Purchase Offer Reviews for Home Sellers

Published on February 2017 | Categories: Documents | Downloads: 29 | Comments: 0 | Views: 178
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1. These are the narrative portions of actual reviews. The piles of supporting data have not been displayed. 2. Clients receive everything along with a comprehensive brief on the suggested course of action. 3. While the data format/content may vary from review to review, a supported course of action will always be suggested and all data provided and explained.

Hi Guys – I wanted to write this and get it over tonight as I started in on it and just kept going. While the offer is low out of the gate, a look at the data shows two main things – the market is sliding further as inventory continues to sit and based on the data, the offer isn’t as out of line as first impressions indicate. Know that this offer was a surprise. This buyer has been kicking tires for a few weeks and I was under the impression that he had left – the other agent said he is a heavy stats guy and has had them pull all kinds of data as well as doing it himself. I was going to get with you tomorrow/Friday to see about reducing the price. ============================ Data Averages: Development Active: $755,900 Sold: $641,000 (since 01/01/06) Harrison HS 600K-800K All Active: $683,100 (82 homes) Sold: $638,000 (20 homes) Sale to list ratio 96% Harrison HS 600K-800K 1+ acre Active: $704,600 (25 homes) Sold: $665300 (3 homes) Sale to list ratio 94% West Cobb 600K-800K All Active: $690,900 (141 homes) Sold: $645,800 (44 homes) Sale to list ratio 94% West Cobb 600K-800K, 1+ acre, Blt 1999 and earlier Active: $729,200 (13 homes) Sold: $618,000 (4 homes) Sale to list ratio 91% West Cobb 600K-800K, Slab/Crawl/Part Bsmnt Active: $670,100 (18 homes) Sold: $606,500 (8 homes) Sale to list ratio 93% ** The ratios do not reflect expired homes that were relisted. If included, the ratios will be reduced. ** The average sale prices do not reflect seller paid closing costs, the average closing costs for homes in this price range is between 6K – 8K. ** With one exception the data groups include new homes and those with basements (fin & unfin). ** The data does not consider updating needed/completed. ** This data considers the two West Cobb MLS areas – mainly west of 575 and north of 120 ** Of the 64 homes between 700K-800K homes, yours is the 12th highest. ================================ The offer price of 667,000 is 85.5% of the list price. Based on the data, it is reasonable to say that an offer of 93% would be considered good. It is also reasonable to say that the market is indicating that the current list price is

optimistic. My suggestion was/will be to reduce the price to at least $749,900 before even seeing this offer. I would strongly consider using that number when considering this offer. The numbers: 779,990 @ 93% = $725,307 749,900 @ 93% = $697,407 Using the 749,900 as a base leaves $82,900 between list and offer. Using the actual list price leaves $112,900 between list and offer. I want the former number for your use; the latter for his. It’s critical to note that this is a cash deal, no mortgage nonsense. No closing costs are asked for and the closing will be 10/29. The stipulations aren’t unusual or of concern. It’s obvious that there will be a counter and they expect that given the aggressive offer. I suggest essentially splitting the difference; counter +60,000 or 728,000 with a faster closing date. It is likely that they will counter back, perhaps at around 700 where they will hold. At that, the sale to list ratio (off 749,900) will be 93.3%. I will of course look to counter again and try and get as much as possible without jeopardizing a deal. Obviously I will work the agent as best I can to get as much on the counters as possible, but the market is obviously not in your favor. While this is an aggressive offer, I understand the logic behind it. This market is completely saturated and it will remain in this state through this time next year. This is a cash buyer so they are completely bypassing potential mortgage issues – an asset they are using. A quick close is possible and I will push for the end of this month – early Oct if needed. I’ll be in my office tomorrow and I will give you a call – get your questions lined up for me –

Hank
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As the only data that matters is that of the closed sales, this is the focus of the review. I also kept the review to a more specific level so that the best look at recent trends can be developed. In this case the data will be specific to 4BR homes, 2.5B, slab or crawlspace in Pope; I eliminated the homes with more than 2 full baths. To get a larger data pool I also expanded for a look to include Pope/Lassiter/Walton. One of the main things I look to develop is the list to sale price range; how much of list price are buyers paying. Once that range is developed, it’s applied to the subject. The data: • • • • • In Pope, the average sale price is $260,433. The sale to list price ratio is 95.53% In the consolidated look at Pope-Lassiter-Walton the sale to list ratio is 95.4% FMLS stats show that the three areas that comprise “East Cobb” have a combined sale to list price ratio of 94.71%. This is for all properties, all price ranges – I look at this as the “strategic” view as opposed to the more specific or “tactical” view. Note that these ratios do not consider closing costs – they are determined only by price at contract and final contract price. Given the list price of 314,900 and applying the ratios, the math looks like: o 314,900 x .9553 = 300,824 o 314,900 x .954 = 300,415 o 314,900 x .9471 = 298,242 Statistically, the offer of 300,000 is dead on



The next factor that has to be considered is closing costs. Running through the closed sales since the beginning of the year shows that the average seller paid closing costs were 5,300. The variable that’s not available for review includes seller concessions like warranties, termite bonds, personal property and other things done to facilitate a deal. As those items are not considered by underwriters/appraisers they are not included during the analysis of data. Again, the math is simple – call the avg from above 300,000 and deduct 5,300 in closing costs; the result is a net of 294,700.

