Friday, July 30, 2004

The counter-counter-offer

7/29/04 10:00 AM

Got a call back regarding the counter-offer. They have given a counter-offer of their own: 1.75% cash back towards their closing costs, all else the same. We have until 5:00 PM tonight to respond. Is this a good deal? Hmm. The difference between 1% and 1.75% is just over $1,000. The factors in favor of this are, again, the large amount of cash down, indicating a serious buyer and small chance of loan troubles down the line. On the negative side, there is the August 31st closing date. That means I'd need to make one more loan payment - about $850. I'm thinking about countering with 1.25% but the closing date is to be August 13th. That might cause problems if the buyer is selling another house to get this one, so I'm still not 100% sure on this yet. The extra 0.25% would cost me $355 dollars, but I'd save $850 for not making the August mortgage payment. We'll hold off replying because...

I am told that we've got one, possibly two more offers on the property. One received last night was rejected outright. They offered $135K with 3% cash back towards closing costs, $1K earnest money, and a bunch of stuff about the deal only being good if approved by this guy's business partner in writing within 10 days. Well, in Arizona, the buyer can back out of a deal within 10 days for any reason whatsoever. So what was the point of the bit about a partner? Sounds to me like someone read a book on real estate investing and is trying to insert a "weasel clause" to allow him an out. Of course, this is not necessary given the 10 day law here (and his purchase price offer isn't low enough for this to work as a flip, which is where weasel clauses are generally used), so it just makes the offer look silly to both me and my agent. I rejected this offer without a counter. But this is another offer utilizing the "x% cash back at closing" method. I wonder if this is a new trend? Being cynical, I wonder if real estate agents are doing this to keep their commission based on the higher price. They'd still get their 3% on the full purchase price, but their client still gets the discount on the house. Hmm. In this case it means only another $127 to the agent, so I don't know.

The other offer that might come in is from an investor who is looking at the property sometime between 10 and 11 today. My agent told his that we have an offer on the table with a deadline of 5 PM, so we'd need their offer before that if they are interested.

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