Should you take a lowball offer?
Unless you're in a buyer's market, don't lose money by letting a buyer drag out a home sale.
Q: Dear Steve,
As executor for my father's estate, I have an offer to buy his former home, but at a severely depressed price. What's more, the buyers can't close on the home sale for more than 90 days. Can I keep the house on the market in the interim and accept a higher price and cancel the original contract if a better one comes through?
A: Dear Michael,
Unless your signature appears on a sales contract with that first party, you can accept just about any offer you darn well please, assuming any are forthcoming. You shouldn't let a home sale slip through your fingers.
If you feel like you're really being beaten up on the price, your instincts about holding out may be right. Merely wanting to take that final step to close the books on your father's estate is probably not a good reason to leave thousands of dollars on the table, unless your role as executor has been especially burdensome.
You don't say why the buyers would need more than a quarter of a year to close, which at face value seems to leave you hanging, given their "severely depressed" offer. Lots of things can happen on a home sale in 90-plus days — few of them good for you. If the delay is due to a contingency for the buyers to sell their present home or a quest for financing, those are both variables that could leave you buyer-less this spring.
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If you do decide to go with the aforementioned buyers, consider giving them fewer ways to exit the deal, in the form of a larger escrow (earnest money) deposit and a shorter mortgage-contingency time frame. Of course, the tougher the terms you try to impose, the better chance the buyers will find an alternative purchase, particularly if your dad's home is in a buyer's market where there's an abundance of short sales and foreclosures that are depressing prices. Yet you might also get a sense of whether the buyers are actually serious or if they are just tire-kickers or investors weighing several potential lowball purchases.
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It could also be that the "depressed" offer you received, while being well under the home's most recent appraisal, may be closer to what homes have lately sold for — not listed for — in the area. In that case, you might just find yourself in the same situation months from now if you play pricing hardball, then facing more buyer contingencies or loan problems down the road.
If you trust your agent, assuming you're using one, then accept his or her advice on how to proceed. If you're not using one, well, it can a tough time to sell without representation.
Good luck, executor. That's a tough job, as you've no doubt discovered.