# Take the Low Offer or Wait for Something Better?



## Echo (Apr 1, 2011)

We are in the process of building a new house and our purchase agreement is conditional upon us selling our exisiting home. The new house is projected to be ready for August 1st. 

We put our house up for sale in early-March and things have been a bit slow (maybe 10-12 showings), but the weather has been brutal which could be delaying the Spring shoppers.

On Thursday night we received an offer, it was $11k less than our list price. We countered, dropping our price by $3k. They countered at $8k less than list price and said that was the max they were pre-approved for (can I ask them to prove that?). This is a conditional offer until Friday (29th), they still need financing to be approved.

So, we're in a bit of a conundrum. Do we accept the lower offer knowing that we have the place sold and the peace of mind to still make our downpayment on the new place (25%)? 

Or, is it too early to jump on the first offer since we might be leaving some money on the table (potentially with more buyers later in the Spring)?

As much as losing the $8k sucks, it won't impact our purchase of the new house, and may just delay doing some of the extras early on like landscaping, fence, etc.

I hate coming out on the short end of the stick, but part of me remembers that a bird in the hand is worth two in the bush.

What do you think?


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## Financial Cents (Jul 22, 2010)

Take the offer man. 

I mean, years from now, you won't be worrying about a few thousand from this offer. You'll be thinking about how much you love your new house and focused on what you're doing to make it a home. The sale will be a distant memory.

Money is important, sure, but so is peace of mind.

(Note: We could have held out ourselves back in the fall, 2010, with the sale of our home but were lucky enough after a couple of days on the market to have two competing offers and took the higher of the two. We could have waited for a higher offer, likely could have gotten it, but decided to take something that was ready and waiting on the table b/c of the security it offered us.)

Good luck with your decision Echo, not easy, but you'll make the right one 

My Own Advisor -A blog about personal finance, investing and my journey to financial independence!


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## Berubeland (Sep 6, 2009)

Depends on what the peace of mind is worth to you. 

It has been lousy weather here in TO which has made rentals quite grim, people just don't like house shopping that much in bad weather and houses tend not to show as well in the bad lighting. 

There are a few things I would consider, you still have some time to wait before you're under the gun, how long has your house been on the market, is your house good value for the neighborhood or is it at the top end of what houses are fetching on your street and finally how does it compare to other houses out there?


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## Echo (Apr 1, 2011)

@Financial Cents
Thanks for your input, I agree that down the road this will seem fairly insignificant...but I find that people are very quick to give away thousands of dollars on their house, as if they are just haggling over a pair of sunglasses on the beach in Mexico. 

Some people stress over paying $3.95 in bank fees but don't bat an eye over dropping their house price by $10k.

That being said, market price is only what the customer is willing to pay...


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## Echo (Apr 1, 2011)

@Berubeland
The peace of mind is worth more to my wife than it is to me (if I'm being honest). I agree that the weather plays a big factor and it's been a rough start to the Spring that's for sure.

As I said, we put our house on the market in early March. Comp's are popping up in our area though, and we have some drawbacks that they don't (back onto a busy street...HUGE backyard, like ridiculously huge for the size of house). 

My concern is that if we wait and don't get an offer within 30 days, we'd be under the gun and likely would drop our price anyway.

Houses are selling here (Lethbridge) but more new builds than existing houses it seems, however it's a University town and parents may be looking for places to buy for their kids over the summer.


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## Berubeland (Sep 6, 2009)

What would the worst case scenario be for you if you didn't sell? Some people could rent their first house out without too much trouble and that would be fine for them. For others that would not be an option at all... so you need to look at that as well. 

Is it worth the risk for you? If for instance you turn down this offer and you don't get any more bites? 

What would the result be in your circumstances?


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## Echo (Apr 1, 2011)

@Berubeland
Well, since we've committed to 25% down on the new place we would need to sell our house in order to cover the majority of that downpayment. Our purchase agreement on the new house is conditional on us selling our current house.

The other scenario is that our builder is going to drag their feet on building the new house, knowing that we haven't sold our house yet and as they get busy with other builds that have no conditions.

And if they know that we turned down a reasonable offer, I'm sure that wouldn't go over very well either.

To answer your question, if we don't sell our house by Aug 1st there is a risk we could lose our new house if the builder doesn't want to wait any longer.


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## Karen (Jul 24, 2010)

With the circumstances as you describe them, it seems pretty obvious to me that you should accept the offer. But then, I'm a very risk averse person - more like your wife than like you. I'm getting butterflies in my stomach thinking about what will happen to you if you let this offer go and the house doesn't sell - and I don't even know you. Think what I'd be like if it were me!


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## Echo (Apr 1, 2011)

@Karen
Thanks for your comments, and I'm sorry you're getting butterflies over my dilemma 

The funny thing is, my wife was more insulted by the low offer (the first one) than I was. But she was pretty much having a heart attack every day that went by without a showing or an offer.

I still think we have time to get more action on the house, but there are no guarantees...and it's all outside of our control, from who comes to see the house, to how many comparables are out there competing with us.


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## sprocket1200 (Aug 21, 2009)

if you want more, just wait, it will come...


