Relocate to Wisconsin : When Buyers Pay OVER the Asking Price...

When Buyers Pay OVER the Asking Price...

 In many parts of the country, neighborhoods here and suBidding bucksbdivisions there we are seeing bidding wars....with homes getting multiple offers and over asking offers.   The wars are a result of "Thinventory" or fewer houses on the

 market than people have seen for a very

 long time.  The very powerful laws of supply and demand are at work.  In Wisconsin, the next step after getting an accepted offer, is to have an inspection by a state licensed home inspector. The top to bottom examination from the roof to the foundation includes the mechanical systems - plumbing, electrical and exterior paint, stain, material condition, drivhouse tug of wareways and sidewalks. This investment needs to also be a "healthy" one...Buyers reassured that they are getting the house worthy of the price tag they chose to inflate.

      The Buyers may choose to write to the offer that includes items that the inspector has uncovered and issues that they would like addressed from chimney cleaning and furnace tune ups to mudjacking and building code issues...the amendment is sent to the Buyers to have repairs done and lien waivers sent to them  prior to closing.  Sellers may choose to sign the amendment and agree to the repairs..substitute credit for some repairs....do some and not others or any combination thereof....with some risk.  If the Seller chooses not to repair what a Buyer may call a defect in the property....the Buyers can send a Notice of Defects and a Cancellation and Mutual Release calling the offer null and vDefensiveoid.

     Uh Oh....Now...the over asking, faster closing offer becomes no offer at all. And....the Sellers must reveal on a revised condition report for all future buyers to see...the condition that they chose not to corrrect causing the deal to fall apart.  Agents can become defensive rather than the objective voice of reason needed in negotiations involving the inspection.

   The better thing to do is work at "keeping peace" and using the objectivity of a professional.  The Sellers got more than they asked for...the Buyers want repairs done...and the Sellers still netted more than they asked for with the original list price.  Common sense, the spirit of fair play, less greed and more equality....all come into play when crafting amendment responses.

     Sellers...do the right thing...respect the offer that exceeded your dreams...let your agent show the Selling agent and the Buyers how much you appreciate their offer.  Buyers...be realistic in your requests for repairs and replacements when you amend the offer you believed would win the war.

      If you or anyone you know is looking for experienced Realtors who know the winning ways to negotiate to begin your "Happily ever after" as a Seller or a Buyer in southeastern Wisconsin, call the Hansons, we are honored to be of service for all things real estate.

 

 

Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS


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Comment balloon 50 commentsSally K. & David L. Hanson • March 18 2016 05:36AM

Comments

Good morning, Sally K. & David L. Hanson ...the bottom line always reverts back to "use common sense"..... some agents are short in that dept....

Posted by Barbara Todaro, "Franklin MA Homes" (RE/MAX Executive Realty ) over 2 years ago

Well written . These buyers are also burying themselves potentially for about 5 years before they could get successfully out of the house !

Posted by Michael J. Perry, Lancaster, PA Relo Specialist (KW Elite ) over 2 years ago

The other problem is getting the home to appraise as well.

Make yourself an astonishing day.

Posted by Raymond E. Camp, Licensed Real Estate Salesperson Greater Rochester (Howard Hanna Real Estate Services) over 2 years ago

Explained well you did the roles of the buyers and sellers... Yoda says Sally K. & David L. Hanson !

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) over 2 years ago

This is very good reading for home buyers and home sellers.

Have a great Friday and an outstanding weekend.

Posted by Roy Kelley, Roy and Dolores Kelley Photographs (Realty Group Referrals) over 2 years ago

That is excellent advice to sellers and their agents. Stay calm and try to work it out and close the sale.

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) over 2 years ago

Sally K. & David L. Hanson All excellent advice in your conclusion, but will it be heeded? Never! Greed always prevails with humans.

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (Realty National) over 2 years ago

Gee, we have so many buyers, sellers and their agents not using common sense. It's a business transaction, not a board game...

