7/30/04 2:50 PM
Just heard from my agent and they accepted my counter-offer. The house is sold!!
Phew.. I was getting a bit nervous. And my agent gave me some more good news - she said she'll tell the escrow company I am a real estate investor and I'll get investor rates! Cool! Gotta love her!
Friday, July 30, 2004
7/30/04 2:50 PM
Posted by Shaun at 2:53 PM
7/30/04 12:40 PM
Still waiting for the response to my latest counter-offer. Getting nervous now. I think it's mostly me psyching myself out though.
Went out to the house at lunch today. I had to bring in the trashcans that I left out Wednesday for garbage collection. When I got there, some thoughtful person had already pulled them in from the curb. The good news is that the old dishwasher was finally picked up, so that eyesore isn't sitting out in the front yard anymore.
4 hours and 20 minutes until the response deadline...
Posted by Shaun at 12:42 PM
7/29/04 3:30 PM
No word from the 10 AM investor, so I’m replying to the original buyer’s counter offer. I wanted to go for 1.25% with an 8/13 close of escrow, but my agent thinks that might not be enough time. If we’ve got good title agents and everything goes smoothly, it could work, but I figure why chance it. Oh, if the buyer was selling a house, their offer should have stated it – if only to give them an out if their sale falls through. So I counter back with 1.25% and a close of escrow on 8/31. The extra 0.5% will cost them $710, but it will almost cover the extra mortgage payment I will need to make. If they can’t pay this, I’m hoping their agent will kick in the extra 0.5% from his commission. Better to lose $710 and still get $3,550 than lose $4,260 altogether. I’m thinking the agent might do this because, when I sold my personal residence last year, in the closing paperwork, I noticed this done. So the counter offer was sent to them and they have until 5 PM tomorrow to respond. I have to say I’m a bit anxious. I’d hate to lose this deal over $710.
So why didn't I just accept their counter? I'm not sure. I think what is boils down to is getting more negotiating experience. If they reject it, I'm betting they will still buy the place if I back down and give them the 1.75% they asked for. Plus, I figure once the inspection period starts, they're going to find more things they want fixed. At that point, I'm likely to be tired of fixing stuff and will just offer them some cash to get it fixed themselves. This gives me a bit more of a cushion.
Now it's waiting time...
Posted by Shaun at 10:30 AM
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.
Posted by Shaun at 10:27 AM
7/28/04 11:00 AM
Run out to the house on my lunch break to install the light cover and filter on the range hood, which arrived yesterday. House smell is much better! Not overpowering and smells mainly like the vanilla air freshener thingies. Nice. Also put out the trashcans for pickup tomorrow. Dishwasher still in the front yard but, while stopping at McDonalds on the way back, I see the trash collectors coming around with the big crane thingy they use for the bulk items pickup, so it should be gone today.
Posted by Shaun at 10:25 AM
7/28/04 8:30 AM
Wow. Talk about timing! Got an offer on the house – a mere three hours after worrying about no offers! And an offer for $142K - full asking price! But they want me to give them 3% back at closing to help pay for their closing costs, plus they want me to provide a home warrantee (max cost $350). I also pay for a termite inspection. Interestingly, they want me pay for the appraisal but will reimburse me for it at closing. Normally, that's something the seller pays for anyway. They put down $1K earnest money and will put down $49K cash for purchase and finance the rest. They are already qualified for a loan and we have the name and phone number of their loan officer to verify. I'm ok with the home warrantee - it saves lots of hassles if something breaks (they don't come back to me to complain and they don't have to pay to get it fixed), but the 3% cash back is a new one to me. Strange to word it this way instead of asking for $4K (about 3%) off the purchase price. Still, they've got $50K in cash to buy this thing, so this is a strong offer.
I decide to counter with accepting the home warrantee and everything else, but paying only 1% cash back. We'll see what they say.
Posted by Shaun at 10:24 AM
7/28/04 5:45 AM
On the way in to work this morning, I’m trying to fight off concerns. It’s been just over 4 days and no offers. I know that’s not much time, but I sold my personal residence late last year in 3 days. However, my house was newer and in relatively excellent condition. In other cases, a friend sold his house in 7 days and my in-laws just sold theirs in 1 week. But my asking price is a bit on the high side (comps are about $137K and I’m asking $142K), so I have doubts. I tell myself to wait at least one week before doing anything.