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## marina628 (Dec 14, 2010)

My brother in law let a buyer walk for a similar amount of money last year then he ended up having to sell the house desperately for $20,000 less as he was tight to carry two homes.I would take the deal as long as buyers are going to agree to your closing and all other terms.


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## crazyjackcsa (Aug 8, 2010)

What kind of %'s are we dealing with? 8k on a 300k deal? Take the money. 8k on an 80k house? Maybe wait it out.
What kind of market are you in? A hot one that sees houses often go for above asking? Or not? you've already said you've seen little action.

As a seller I always figure if I can get 95% of asking, I'm happy, and as a buyer if I can get below 95% I'm happy.


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## FrugalTrader (Oct 13, 2008)

I agree with crazyjackcsa, take a look at the discount % relative to the overall selling price. If you "need" to sell your house within a 30 day window or close to, this offer may be a pretty good one imo. Maybe if you can't negotiate on price at this point, you can put a few conditions in there, such as specific closing date that works with your new house build.


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## Four Pillars (Apr 5, 2009)

Tough call. I'm not a big believer in the weather factor - a serious buyer will brave the elements. 

Like others, a percentage would help. I'm going to guess that your house was listed at $225k which makes the $8k difference 3.5%.

I'd be inclined to take the offer - why do you think that your asking price was perfectly accurate? Real estate is a big guessing game. Unless the market is pretty hot, most people will expect to pay a bit less than asking (assuming it's reasonably priced).

I don't know about Lethbridge, but in T dot - right now is the hottest selling season. If you can't get your price in April - you probably won't get it.

There isn't a right answer for your question obviously, but this statement convinced me that you should take the offer.



Echo said:


> ...
> 
> The funny thing is, my wife was more insulted by the low offer (the first one) than I was. But she was pretty much *having a heart attack every day* that went by without a showing or an offer.
> 
> ...


Different people and different situations call for different strategies. You already have a house (conditionally) bought and it doesn't sound like your wife wants the situation to continue. That isn't a position of strength.

Here are more thoughts on asking price:

http://www.moneysmartsblog.com/house-wars/


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## kcowan (Jul 1, 2010)

The other thing is that, if you refuse the offer, it will be common knowledge among realtors not to bring in offers that are $8k off. Everyone likes to feel like they made a deal, including your buyer.

Like others have asked: "Is it normal for houses in your neighborhood to sell at or above list price?"


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## Echo (Apr 1, 2011)

Thanks for weighing in everyone, I think we're going to take the offer. 

@FT, you bring up another point that I didn't mention - they wanted a pretty short possession date (May 20) which means we will have to find a short term rental until our new house is completed.

Here's the numbers for those of you who are curious:

Market Assessment - $249,900
Listed At - $247,900

1st Offer - $237,000 (with May 20th possession)
Counter - $244,900 (with May 20th possession, basically saying we can give you the possession but you need to come up on the price)

2nd Offer - $240,000 (with May 31st possession, saying this is the max they can afford and they have to be out of their place by the end of May)

I guess I've read Freakonomics too many times and I believe we are leaving money on the table. Other comparables sold in the area have come down 1 or maybe 2 percent, not 3%. 

I'm mostly ticked at the "that's the max price we were approved for" statement and that there is no way to verify that (legally). 

@Mike - we under-priced our house by 1% according to what it was assessed at, however it's an inexact science and the market price is what it is.

Again, I think we're leaning towards accepting.


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## Echo (Apr 1, 2011)

One other point that is helping with our decision to accept the offer:

We had a quote to repair a section of fence (the gate area) that was leaning and needed to be re-dug with new posts ($500). We were going to fix it this month thinking that it might be turning people off. 

We were also going to have the carpets professionally cleaned (we have pets), but didn't get a quote so I'm not sure what that would have cost.

These buyers want the house "as is", so I'd guess we would save $1k on minor repairs and aesthetics that we would have done had the house stayed on the market with little action.

Also, July is one of those 3 mortgage payment months with our bi-weekly payments, so if we're not in the house we will save on that additional expense as well. 

Short term rentals in the summer are not too difficult to find in a University town, so if we can find a place from June-August we can save a few hundred bucks a month on housing expenses.

Ok, I think I'm done sweating this out


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## Cal (Jun 17, 2009)

In your intial post, you said 'losing' 8K, but you aren't really losing 8K are you...you are selling for more than your purchase price right? It is just the mentality of not potentially getting the full asking price, correct?

For my 2c worth...take the offer...


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## Four Pillars (Apr 5, 2009)

Cal said:


> In your intial post, you said 'losing' 8K, but you aren't really losing 8K are you...you are selling for more than your purchase price right? It is just the mentality of not potentially getting the full asking price, correct?
> 
> For my 2c worth...take the offer...


If you sell something for less than it's worth - you've lost money. 

Of course, it's the amount that it's worth that is the question. In Echo's scenario - that amount is very uncertain.


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## GeniusBoy27 (Jun 11, 2010)

You could always counter with $242,500 or something like that ... if you want to haggle in-between.

Is it worth it for the $2500? It depends on your circumstance.


