House Is Sold!

My counter offer to the previous offer was rejected. The buyer did not want to come up with the extra cash or to make the earnest money non-refundable. His agent said she's been trying to get him a house for a couple months, so I guess he's pretty picky. Could be a good thing he backed out.

Yesterday afternoon, my agent received a rather strange offer: it was from a family-run real estate agency here in the Valley which is rather large and whose members are all Realtors. The offer was for $175,000 but the buyer's name was "name and/or nominee." Of course, anyone who has read anything about birddogging recognizes that phrase and what it means - that the person making the offer likely won't be the buyer and will be looking for someone else to buy it. The offer also wanted a 45 day escrow (30 is normal) and they wanted their earnest money to be refundable anytime during the first 2 weeks after contract acceptance. The cover letter to the fax stated that this agent had lots of investors willing to buy properties. It also stated they would beat any other offers by $500 up to a maximum price of $184,000.

I rejected this offer. Or rather, we were going to sit on it until Wednesday, 9 PM, which was when it expired. I felt this offer was obviously a mass-market type thing by an agent who puts out tons of offers in the hopes of getting one accepted and then finding a buyer for it. The way it was written, I wouldn't have been able to entertain any other offers for two weeks and, if the guy changed his mind or couldn't find a buyer, he could walk away for free, wasting two weeks of my time. We decided to sit on the offer for as long as possible before rejecting it because this would give us a competing offer if another offer came in. A little ammunition for a bidding war, if you will.

Late last night, my agent got another offer. This one was from the agent of the guy above who rejected my counter offer. She decided the property would be great for her father, so she put in an offer for $181,000 with a $2,000 earnest money deposit and a $7,000 down payment. The deposit is non-refundable after the inspection period. They are paying for the appraisal and home warranty. Her father is pre-approved from his bank. This offer was for $1,000 over list price and I can't find anything else wrong with it. I accepted it and escrow will be opened today!

Need New Cabinets In Phoenix?

Ok, I met up with Keith yesterday to settle up our bill. After working with him on this project, I have to say he is a fantastic person to do business with. He has fantastic attention to detail and is considerate of my time. For example, we agreed to meet yesterday at my work to wrap things up. We had not agreed to a specific time - he was going to call when he was on the way. I got a call about 10 minutes to 3 PM saying he was just getting off the freeway near my work. Turns out, he remembered that I work 6 AM to 3 PM and planned his arrival to be near 3 PM so he would not disturb my working day.

He probably isn't the cheapest cabinet guy around. However, he is honest, fair, and incredibly dependable. He cares about getting the job done right. He works with several investors who flip properties, so he knows time is of the essence when replacing cabinets. He manages projects well. If you need cabinets, I can't recommend him highly enough. He is a franchisee of Kitchen Solvers and his contact info can be found here. His name is Keith Wolfram. Tell him Shaun sent you. (This is an unsolicited recommendation.)

Offer Fell Through, But New One Received

Now the fun stuff begins - offers and counter-offers!

The buyers did not want to agree to my counter offer to make the earnest money non-refundable after the inspection period, so that deal is gone. My agent says this, along with the use of an FHA loan (which is usually used by people with poor credit), indicated a weak buyer.

But we've got another offer on the table. This one is for $185,000, which is $5,000 more than the list price. However, the buyer wants a seller's contribution of 3%, which is $5,550. Now this buyer also did not want a home warranty and there is no $410 fee associated with an FHA loan like the last offer, so on the surface, it looks like there is only a $140 difference between the two offers. However, I would need to pay commission on the higher selling price. That's an extra $200 I'd have to pay, meaning this offer is now $340 less than the previous offer. Other details are a $1,500 earnest money deposit and a $5,500 down payment. The buyer has a FICO score of 805, which is great. Apparently he's got money, but it's in accounts he doesn't want to touch - IRAs, 401(k)s, etc. This is the reason for the seller contribution.

We're countering back with a seller's contribution of 2%, or $3,700. As before, we are asking the earnest money deposit be non-refundable after the inspection period.

Offer For House!

A couple hours before I got the call from my cabinet guy with his cost for fixing the cabinet fiasco, I got a call from my agent telling me she had received an offer for the property! The offer was for full price ($180,000). The buyer was putting 3% down with $1,000 earnest money. It was an FHA loan. They did not want a home warranty. They will pay the appraisal fee. I am to pay a maximum of $410 towards the buyer's closing costs.

It sounds like a great offer. The only strange thing is that it's an FHA loan. My agent said she hasn't seen one of those in 3 years. I counter offered with the condition that the earnest money is non-refundable once the 10 day inspection period has passed. They have until 5 PM today to respond.

Because this is being bought with an FHA loan, the buyers are owner-occupants, not investors. It also means there are likely going to be some additional hurdles to jump through and I would not be surprised if this sale did not go through. First, the FHA will not issue a loan if the seller has owned the property for 90 days or less. I pass that test, since I've had it for almost 6 months. However, if the seller has owned if for less than 12 months, they may require two appraisals to verify the purchase price. Full details of their requirements can be found here. My agent says sometimes they will want two appraisals, and sometimes they will accept one appraisal, but it will be reviewed by a second person. The other reason I think this sale may not go through is that, during my research on the seasoning issue, I came across the maximum amounts FHA will loan for Maricopa county: $172,632. The buyers will need a loan of $174,400. Oh, scratch this. I found another site that gives a bit more detail. That $172,632 amount is for non-metro areas of Maricopa county. For the Phoenix - Mesa - Scottsdale area, the max is $214,700. So it looks like we're ok there.

If they accept my counter-offer, then it looks like the place is sold and the only thing I have to worry about is the dual appraisals. If they do not accept my offer, I'm not too worried. My agent said she had a couple other agents express interest. She was trying to get them to submit their offers before the reply-by deadline of this FHA offer, but it didn't happen. So there could be other, non-FHA offers out there, waiting to come in.

Cabinet Costs

I got a call from Keith last night to discuss the bill for getting the cabinets installed. I had mentally figured around $2,000, which is what the other guy charged me for the job. It turns out to be a bit more than that... The total cost is going to be around $5,200! Keith had about 25 hours of his time in the job, plus his assistant had 25 hours. His rate is $40 - $45 an hour. There was a little more than $1,000 in parts costs and the countertops were about $1,500. Oh, all these figures are not just for the kitchen cabinets and countertops. They also include the bathroom vanities, countertops, sinks, and faucets. Although the old cabinet guy had the kitchen cabinets made and in the house, he did not have the new bathroom vanities made, so I had to buy those. I'm meeting with Keith today to get a full invoice and to give him a check.

This was more than I expected, but I'm not too concerned. Why? Well, for one thing, there was the $13,000 phone call. For another, well, you'll see in my next post!

Yardwork Revisited

Well, it seems like I'll have to get the weeds cut down anyway. When I came home from work this afternoon, I had a letter from the city stating I was in violation of city codes. They say the weeds must be cut down to less than 6 inches and a tree on the south side yard must be trimmed so that its branches are at least 7 feet above the sidewalk and 12 feet above the street. I have until August 31st to comply and I will need to have the city inspector back out again to verify the work has been done. At my last property, my handyman cleared the yard of weeds, so, given my difficulties finding people to work the yard at this house, I've called him again to see if he can do this. I called at 4:30 on a Friday afternoon though, so I don't expect to hear from him until next week.

Cabinet Photos

Here are some pictures of the long awaited cabinets. I have previously posted photos of the old cabinets. Click the pictures for a larger view.