Posted by Shaun at 10:22 AM
7/24/04 1:00 PM
Ran out to the house to do some minor stuff - install three more switch plates that I didn't catch earlier and screw down the dishwasher, which, for some reason, was not screwed to the countertop. While there, an agent came by with a couple to see the place. House still smells a bit - a combination of paint, carpet cleaner, and air fresheners. A bit overpowering. The man seeing the place had to go outside because the smell overpowered him. It's not unpleasant, but it is strong. I hope it doesn't last too long. There were four agent business cards on the counter, so at least it's been shown a couple times.
Posted by Shaun at 10:20 AM
7/23/04 11:00 AM
Stopped by the place on the way to work. Carpet looks great! Those guys did a good job. Finally, the house is just about done. It's good enough to put on the market now anyway. I called my Realtor and gave her the info and she's going to get it on the MLS right away so we can get people seeing it this weekend. Plugged in Glade air freshener things in the living room (near the front door) and the guest bathroom (back of the house). Used the vanilla scent, since everyone says that's what gives new home buyers warm fuzzy feelings about a house.
Posted by Shaun at 10:18 AM
Handyman is done and I meet with him to go over his work. He never found the name of the fiberglass guy, but I found someone and he came out to fix the shower. Cost $250, but it looks good. Paid the handyman. I’m pleased with the work. Carpet cleaners are coming tomorrow morning to clean the carpet and then the place is ready to list!
Posted by Shaun at 10:16 AM
After a trip to the house, I discover the dishwasher still isn’t fixed. I call the delivery company, furious. The receptionist, who apparently is also an expert in dishwasher operation, informs me that it couldn’t possibly be an installation issue because dishwashers use more water than what has collected in the bottom of the unit. Therefore, I need to call GE and have them send a repairman out. Further, since the installers said it was working correctly, it must be. I explain the installers didn’t stay for a whole cycle to run and she says they don’t have the time for that. She can’t explain how they can be 100% sure it was working correctly if they didn’t stay for all the cycles. She gets snippy and I ask to speak to her supervisor. She’s no better, also insisting that, since their installers said it was working, it was and therefore they won’t send them back out. She also says she is the one who picks up voicemail messages but never got mine from Saturday. I’m livid.
I end up calling GE, who sends someone out the next day. Turns out the problem is, in fact, the installation. The dishwasher drainage line connects to the garbage disposal. However, the disposal has a punch-out at the connection point. This allows you to use the disposal if you don’t have a dishwasher. If you do connect a dishwasher, you need to knock out the punch-out so water can drain. They didn’t knock out the punch-out. I write a letter to the owner of the company and fax it to her. I also send a copy via mail to the company address on file with the state corporation commission. I copy Home Depot on this. I get a call from a very nice lady at Home Depot. They are deeply concerned about the behavior of this contractor. I hope they stop using them. I never receive a response to my letter from the company.
I do some research with the city. They have a bulk item garbage collection next week. Sweet! I haul the dishwasher out to the street for pickup. Unfortunately, they don’t say which day the pickup is, so I’ve got to leave it out all week. Oh well. Beats paying $100 to have it hauled away.
Posted by Shaun at 10:12 AM
7/17/04 10:00 AM
New dishwasher and range are being delivered today. Man, that old dishwasher is really foul.. The inside is covered with brown mold and the smell is horrendous! The new appliances are installed and briefly tested. They tell me they are working correctly. The guys were supposed to take the old appliances away. They take the range but refuse to take the dishwasher. I’m a bit pissed because nowhere in any paperwork I have does it say the appliances have to be in working order in order to be hauled away. I’m complaining to someone about this. They leave the moldy dishwasher in the garage.
The handyman showed up and went over list of items that need to be fixed. There’s a lot!
- House inside needs to be repainted
- Closets in the guest bedrooms need tracks for the doors so they don’t swing inwards.
- Master shower floor is cracked. He doesn’t do fiberglass work, but knows someone who does. He’ll try to get the name and phone number for me.
- Toilet in guest bath needs work – the toilet itself isn’t connected securely to the ground and the water line into the tank is leaking and spraying water. The shut off value doesn’t really work either, so I can’t completely turn it off. He tells me this isn’t uncommon and not a bit deal to fix.
