It was the best of markets, it was the worst of markets… ok, actually, it has been the worst of markets, and my house has been on it for nearly ten months. As of New Years Day, it is officially under contract! What a great way to start 2007. The close date is set for the end of the month, and I will sing and dance once that is final and I have a check in my hand. The crazy part is exactly what happened the day of the offer…

This post will tell the tale of two offers, and a later post will talk about specifics that might be of interest to the budding real estate mogul or home flipper: like what I spent money on to fix up the place, and what made the biggest difference in presentation, what were the keys to giving the buyer that feeling of, “this is the right house for me.”

The Story Thus Far

Note: If you don’t care about the back story, skip down below for the tale of two offers…

I bought my house in April, 2004 with the intention of turning a profit in two years. Why two years? Because relatively new changes in federal tax law state that if you can sell your primary residence after two years and not pay capital gains tax on it. So the plan was to buy a four bedroom house, live in it myself, fill the other three bedrooms with tenants / roommates, and then sell in April 2006 and make millions. Unfortunately, the housing market tanked sometime circa, oh, April 2006. Unfortunately, there was no turning back because my tenants had already made plans to move out. The new plan: sell before the market gets any worse.

April, May, June, July, August, September…. then finally an offer came in at the end of October. It was a low ball offer, but even after the buyer rejected all counter offers, I had little choice but to accept. And besides, I would still come out profitable. After the inspection, the buyer sent over a rather ridiculous list of repairs – even as picky as tightening bolts on the attic ladder. So I spent about $1000 and many hours of my time completing a majority of the requested repairs. Then about a week before closing, it came out that the buyer had no credit history (they are evidently new to the US, and are not even citizens) and could not qualify for financing. That meant that the deal not only fell through, but I would not receive any of their earnest money.

Lessons learned: 1) Make sure that the prequalification process for a given lender includes a credit check, and 2) Be aware that a preapproval is different from a prequalification. Preapproval means that the lender is ready to make the loan, whereas a prequalification is that the lender has reviewed buyer-provided financial information and determined that the buyer will likely qualify for a given loan amount.

The good news was that the house was ready to sell. The general inspection and stucco special inspection were complete, repairs had been made, and the place was good to go.

The Tale of Two Offers

Between Christmas and New Year’s Eve, there was a small flurry of interest in the house (take note, budding real estate moguls: I surmise that each of these buyers is more serious and in more of a rush to close a deal than the buying season crowd). Potential buyer #1, who I will refer to as PB1, came to look at the house and followed up the same evening, asking to see the inspection and other paperwork — a very positive sign. They wanted to come back a couple days later, on New Year’s Eve day and make a final decision between my house and another they were considering. On that same fateful day another potential buyer called, interested in looking at the house, who I will refer to as PB2. They asked to come look at the house at 4pm. As it turns out, PB1 was delayed and could not make it at their scheduled time (2:30pm), and ended up coming to the house just as PB2 was leaving. From what I heard, PB2 really liked the house and felt flustered when PB1 showed up presenting a competitive threat for house. In the end, PB1 decided to go with the other house, but the nervous PB2 made an offer the same night – and not a bad one, at that. It’s funny the way things work out sometimes. Either way, I am thrilled to have another offer and can’t wait to close and be finished with this chapter.

This entry was posted on Sunday, January 7th, 2007 at 7:36 pm and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.