We received our second offer on The Poor House today…
We were originally told we’d be getting an offer about two weeks ago, but due to some family issues, the buyer was out of town for much of the past two weeks. Then, we were told we’d be getting an offer this past weekend, but because of “some issues” with the mortgage broker, it got put off again. This is actually pretty common — we get a phone call from an agent saying that an offer is pending, but then it never comes. My guess is that the buyers either get cold feet or they realize that they’re not really financially qualified to make the purchase.
Anyway, we had given up on actually getting this offer, but this morning it was sitting on the fax machine. The purchase price was low, but something we could negotiate with. More concerning were the other details of the offer — the buyer needs a large portion of the closing costs paid, wants six weeks to close, wants a long due diligence period, etc.
After doing this for nearly two years now, we know these sorts of things to be serious red flags. In fact, if I had to guess, given the current offer, we’d never make it to the closing table, even if we did accept it. There would be issues with the mortgage, issues with the inspections, issues with the closing, etc.
So, our counter-offer is probably going to sound harsh to the buyer, but it’s what we would need to agree to this contract. Specifically, we would require that we use our closing attorney to close the deal, we would require the buyer to put down a very large deposit UNLESS he used our mortgage broker (in which case, he could get away with a much smaller deposit), and we would only allow three weeks to close the transaction. The purpose of the short closing time is that we don’t want to take the property off the market for six weeks just to see the deal fall through, and realize that we just lost six weeks that we could have found a good buyer.
I have a feeling the short close time will be a sticking point. Most mortgage brokers tell their clients that it’s impossible to close in less than 4 weeks, but in our experience, that’s just an excuse for the broker to be lazy and take his time. Realistically, an FHA loan should be able to close in 3 weeks, and a good broker can get it done in less time. So, if the buyer says his broker can’t do that, we’ll suggest he use ours instead. If he refuses to use our broker, and his broker can’t commit to a quick closing, we’d rather not do the deal anyway.
I’m giving this offer about 25% chance of actually getting to an agreed upon contract…I’ll let you know tomorrow…