Posted byon March 24, 2011
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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.
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.
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.
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!
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!