Making an Offer on a Vacation Home

Posted by Madison on March 24, 2011

We’re back from our Vacation Home Shopping Trip!

And I can’t thank you, my wonderful readers, enough! I took with me all of the data points that readers shared tips for making lowball offers.

We finally found a vacation home, that will also double as a rental when we aren’t using it. But it’s not a done deal yet.

Viewing the Properties

We viewed the properties with the developer and the lots available to build on. The developers price ranges: $160,000 to $230,000. After viewing all of the options and getting our questions answered he asked about our decision.

I asked if he was willing to negotiate on price. He said no. (What? In this market?) I politely thanked him and the negotiations ended (or never started depending on how you look at it).

We saw a few other properties and a for sale by owner property. But just before leaving we found out about one final property for sale that was bank owned. They’ve had no offers and it’s been listed for nine months. The bank is very motivated to get the property off their books and would like a closing in 30 days. They listed the property at $150,000.

We viewed the property and it was in almost perfect condition because the rental company has been maintaining it even though it went through foreclosure.

Searching for Comps

Even though the developer is still selling at his full price, after digging around at the county clerk’s office, we found one private party comp for $93,500. In addition, there was a recent property transfer that we had reason to believe sold for around $98,500, but there is no record of the property transfer yet, nor was anyone willing to disclose the price. I spoke with the buyer of the latter one, and it was a fast sale, but did need updating.

The annual rental income is about $9,000 gross and there are some vacation home tax savings I’ll cover another day. This particular vacation home did not need any updates or work done, so we actually felt it was worth slightly more than the comps.

Our Offer

Knowing the bank was planning to counter our offer one time, we hoped that a quick closing, with no financing contingency would help support a lower price.

We put in an all cash offer for $83,500, about 10% below the comps and 44% below the list price, with a closing date in few weeks and a few contingencies.

Before reading that readers had success with offers 40% below list price, I would have never felt confident putting in such a low offer! I’m so glad I discussed it with you before we went down to look at the properties!

Their Counteroffer

The bank quickly countered back at $96,000 and stripped out some of the meaningless contingencies.

We countered with our final and best offer at $90,000, with plans to walk if they do not accept it. Now we wait….

Update: Our Offer Was Accepted!





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Comments to Making an Offer on a Vacation Home

  1. What housing market is this located in?

    Steve

    • It’s in Kentucky. What are you thinking Steve?

      Madison

  2. Walking over 6k? Really? That seems excessive.

    Roman

    • When you put it that way, Roman, it does sound excessive!

      Although, I’ve paid too much in the past for things because I got emotionally attached. I’m trying not to do that this time, which is why we drew a line in the sand.

      Our max price is also partially because we put in a cash offer; that was all that we were willing to spend.

      Madison

  3. Nice work Madison!
    I completely understand the emotionally attached feeling, but also have been feeling a bit more competitive and ego driven then usual. My offer was the first on on the property, and it was accepted by the sellers. A cash offer for a higher purchase price came in the same afternoon and has been a monkey on my back every since. I’ve been given so many chances to back out, that I’ve lost count. Settlement is April 1st, how appropriate!
    Best of luck to you with your new home!

    JannyPi

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