Posted by Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400, Long Island Condo & Home Sale Specialists (The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803) over 2 years ago

I think that we all need a 101 some times..

Pricing is key to selling a property..

Posted by Ginger Harper, Your Southport~Oak Island Agent~Brunswick County! (Coldwell Banker Sea Coast Advantage) over 2 years ago

I'm so glad that my market has a healthy amount of inventory and there aren't many bidding wars going on at all. I don't miss those days back in 2011-2012 when buyers were paying 15k-30k over asking price just to win a home. 

Posted by Nicole Doty - Gilbert Real Estate Expert, Broker/Owner of Zion Realty ZionRealtyAZ.com (Zion Realty) over 2 years ago

Too many emotions and the lack of common sense is a combo that can destroy deals. Thanks for this fantastic and well written post.

Posted by Chris Lima, Local or Global-Allow me to open doors for you. (Atlantic Shores Realty Expertise) over 2 years ago

Excellent post, well deserving of the coveted ActiveRain Gold Star.

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) over 2 years ago

Lots of good advice in your post, Sally K. & David L. Hanson. Many Buyers and Sellers will not heed it, however. 

Posted by John Mosier, Prescott's Patriot Agent 928 533-8142 (Realty ONE Group Mountain Desert) over 2 years ago

   Over the Asking Price

     Inspection problems, appraisal issues, getting underwater right from the start, the danger of a "Bubble"...  sounds like the early 2000's all over again!

Posted by Fred Griffin, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) over 2 years ago

Hi Sally and David -- as the listing or selling agent, it is important to remember we are not principals in the transaction.  We are delivering the message and it should be done so without emotion, with common sense and remaining mindful of the end result.  

Posted by Michael Jacobs, Los Angeles Pasadena Area Real Estate 818.516.4393 (Coldwell Banker Residential Brokerage) over 2 years ago

Sally and David, I love "Thinventory"!  

Our bidding wars are so competitive that it's not only about being willing to pay more, but also submitting an offer that is totally 100% squeaky clean.  Winning buyers typically have a home inspection done prior to submitting an offer, then go in "as is" and non-contingent.  Any sign that a buyer will come back with post-ratification demands will raise a red flag for the sellers, who are likely to have many offers from which to choose.  

And your post is a cautionary tale for sellers who can't resist the temptation to get super-greedy!

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 2 years ago

I also think that when the buyers are paying top dollar and pay over asking, this is where the bubble gets blown up.  What happens if / when . . . they want to move?  The top dollar they paid for the place is similiar to the time when everyone refinanced to max out their equity.  When the bubble burst, it's still the same overpriced property, no?!?  In an area in my market, little 750 sq. ft. 2 bedroom (SFR) were put on the market at $210,000 -- then SOLD for $265,000.  So what happens when that $265K property is on the market next?  Will the market appreciate?  Will it be top heavy?  There comes a point where the market will not bear the list price and it takes 5-10 years to appreciate again.  It is cyclical, and I do wonder about the over-priced places.

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 2 years ago

Sally and David - certainly clear heads and a professional agent who keeps emotion out of it are needed.  Sellers need to understand what could happen if they dig their heels in.  Buyers need to understand what happens if they overpay.  

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) over 2 years ago

Thank you for sharing multiple offers are great even better if cash offer is the one that is highest and best. One must still prove the point and can one prove the point and does it make sense to make the offer way above the asking price? That can make a difference but some still say they want the house and will pay more than asking even if it does not make sense to do so. 

Posted by Laura Filip, What can we do for you today? (RE/MAX UTOPIA , Serving all of Texoma ) over 2 years ago

Sally and David

Buyers are paying over asking more often in the current real estate . . . . Barbara Todaro's comments are right on point.

Good luck and success.

Lou Ludiwg

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 2 years ago

Two other key factors I see in this Scenario.  The house needs to appraiser for this over asking price agreed contract price.  Sometimes buyers use the inspection as a hammer and present unreasonable repair estimates.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 2 years ago

I have seen it happen Sally & David, the market has changed in the last few years.