- Need a stopper installed in the bathroom sink – there’s a toothpaste cap down there now.
- There is a drinking water filter unit under the sink with a dispenser above the sink. Need to remove that. No water comes out of it and if the dishwasher was that moldy, I hate to think what the filter parts look like.
- He offers to straighten the cabinet floor under the sink, which has warped due to water.
- Want to replace all switch plates in house. Just a general reselling tip and they cost less than a buck each.
- Backyard is overgrown with waist-high weeds. Need to cut those down. No need to remove, but just cut down to ankle-height.
- Baseboards need to be fixed. The tenant replaced all the tile, on his own, it appears. The new tile must have been lower than the old tile and the baseboards have not been put back on correctly. Corner pieces are missing and they pull away from the wall in several places. They need to be redone.
He leaves and will call with a quote later today. I head out to Home Depot to get new switch plates. When I return, I discover the dishwasher didn’t drain. There is also water dripping from the counter top across from the dishwasher. The water was from the water filter. Apparently, the previous owners ran a line from the filter, through the cabinets, to the refrigerator so the water there was filtered. The fridge is gone, but the dishwasher installers must have turned a value somewhere, so water is now flowing out the line. I find the value and shut it off. Thank goodness I came back. Having that run for days would have been a disaster.
But the dishwasher hasn’t drained. Damn. I try calling the installers, but I only have their office number and, being Saturday, no one answers. I leave a very pissed off message. I will be out of town Monday and Tuesday and want this fixed before I get back.
Handyman calls back and quotes me $1700 plus cost of paint for the painting and $200 for everything else. I agree, even though the painting price sounds a bit high, and he’s set to start Monday. Says it’ll take about a week.
Posted by Shaun at 10:06 AM
I’m picking up this story at the point where my renter’s two year lease has expired and they have opted not to buy the house. This is actually what I want, since I keep their option money ($4K) plus still get the house. Their contract was to buy the place for $125K and I think I can sell it for at least $135K now.
(I’ll go into the details of when I first bought the house and leased it later on.)
I was thinking about re-leasing it on another lease-option, but decided not to. I had just been in a car accident, so I had bills from that, plus had some other bills I wanted to pay off. It’s pretty much exactly like the Cashflow game – selling a house to pay off debt. I figure paying those bills will increase my cashflow by $500 a month. Of course, I lose my passive income, but I’m ok with that. I was getting $260 a month, so by paying off debts, I’m $240 ahead each month. I plan to save some of the proceeds to invest again later.
Because I’m selling for cash, I can’t do a 1031 exchange and I’ll be hit on taxes for the capital gain. I don’t like this, but I’m going to do it anyway. Gotta meet with my CPA and figure out an estimated tax payment to avoid penalties next April.
Checked out the house. Lots needs to be done. Range can be cleaned, but dishwasher is a lost cause. Full of mold. Ugh. Walls are dirty, grease stains are on carpet, baseboards are coming off, light bulbs need to be replaced. On the plus side, they installed an alarm system from ADT, so that’s a plus for selling. They beat the hell out of the house. But then, I figured they would, so it’s not a huge shock. I estimate about $3K to fix it up.
Had a company come in and do some cleaning. They cleaned the range up pretty well, but it’s still not too good looking. Went down to Home Depot and bought the cheapest dishwasher ($179) and range ($279) they had. Free delivery and, since I opened a Home Depot account, I have no payments, no interest for 1 year. I’ll pay this off when I sell the house.
Posted by Shaun at 9:54 AM
I decided to start this blog as a mirror to my blog on the richdad.com website. That can be found in the Insiders Access area (membership is required). That site, unfortunately, only allows me to post - readers cannot post comments or questions. Since I feel a big part of the blogging experience is feedback from readers, I started this blog, where comments are allowed. My posts will be the same on the two sites, so if you just read one, you won't miss anything.
I have only limited real estate experience and it's my hope that as I gain more, I can share it with those who have less than me. I hope to show those who want to get into this business that it's not as hard as you might think. The biggest hurdle to get over is simply taking the first step.
A quick summary of my situation: about two years ago, I purchased a house from a foreclosure auction, leased it out with a lease-purchase agreement for two years, and am now selling it to get some cash. This is my story :-)
Posted by Shaun at 7:17 AM