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Question: We have been looking at a home that is being modernized and fixed-up. We very much like the property and the upgrades added by the builder. The sticking point is price. The developer set a price and we think the right number is about $30,000 less. With misgivings we made an offer on the property through a broker midway between what the builder wanted and what we wanted. The offer was instantly rejected and the builder said another buyer was interested in the property. Several months have gone by and still no sale. Should we re-submit our bid?
Answer: If the builder had been able to get a quickie sale, you would then know that his or her estimate of value was on-target. The inability of the developer to quickly sell the property suggests that your instincts were right.
The builder now faces several costs. First, the loss of a sure sale with you. Second, the cost of continuing to own the property. Third, potentially another cost, a sale price lower than your first offer.
Houses have a particular allure. They are about more than money, they also reflect ego, status and personal preferences. Once a purchase offer is rejected you have to wonder if some of the attraction has been lost.
From your experience several questions emerge:
First, why hasn't the home sold? Do you have any feedback from your broker?
Second, are you still interested in the property? If yes, are you prepared to re-submit your bid or do you now think a lower offer is in order?
Third, since time has gone by what has happened to the local market? Did the house not sell because of a particular concern such as price or condition or are sales simply slow in the neighborhood? If sales are slow, then maybe the builder will want to reconsider the price.
Fourth, have you since looked at other houses? How do they compare? Is there a different property, which now seems more appealing?
If you do elect to go back with a second offer, be careful how you express your interest. Don't gloat over the builder's inability to re-sell the property, a deal could have fallen through for any number of reasons. For instance, maybe the purchasers' financial situation changed, something that's not the builder's fault.
If you want to make another offer, your broker can say to the builder, “my clients continue to like the property but they just can't get to the original asking price. Some time has now passed and everyone has had a chance reconsider the whole matter. Would you look at a second offer from the buyers? Maybe there's something we could work out so that you can finish up this project and get on with a new one….”
In other words, offer the builder a benefit that will come from your offer in addition to money, in this case the ability to close the deal and move forward to a new project that hopefully can produce a better financial result.
Peter G. Miller is author of "The Common-Sense Mortgage," (Kindle 2016). Have a question? Please write to email@example.com.View Foreclosure Article Archives
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