Posted by Noah Seidenberg, Chicagoland and Suburbs (800) 858-7917 (Coldwell Banker) over 2 years ago

Right, but I've always maintained that the inspector doesn't necessarily know everything. Just because he says something, doesn't make it true.

Posted by Marj Carpenter over 2 years ago

Sally and David you offer a level headed solution, and Sellers would be wise to follow it.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 2 years ago

Good advice and reminders for us agents. The ultimate goal is to get the deal done. But we need to remain level-headed and objective throughout the process. And of course, giving the client good advice is key (and hopefully they will listen!)

Posted by Melissa Spittel, "Achieving Results Together " (Coldwell Banker Residential Brokerage) over 2 years ago

Great advice to Sellers and Buyers.  The sale of a home should be a win-win for both sides.

Posted by Evelyn Johnston, The People You Know, Like and Trust! (Friends & Neighbors Real Estate) over 2 years ago

This looks like the Golden Rule of Real Estate

 "Sellers...do the right thing...respect the offer that exceeded your dreams...let your agent show the Selling agent and the Buyers how much you appreciate their offer.  Buyers...be realistic in your requests for repairs and replacements when you amend the offer you believed would win the war."

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 2 years ago

I'm with you Sally & David ... I also serve in SE Wisconsin and your post in right on point!  Great information and in agreement 100%!  Ultimately we are working toward the goal of a WIN/WIN for all parties ... and keeping the deal together.

Posted by Diana Dahlberg, Real Estate in Kenosha, WI since 1994 262-308-3563 (1 MONTH REALTY) over 2 years ago

Sally K. & David L. Hanson - I do see 'bidding war' - and the best advice from your post --- 'Keeping Peace' really helps everyone for a win-win.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 2 years ago

Sally and David, you have a very interesting perspective on the internal workings of an offer, particularly when it is over asking. Ultimately you have the best interest in mind for all parties which is to keep the deal alive, both sides doing their part and moving forward towards a close. 

Posted by Craig Cooper, Creating-Preserving-Growing Wealth in Real Estate (Chase International Real Estate) over 2 years ago

Good morning Sally. You shared a lot of common sense and wise advice for anyone in this kind of situation.

Have seen a number of appraisal issues when there is a bidding war on property.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 2 years ago

Hi Sally and David.  This is excellent advice that hopefully will be read and understood by sellers in this enviable position.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 2 years ago

There is definitely a happy medium of buyer requests and seller agreements that can make a deal work out for everyone. If the sellers are getting more than they expected in terms of money, and the buyers have some reasonable repair requests, I would suggest the sellers go ahead and make the fixes. Everyone wins.

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, kat@thehousekat.com) over 2 years ago

This issue of "thinventory" is definitely causing many agents and buyers and sellers to rethink the entire negotiationg, inspection, and appraisal process. I recently suggested to my clients that they withdraw an offer for a townhome that had gone into multiple offers and where the seller selected our offer, but got a little too full of herself in her demands. This week we found another townhome, paid $5K over ask and got the house against 7 other offers. But at least the seller was realistic on terms... we gave in on her need for a slightly extended closing date; she provided a good allowance towards a home warranty. It's all still give and take even in a hot market.

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (RE/MAX Executive | Charlotte, NC) over 2 years ago

Great post Sally & David! I know the biggest problem we see with this situation is the appraisal doesn't keep up with the demand and there are a lot of hurt feelings when this happens; the seller because the buyers can't pay the extra out of pocket and the buyers because even though the "won" the bidding war they lose the house in the end. I look forward to reading more of your insightful posts in the future!

Posted by Chris Shull, Your Realtor For Life! (ColumbiaLand Realty) over 2 years ago

I like these words.. Seller , respect the offer.  I think, regardless of amount this should always be the case.

