our broker) is worth it. It also tends to make the first-time buyers MUCH more comfortable with the whole process.

    The extra risk we impose is that, for any buyers who choose not to use our broker, we require a much large earnest money deposit. For example, for this property, we would be happy with a $500 earnest money deposit if the buyer were using our broker, but because they are not, we are requiring a $2500 deposit. So, if their broker can’t come through, they’re out a lot more money.

    Also, for buyers who don’t use our broker, we will much less lenient when it comes to extending the contract and dealing with broker mistakes. If their broker comes to us three days before closing and tells us he forgot to order the appraisal, we won’t feel obligated to extend the contract for the buyer. If, on the other hand, it was our broker who made that mistake, we’d happily extend the contract (after all, the broker was our recommendation, so if he screws up, we are willing to take the hit).

    Does that make sense? I wrote more about this in article last week:

  5. Luis says:

    Yes it does, thanks for the clarification.

    I know you are all for controlling your deals and I agree with that approach which is one of the reasons I am getting the license and why I met the appraiser at my property on Friday!

    I was jut curious what effect would it have on a buyer if I made some sort of lender requirement. You know how it is, you don’t want to push too much during negotiations so you don’t scare the buyer away…but the way you are doing it make sense.

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up for our Newsletter and get immediate access to our FREE 150+ Page eBook on New Construction, plus all of our business tools: Single-Family and Multi-Family Business Plans, Rehabbing and Buy-and-Hold Spreadsheets, Contract Templates, and more!
We respect your privacy. No Spam...EVER!