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We Got An Offer On Our House!

Just before leaving work last Thursday for the long weekend I got a call from our realtor who said that we got an offer on our house.  This was welcome news since our house had been on the market for about a month and a half with less than a dozen showings in that time.

For those of you unfamiliar with our situation, we have a purchase agreement in place to start building a house in a newer development here in Lethbridge.  The purchase agreement is conditional on us selling our current home, which will cover the majority of our 25% downpayment on the new house.  The new house is scheduled to be completed by August 1st, and we put our current home on the market on March 10th.

The Offer On Our House

Of the dozen or so showings that we had over the past 45 days, we probably received the least amount of feedback from our future buyer’s visit a few weeks ago.  In fact, we forgot about this showing and turned our attention toward another couple that expressed interest and booked a follow-up visit.

So we were surprised to say the least when we got an offer from this particular buyer.  I was also a bit surprised by the offer itself which came in at $237,000, or $10,900 less than our asking price.  They also wanted a fairly quick possession date of May 20th.

After some conversations with my wife and our realtor we decided to make a counter-offer at $244,900 and agreed to the possession date if they could agree to the higher price.

Negotiation is about give and take, so if you ask for a concession from the buyer you should also be prepared to give up a concession yourself.  The possession date was slightly irrelevant to us anyway, since it would be nearly impossible to match up the dates with the completion of our new house.

The Dilemma

Our realtor called us later that night and told us that the buyer had only been pre-approved for $240,000 so that was as high as they could go.  They also agreed to move their possession date back to May 31st.  The offer is conditional on their financing being approved by the bank before the end of the month.

Honestly, I wasn’t expecting this at all.  We had just received a really positive visit from a couple who wanted to book a 2nd showing but they would be away for the long weekend.  We also had just booked a showing for a first time home buyer the next day.

Now it felt like we were under the gun.  Do we accept the lower offer and potentially miss out on a higher offer down the road?

Our new house was dependent on us selling our current home, but we were still over 3 months away from the new house being ready and the real estate market typically picks up in the Spring.

We asked for a few days to think about the offer and to give us the opportunity to have a few more showings over the long weekend.

The Decision

We are in the process of building our dream home.  It’s all we’ve been talking about for over a year while we saved our money and determined how much home we could comfortably afford on a single income.  That dream has one obstacle in its way, which is to sell our current home.

I know that we’re leaving some money on the table.  It bugs me that we could be giving up thousands of dollars when I work so hard to continuously improve our finances and sweat over saving even a few extra dollars a month.

Ultimately this decision comes down to what price we are willing to accept for our home, and how much risk we are willing to take by standing firm and waiting for something better to come along.  Market price is only determined by what a buyer is willing to pay for your house at a particular moment in time.

We accepted the offer last night.  In the end, our peace of mind was worth far more than the potential of an extra few thousand dollars from an offer that may never come.  Hopefully the buyer’s financing goes through later this week, and then we will have to find a short-term rental this summer until our new house is completed.  And you can bet that I’ll be trying to find ways to save a few thousand dollars this summer while we’re renting 🙂

Did we make the right decision?

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22 Comments

  1. Glen on April 25, 2011 at 8:09 am

    Sometimes the question of whether an offer is good is not so much how much it is but how likely they will get approved for the mortgage. Who’s credit is best?

    Seems like the offer you got wasn’t that much lower than your asking price, percentage-wise. Not sure how the market is by you but I think by me people can easily expect offer that are 10% and more lower than asking.

    Are you leaving money on the table? Well, consider that time is money. In real estate, the longer a house stays on the market the worse it is (usually). Waiting for a potential better offer could end up costing you, either in price or in the time it would take to get moving on your other place (imagine you were still waiting for a good offer come June or July?).

    And even accepting an offer doesn’t mean you are in contract. You can still show the place and see what other people say and offer. Nothing is set until it’s set.

    • Echo on April 25, 2011 at 7:24 pm

      @Glen
      Good point about the approval process, if they are at their max how likely will it be that they get approved by the end of the month? You’re right, we can still show the place due to the condition of their offer.

      Our market typically sells 1-2% below the list price, and this offer is slightly over 3% below our asking price. If we got an offer 10% below I don’t know if I’d even respond.

  2. Balance Junkie on April 25, 2011 at 11:08 am

    If you have peace of mind, then you made the right decision. Now you can start looking forward to living in your dream house. Congratulations! 🙂

    • Echo on April 25, 2011 at 7:26 pm

      Thanks Kim, we’ll start looking forward once this goes through for sure 😉

  3. Sustainable PF on April 25, 2011 at 11:50 am

    I think you made the right call. Our realtor told us the first offer you get is usually the best and if you hadn’t been getting any bites in 1.5 months this was a good offer to take.

    • Echo on April 25, 2011 at 7:30 pm

      @SPF
      Thanks, our realtor told us that too…must be part of that realtor conspiracy, right? 😉

    • Tom on October 12, 2011 at 8:11 pm

      I sure agree with Sustainable PF. $8000 seems like a lot of money when you think of how long it takes to save that much, but when you think of a house as a 20-year plan, it’s really not much. A mere 3% of your asking price divided by 20 years… not even worth worrying about.