The offer on the table has the following high points: • • • • Offer of 300,000 with 9,000 closing – net 291,000 Closing date of 8/24 3000 in earnest money 14 day due diligence period – simply put they have an “option” on the home during that period to do whatever research they deem important. If they kill the deal, they must do so during that period, after that they are locked into the deal. Appraisal period is 24 days. These time frames begin when a contract is agreed upon. Stated financing is conservative – 20% down with a 30 yr fixed rate mortgage



• •

They are asking for the fridge, a home warranty capped at 439, light fixtures to replace the ceiling fans in the BRs and a termite repair and retreat bond valid for a year from closing. They do not have a house to sell.

Opinion: • Statistically, this is just about right on the data with the exception of closing costs. The other concessions (outside of the light fixtures) are common and things that I would ask for. As far as offers go, I don’t see anything that precludes getting something done. They are starting about par so the objective will be to get as much from this point as possible. This is far from a low ball or aggressive initial offer. There’s a 4,000+- spread between this offer and the statistical average. Other variables that have to be considered include the bedroom count of the house – several have commented that it’s a 3BR with a bonus, which can be strongly argued. Many of the comps are full 4BRs with a garage bonus. The issue of the creek, public’s reaction to water and diminished utility of the yard have been mentioned. On the flip, it has been updated with the kitchen and recent paint/carpet work. You should not expect to net 315,000; I see a net of 300,000+- as being well supported on the house given the feedback and data. That puts you above the average sold price as indicated for the year so far.





Suggested course of action: • • • As none of the concessions outside of the light fixture request are atypical, I’d leave them and focus on price/closing costs. I would move the closing costs to 6,000K and the purchase price to 311,000 – that’s a net of 305,000 which I think is a strong price for the home. It’s a stong counter but one that indicates a willingness to get a deal done. I would expect that they would counter back probably in the range of a 300,000 net at which point you would have achieved what I would say is a very good price for the home. This seems to be a well qualified buyer, no contingencies that will close in six weeks. Focus on the net as it’s the most efficient way to cut through the numbers being moved around. Some buyers need more closing costs than others so working off net is the best way to accommodate that.



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Statistical data: Highland Colony Overall (closed since 06/01/07) 96.8% to 97.6% sale to list price ratio Same MS/HS since 01/01/08 (with as comparable homes as possible) 89.2% to 94.7% sale to list price ratio TrendGraphix Data for 30075, 200K-275K, since 10/07 to 12/07 91% to 98% sale to list price ratio 15 month sales drop of 44.4% / 12 month sales drop of 58.3% 15 month pending drop of 50% / 12 month pending drop of 72.7% If we apply that to the list price, we get indicated ranges (rounded) of: 1. Development - 242K – 244K 2. Schools - 223K – 237K 3. TrendGraphix - 228K – 245K Consider as well that average seller paid closing costs run between 3100 and 6900; call it an avg of 5K at this price range. That leaves an adjusted range off the list price of 218K to 240K Your home isn’t going to fall into the bottom of the range, but it’s also not going to be at the top. The issues we heard last time and have a bit already include the lot, the front stucco, the idea that water will collect in the driveway area and the likely need for mechanical/deck/retaining walls/roof updating. This agent hit each one of those as she explained their logic for the offer. She did say that the updating completed inside was much nicer than many homes they visited. This offer is 230 with 0 closing costs – for an indicated price of 230K or 92%. While lower than the community range, it is in the middle of the school range and close to the middle of the trend graphix range over the last several months. The starting point for this doesn’t appear bad based upon the data. Strength of the offer: The major positives here: 1. Preapproved buyer with no home to sell (this will be verified as part of the counter although she verbally told me this)

2. Closing 2/23 – this would seem to coincide with your other closing – we can massage that as needed to avoid you having to store anything and make the move as easy as possible. 3. No closing costs asked for 4. She is asking for nothing in the way of work to be done 5. No crazy stipulations or back door clauses, just a standard due diligence period. You know what the market is and the TrendGraphix data is a bit brutal graphically representing it. While my first reaction was to go back hard, after review of everything I’m going to suggest it might be better to consider a “normal” counter. I had a good conversation with the agent, she is aware that this home is well priced, she also made me aware that she did her homework and knows the history as well as the issues/concerns that are present. Of course I had to counter by asking her to show me homes like yours that are priced and situated like it is…we each made our points and agreed that all expect a counter. So – here’s what I’m suggesting – and naturally we’ll discuss this as this is my opinion only: 1. Purchase price to be 243K. That is a bit over the 10K split but it gives us a bit more for the counter back. I think it shows that you are interested in making this work while recognizing the current and expected market, current inventory and issues they consider important at the house. 2. We’ll make it clear that the house is largely “as is”. I will explain to the agent that you’re not putting any money into the deal based on inspection nonsense. If safety/code issues are noted then we’ll talk but it has to be something significant. 3. Adjust the closing date as/if needed to fit your requirements 4. We’ll request evidence that she has the funds available to close. There’s not much else to counter and this is a very clean offer. If we counter at 243K, I would expect we’d settle around 236K net when all is said and done. If you look above, that puts you well in the current ranges – with a no contingency deal closing in a few weeks.

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