Well, we tried to make an offer on the house -- at a price that was $50,000 less than what they were asking for it, but that would still have offered them a healthy 22% increase over what they paid for it five months ago. Given the magnitude of our attempted cut, our realtor thought that it was best to call their realtor and float this by her verbally before making a written offer. Their realtor's response was succinct, along the lines of "no way in hell" -- reminding us that this property is owned by investors, that it had already gone through two price reductions (originally the sellers were going for a fifty percent increase!), and that the sellers needed to sell very close to their asking price, because they had to protect their investment. She then added that if the house didn't sell after this price reduction, the owners would probably take it off the market and rent it out.
My first reaction was frustration and depression, to have our first feint at an offer rejected so hard that the agent didn't even consider asking the seller about it. My second reaction was "you idiots" -- nice way to protect your investment!
Thanks to the title company, we know that they bought the property for 5% down -- so turning it around and selling it to us (allowing for agents' fees and hypothesizing that they spent $25,000 on renovation) would net them a 173% return on their original investment! On the other hand, given that the rental market is cold and rents have been falling, good luck to them in finding someone willing to shell out the $3.5K or so in monthly rent that they'll need to eke out a profit while covering that five-percent-down mortgage of theirs. In the meantime, every month that the house sits vacant eats another mortgage-payment-sized chunk out of the profits, and since it's been on the market for sixty days -- two weeks of that at its current price -- it's clear that we're not the only ones who still consider this house overpriced.
Maybe tomorrow they'll find someone who'll write a check for the full amount, but I suspect that we might have another chance at this house as it makes its way downwards -- in the meantime, we keep looking elsewhere.
Posted by Kevin at August 9, 2004 09:52 PMThis reminds me of a house Brad and I made an offer on in North Mission Viejo; it was perfect. Unfortunately, we were outbid twice and we decided not to play "the game." -- however, the "winning bidder" couldn't get financing (he obviously was offering money he didn't have.) Well a few weeks later, the seller's agent called Tom and asked us if we were still interested. We told them to shove it!
Posted by: Katrina at August 14, 2004 09:45 PM