The five offers in 48 hours to buy my parents’ former home bowled me over, especially considering the real estate market we all just barely lived through.
But what really did me in were the letters.
Two of the buyers submitted their offers with photos of themselves and letters professing their love for the four-bedroom California ranch house. I was a goner.
“I haven’t seen anything like this in a long time,” said my listing agent and good friend Bill Wood.
“They wrote letters?”
“You probably shouldn’t read them.”
“Can we sell the house to more than one buyer?” I felt seriously bad about picking just one buyer and turning down four.
See, these weren’t just offers; they were great offers. Three were for $15,000 over the asking price, which we had set high. One came in at asking, and one came in $10,000 below asking, but with a 90 percent cash down payment.
I would like to pause here to let the record reflect that the multiple offers not only confirm that the market is coming back -- Huzzah! -- but also that the $15,000 I strategically spent on the makeover paid off, as I’d hoped, in a faster sale at a higher price than if we’d sold “as is.” Much higher meaning a net gain of nearly $100,000. Not braggin’, just sayin’.
But back to my plight. Now, if I had put in a full-price offer on a home within hours of its going on the market, I would assume I had it. Yet the full-price offer was in fourth place.
While part of me was ecstatic, of course, I also hated to disappoint these earnest buyers. I know what it’s like to want a house so badly you fall asleep at night arranging furniture in your head, and continue arranging right on into your dreams.
I know what it’s like to get swept away with visions of pulling into the driveway and unloading groceries in your new digs, of hosting family and friends there, of assigning bedrooms to the kids and telling the dog all about the yard getting his hopes all up, and of nesting so intensely you’re practically laying eggs.
Then, poof! The deal caves like a hot cake in a cold draft.
House love, like human love, can be so capricious.
After Wood recapped the offers, we decided to turn down the two lowest ones (Sorry!), and ask the three remaining buyers, whose above-asking offers were all within $1,000 of one another’s, to make their best and final offers.
Two raised their price by $10,000, the third by $5,000.
That’s when, against Wood’s advice, I read the letters. “We love your home and can see ourselves happy there for many years to come….the backyard, location and neighborhood will provide a safe and happy environment for our kids to play and grow,” one buyer in the finals wrote.
Attached was a picture of a family of four standing in front of a backstop. The boy, age 3, wore his T-Ball uniform and a baseball glove while the mom held his 4-month-old sister.
Another couple, also in the runoffs, wrote, “From the moment we pulled up, we were instantly sold….We could easily picture the two of us and our little one in the living room in front of the fireplace…and having family and friends over for barbecues in the backyard.”
They included their 18-month-old wedding picture and the news that they were expecting their first child.
“They’re killing me!” I said.
“Told you not to read them,” Wood said.
“What do we do now?”
“We go with the most qualified buyer.”
“You mean the one most likely to run the ball over home plate?” I said, knowing better than to use a sports metaphor.
“There’s a lot more to an offer than price.”
Wood and I considered the three upgraded offers, weighing the following factors, which may also help you if you’re ever faced with multiple offers or competing for a hot property:
• Price. The amount of the offer is easy to fixate on, but higher is not always better. In the end, we accepted the second highest offer, the one $5,000 lower than the other two, because that buyer scored higher on what else matters.
• Down payment. The winning buyer was putting 20 percent down, so only had to finance 80 percent. The other two buyers were planning to put down 10 and 5 percent. Of course, I was partial to the 90 percent cash-down buyers, but their purchase price was too low.
• Loan. All three buyers had been pre-approved for loans. However two were getting FHA loans, which have more red tape; the ultimate buyer was getting a conventional loan, which tends to imply better overall credit.
• Escrow. We wanted a 30-day escrow, which each party agreed to. But if one had needed a longer escrow, that would have been a drawback.
• Reserves. Wood looked at the buying parties’ bank statements to see how much money they would have left after the purchase. A buyer with healthy reserves is more attractive to lenders and sellers. Unlike the buyer whose offer we accepted, the two runners up – though they qualified for the loan -- would have been more stretched financially.
• Contingencies. The winning buyer had sold a house and it had closed escrow. They had cash from that sale in the bank, and were ready to move. One runner up had a house in escrow that needed to close. The third was a first-time buyer borrowing money from parents. We favored the buyer with no strings attached.
• Love letters. Though Wood was immune to the heartstring tactics, the letters and photos did make a difference to me. Much as I wanted to sell the place to all who loved my childhood home, the little slugger’s family will move in this week.
Join me next week as we take the journey from offer accepted to deal done.