Posted by Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC, ... a small office, delivering big service! (Waters Realty of Brevard, LLC) over 2 years ago

Hi Sally Offers above listing price is only better than cash IF they can get it appraised.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) over 2 years ago

Good Morning Sally excellent post. Sellers should respect the offer if its highest and best and know it might not happen again.

Posted by Joy Bender, #1 San Diego Luxury Real Estate Digital Marketer (Pacific Sotheby's) over 2 years ago

You offer sound advise in a strong market for sellers.  Our market is so slow that sellers appreciate any offer and are usually most obliging to work with the buyer

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (RE/MAX Professionals, CT 203-206-0754 ) over 2 years ago

It's a shame when buyers and sellers are so commited to their particular agends, rather than trying to be a bit more objective and think about the long-term goal they both want - the house to change title. How about some common sense and objectivity?

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude - Carlsbad (Solutions Real Estate ) over 2 years ago

Any reasonable contingency should be considered, however, it's ultimately the sellers decision to draw the line so their agent can proceed to close. When a property has L3 and in a very desirable neighborhood, closing will occur rather quickly. The price will be determined by the amenities and value of the property, so, buyers will pay more to secure their lifestyle.

Posted by Kimo Jarrett, Pro Lifestyle Solutions (WikiWiki Realty) over 2 years ago

Sally we've been seeing a lot of game playing over the inspection requests this past few years. Far too many bogus items asked for (how do we know, we have homes pre-inspected) and the list of items asked for is ridiculous. If the seller knows their home well, and it's been pre-inspected and items repaired that puts them in a better negotiating position. I just wrote a long post about it last week. I could write one every week as it is seriously the biggest complaint our legal hot line has been getting 2 + years in a row.

Posted by Anna Banana Kruchten CRB, CRS, Broker, Arizona's Top Banana of Real Estate! (Phoenix Property Shoppe) over 2 years ago

"Respectful" and "realistic" - qualities that would serve the transaction well if ALL parties possessed them. 

Posted by Marte Cliff, your real estate writer (Marte Cliff Copywriting) over 2 years ago

Hi Sally and David - looking at the transaction in a rational business way is certainly great advice.

Posted by Grant Schneider, Your Coach Helping You Create Successful Outcomes (Performance Development Strategies) over 2 years ago

It's a sellers market here and in some areas, multiple offers and sales going $5000-$15000 over an asking price of $250K!!  It's very difficult to be a buyer in a market like that.  We also see a lot of flipped deals  as buyers get cold feet a few days later.  The inspections are important though and both parties need to work out a reasonable compromise.

Posted by Mary Hutchison, SRES, ABR, Specializing in Brookside, Waldo, Prairie Village (Better Homes and Gardens Real Estate-Kansas City Homes) over 2 years ago

It's almost like passive aggressive in nature and I always have found it kind of weird.

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 2 years ago

It's a sellers market in a lot of places more than a buyers market. I'm not surprised. Good luck! Mary Hutchison, SRES, ABR

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 2 years ago

Although we are all excited to see the home appreciation happening finally we as Real Estate Agents should be mindful of the run up in perceived value before the market crash in 2008.  Overly optimistic buyers could find themselves doing a short sale in a few years. The business cycles of prosperity and downturn have occurred several times in history.

Posted by Kathy Fuhriman (Bear River Valley Realty) over 2 years ago

Sally & David, great post on offers that are over the list price. I like your point that after Home Inspection and request to repair have been made the Seller may not view the offer as so good.

We are called upon to be professional at all times and this may be the time to shine and help all parties concerned come to a reasonable agreement.

Posted by John Wiley, Lee County, FL Real Estate GRI, SRES,GREEN,PSA (Right Move Real Estate Group- EXP Realty) about 2 years ago

Definitely a lot of common sense in this - I always tell my sellers that if the buyer bleeds in making the offer, they are going to come at you during the inspection - life is a circle! 

Posted by Lise Howe, Assoc. Broker and Attorney Licensed in DC, MD, VA, (Keller Williams Capital Properties) about 2 years ago

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