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## m3s (Apr 3, 2010)

Cal said:


> In your intial post, you said 'losing' 8K, but you aren't really losing 8K are you...you are selling for more than your purchase price right? It is just the mentality of not potentially getting the full asking price, correct?
> 
> For my 2c worth...take the offer...


First I agree to take the offer, but I don't agree that anything above the purchase price is bonus. I would consider anything less than ~3% annual increase a loss really. Of course you'd have to factor in the market, reos, maint cost etc to come to an acceptable %, but certainly I wouldn't consider anything to be profit myself if the market has increased

My mentality is that it's best to sell fast and that spring is the best time to list. I purposely waited to list my house as close to spring as possible. I just think that after a house has been listed for awhile and denied offers, it kind of burns out the market. Of all my peers, people either sell really fast for a good price or end up waiting until they can't take it anymore and have to reduce their price. People just expect a house that's been on the market to sell for less

I denied my first offer, and they ended up coming back to pay more than my original counter offer. After I sold, my neighbour across the street listed and sold immediately for 5% more (more than both our listing price) I probably could have held out for more, but I just don't have the time to deal with that. Like you, I already have plans for the cash and need to organize my move. I thought afterwards maybe what I should have done is to take out a temp HELOC

Basically I think the key is to list at the right time and sell fast if possible. I'd take the offer myself if you've made a decent capital gain and worry about your new house. It is a tough decision though and I'm also a huge fan of Freakonomics myself. It definitely helped me understand why the agent said the things she did


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## mrbizi (Dec 19, 2009)

The fact that your house has not received more than one offer and that it has been on the market for 45 days may be an indication that you are at or very near market value. If you have no other considerations e.g. another house waiting for you, it may be worth taking your chances and waiting for a better offer. But that is not the case, so I say, take the money and enjoy having one less thing to worry about!


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## kcowan (Jul 1, 2010)

How important is the possession date? That might be another point of negotiation?


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## dogcom (May 23, 2009)

It also sounds like you guys are taking the price of your house to personally. When I sold my house this spring I set out goals that I wanted completed and price was only important if my goals were achieved. My real estate agent knew I would take less only if I could pay less for the houses I wanted in the areas I wanted to live and become mortgage free with money in the bank. If that didn't happen I was set on my price and would not go one dime lower.

There was also more to it then that but the bottom line was the selling price of my home was just a number that fluctuates like the stock market. So many people I know have looked at their own home as money and that kind of thinking has put almost all of them in a position of regret.


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## Echo (Apr 1, 2011)

Thanks for all of your comments everyone, while this wasn't an easy decision we decided to accept the offer last night.

http://www.boomerandecho.com/we-got-an-offer-on-our-house/


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## jamesbe (May 8, 2010)

You made a good decision, don't look back, just forward to your new place.

I was in the same boat, took less than I wanted but you know what, a month after the sale I don't care anymore. Just looking forward to moving next week!

Good luck with the packing, that's the worst part!


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## sprocket1200 (Aug 21, 2009)

a broker recently told me that the buyers set the price. glad to see the prices are being set lower...


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## LondonHomes (Dec 29, 2010)

Your first offer usually ends up being your best off. I think you made the right move by accepting it!


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## marina628 (Dec 14, 2010)

The last house we sold we set price at $279,000 with anticipation of a $267,000 sell price.Everyone wants to get a deal.We ended up getting $269,000 which was $2000 higher than we expected but we had to carry the house for 2 months empty which effectively took up the $2000 'bonus'.


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## sprocket1200 (Aug 21, 2009)

marina628 said:


> The last house we sold we set price at $279,000 with anticipation of a $267,000 sell price.Everyone wants to get a deal.We ended up getting $269,000 which was $2000 higher than we expected but we had to carry the house for 2 months empty which effectively took up the $2000 'bonus'.


good for you for understanding the value of time. so few understand this...


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## Cal (Jun 17, 2009)

Four Pillars said:


> If you sell something for less than it's worth - you've lost money.
> 
> Of course, it's the amount that it's worth that is the question. In Echo's scenario - that amount is very uncertain.



Less than its worth, or less than it was appraised at?

Ultimately it is worth what a buyer will pay for it.

I was just trying to clarify if they were taking a financial hit or not.

I agree w Mode3sour that you should definitely calculate a ROI to see if it is even worth selling your home at any time, and to figure out what you really made on your investment. Although the OP is committed beyond that at this point.


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## Four Pillars (Apr 5, 2009)

Cal said:


> Less than its worth, or less than it was appraised at?
> 
> Ultimately it is worth what a buyer will pay for it.
> 
> ...


Less than it's worth. 

The appraisal amount means nothing.


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## Retired at 31 (Apr 20, 2009)

Glad to see you've taken the money and run. 96.8% of ask price is pretty good. I hope you squeezed Miranda for a discount on commission too?


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## Echo (Apr 1, 2011)

Retired at 31 said:


> Glad to see you've taken the money and run. 96.8% of ask price is pretty good. I hope you squeezed Miranda for a discount on commission too?


What an odd thing to say, creepy stalker dude.


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