      You weren’t greedy (i.e. re-countering with 245,900 or something weird like that) and you made the deal. They were happy, and I think you should be too!

      If you have any doubts here’s a story of our own. This summer we made an offer to owners of a house who were asking $579K (down from their starting price last year of $740K…). Our offer was $550K. They countered with $577. We countered with $560K. They countered again with $576 and we asked them to get serious. They dropped the offer, and that was that. Or so we thought.

      Six weeks later, we started getting emails from their Realtor asking us to, please, resubmit our offer for $560K. Meanwhile though the market’s been dropping like a rock and there’s so much out there to choose from we’ve lost interest. Their house, 3 months later, is still for sale. We could probably get it for $550K or less now if we wanted to. But we don’t.

      • Khaleef @ KNS Financial on October 12, 2011 at 8:17 pm

        Tom,

        I think your situation is a perfect example of unrealistic expectations and greed! They obviously weren’t interested in negotiating with you, as seen by those miniscule drops in their asking price. They were greedy and their greed (and possibly other factors) caused them to act in an irrational manner!

  4. Ashley @ Money Talks on April 25, 2011 at 1:42 pm

    I was thinking “take it!” as I was reading… so I think you made the right choice. You will always wonder “could I have gotten more?” no matter what the selling price.

    congrats on the start of your next chapter!

    • Echo on April 25, 2011 at 7:31 pm

      @Ashley
      Thanks! It’s like playing that Deal or No Deal game and knowing when to take the money and when to keep on going. Knowing what we had to lose if we didn’t get another offer was too much risk to take.

  5. Geoff Vincent on April 25, 2011 at 3:12 pm

    Good choice (that old “bird in the hand” thingie). The peace of mind is a biggie and it cuts both ways. We also recently sold and bought houses and, frankly, there seemed to be as much stress buying as with selling. So we were very relieved to finally find a house that we (will, as of may 18)) love and didn’t fuss about a few thousand dollar gap.

    Good luck!

    • Echo on April 25, 2011 at 7:33 pm

      @Geoff
      Congrats on your new house! I guess I never really put myself in the buyer’s shoes, knowing that they were stretched to their max budget and pressed for time they must have been even more stressed than we were.

      Thanks for stopping by!

  6. The Passive Income Earner on April 25, 2011 at 4:34 pm

    Congrats!

    Price is very rarely the only variable in personal real-estate as many will have dates, and other things to juggle but it is certainly the one that we want to control the most.

    • Echo on April 25, 2011 at 7:34 pm

      Thanks! What was hard for me was that we didn’t get the price OR the possession date that we wanted, but at the end of the day we will make it work and move on with our lives.

  7. Travis @DebtChronicles on April 25, 2011 at 8:30 pm

    I think you made the right call. When my wife and I were building our current home, we sold our first home on our own (the realtor didn’t want to list it until 90 days before our new home was going to be complete…so we tried ourselves). We did showings, advertised in free papers, put out a sign, made flyers, etc. In the end we sold it for a bit less than what we had hoped, but the stress of watching our new house go up and having our old one sold was SOOOO worth having it over and done with. Congratulations – enjoy watching your dream home be built!

    • Echo on April 25, 2011 at 9:38 pm

      @Travis
      Thanks for sharing your story. I think we’ll have one more thing to stress over, which is trying to find a short term rental while our new house is being built.

      I can’t imagine trying to sell our home on our own, congratulations for being able to do that…it sounds like the whole process was worth it for you in the end.

  8. Khaleef @ KNS Financial on April 25, 2011 at 9:10 pm

    I think that having assurance is extremely important in a volatile market. If you are fine financially, then I don’t think you made a bad move. Time and peace of mind are very valuable, and if this offer goes through, you will have gained both!

    • Echo on April 25, 2011 at 9:43 pm

      Hi Khaleef, thanks for stopping by! You’re right, the assurance to know that it’s sold and the peace of mind that we can now concentrate on moving forward with our plans are very important to us.

  9. Doable Finance on April 28, 2011 at 7:07 am

    Congrat!

  10. pjwebgirl on May 16, 2011 at 9:56 am

    If you accepted an offer that had conditions on it, like financing. You still have the option to consider another offer, if that is a firm offer. The original offerer’s would have a period of time to firm up their offer with no conditions, or you could accept the new offer.

    Therefore, accepting this offer with conditions is ok, since you do still have an open window to accept another offer. Therefore, you have peace of mind and also the knowledge to know you can accept another offer if needed.

    • Echo on May 16, 2011 at 10:55 am

      @pjwebgirl
      We were told that we could still show the house and accept “back-up offers” from other buyers until their financing was approved. But if even if the back-up offer was higher than the original offer we had to accept the original offer if their financing went through.

      It did, and we sold!

      • Tom on October 12, 2011 at 8:17 pm

        Echo is correct — contracts typically only make it possible to accept another offer and drop your first offer when the first offer is conditional on the sale of a house. When you accept an offer conditional on financing you’re agreeing to wait until the condition’s expiry date — so make it a short waiting period if you’ve got concerns.

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