Author Topic: "Would you be open to an offer?"  (Read 1984 times)

obstinate

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"Would you be open to an offer?"
« on: October 25, 2016, 09:26:19 PM »
My family is planning a move to another city in April of next year. We are planning to sell our house when we move there. We have actually been planning to meet with the real estate agent who helped us buy the house to start talking about selling it.

I got a business card from another agent on my door today. It had the agent's contact info and a handwritten, "Would you consider an offer?" on it.

Now, I have a notion of the range my house will go for. There are only five to ten homes in my city on the market at any given point in time, and less than a hundred in the metro area (this is the area in Silicon Valley closest to the Facebook and Google campuses). My house is within a two to three minute bike ride of the Facebook campus, and it's one of the only four bedroom homes in my neighborhood. All that to say, this isn't a case of a cold market where you don't have a clear idea of what the house will go for. I think I can be pretty confident, to within about five percent, of what my house will eventually go for.

So I have a couple of questions.
  • Any downside to entertaining this person's offer?
  • (Assuming the answer is no . . .) Any downsides to accepting if it's reasonable? I would insist on a non-contingent offer, but since it's an off-market deal, there'd be no issue if it fell through.
  • (Assuming I get an offer at the price I want -- or vastly above -- with no contingencies . . .) Should I do the deal without an agent of my own? I assume the buyer's agent, the person who contacted me, will want his cut. In Silicon Valley, this tends to be around 2.5%. So I'd save 2.5%, but in this transaction, that number is at least $50k.
  • (Assuming I try to do the deal on my own . . .) Any precautions I should take? One thing that occurs to me is hiring a lawyer to review the purchase contract. However, that contract is standardized in California. As far as disclosures, I think I can mostly just copy the set that we received, since we have nothing new to disclose. I'm not asking for advice specific to California or my county -- I'll do that research in more depth if I choose to go down this route. What I'm wondering is if this idea seems like a generally bad idea that I should not even consider going down.
  • (Assuming I don't do the deal on my own . . .) I could also talk to this agent about being both the buyer's and seller's agents. This would make them a fiduciary to me and probably cost another half a percent. I know that with unethical people that only counts for so much, but I'm at least intermediate on real estate sophistication, so I think it would be relatively tricky to take advantage of me. I don't know how to price houses other than my own, but I did read every word of the purchase contract we made when we bought the place, and I also have friends that are even more sophisticated.

« Last Edit: October 25, 2016, 09:28:41 PM by obstinate »

obstinate

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Re: "Would you be open to an offer?"
« Reply #1 on: October 25, 2016, 09:44:41 PM »
Yeah, that's what's unclear to me. It really just depends on what the offer is. Let's say I think I'll get X if I work with my agent. If the offer is X, I'll probably turn it down, because I'm not sure how good my estimate is. But if the offer is 1.2 X, I'll probably take it, because I really doubt my agent can squeeze out an extra 20% in a market where all homes have multiple offers (indicating more efficient pricing).

I actually already have a meeting with my agent scheduled for Tuesday, but I can push it back if the number this new agent is suggesting is high enough.

clarkfan1979

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Re: "Would you be open to an offer?"
« Reply #2 on: October 26, 2016, 02:51:08 AM »
I would entertain the offer. They don't know that you are willing to sell, so you have leverage. They might feel like they have to offer more than market value to make it worth your while if it's not on the market.

Villanelle

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Re: "Would you be open to an offer?"
« Reply #3 on: October 26, 2016, 03:41:24 AM »
I think many, many times, agents do this to drum up business and there is not actually someone specifically interested in buying your home.  Just something to be aware of--this is very possibly just a way to get you to all them, and for them to have the opportunity to pitch their services to you, so don't get too excited about a supposed possible offer.

On a semi-related note if this does end up being real, you could ask the agent you already had in mind if s/he would be willing to represent you in a sale where you already have a buyer and just want help with paperwork and details.  S/he may be willing to do this for a flat fee or a significantly reduced commission because most of the hard work is done, and there will be no advertising or expenses.  Instead of paying that .5% to the selling agent and worrying about being taken advantage of, you could offer the same amount to your own agent instead. My parents sold their home to my sister and BIL, and I believe this is what they did--paid an agent a small commission to handle the transaction. 

CareCPA

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Re: "Would you be open to an offer?"
« Reply #4 on: October 26, 2016, 05:59:48 AM »
It could also be a variation on the yellow letter campaign - but by going door to door the agent can do a more targeted approach.
The letter campaign is used to flush out any people in a specific geographic area who may be motivated to sell, so the agent/investor can pick up houses not on the market for a deep discount.

Heroes821

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Re: "Would you be open to an offer?"
« Reply #5 on: October 26, 2016, 06:57:55 AM »
Well I can't speak to most of your question, but my understanding with most buy agents or sellers agents end up as something like this: 1 agent 5% of sale. 2 agents 3% of sale each.

So if the buyer has an agent and you do not you could end up with them getting 5%.  I think MMM has mentioned his wife "representing" some of their friends on paper and only taking like 1% or something herself and giving the other 2% back to the seller themselves.

J_Stache

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Re: "Would you be open to an offer?"
« Reply #6 on: October 26, 2016, 08:50:09 AM »
Check with your neighbors to see if they received the same note.  That'd give you a clue as to whether this was an actual offer.

As one of my friends once said (about everything he owns):  "Everything is for sale, if the price is right".

Ensign1999

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Re: "Would you be open to an offer?"
« Reply #7 on: October 26, 2016, 01:17:29 PM »
  It could be to drum up business or it could be for real.  The folks that purchased the house next to my mom's place picked the neighborhood and had the house style/floorplan they wanted and had their agent cold call the owners.  It turned out that my mom's neighbors were looking to sell and move to Florida so it worked out for them.

  With respect to commissions.  The seller sets the commissions (or that was my experience when we sold our house in San Diego).  The commission was listed where buyer agents could see (ie: "2.5% paid to buyers agent" was what we had listed).  In your case, the amount of commission you paid the potential buyers agent is something that you can negotiate with them.  They could argue that you need to pay a 5% to them, but if it is too high then you can pass.  From what you have said, the market has very few options and if there is a buyer out there looking for a 4 bedroom in your neighborhood, and any commission is better than having a buyer move on to a different agent.

  My recommendation would be to call the number and find out what the deal is.  If he truly has a buyer then have them make an offer with the requested commission as part of the offer.  You can always counter with the same offer price and lower commission (if you think the agent is asking for too much).  If you have an offer on the table that you like, then you could offer your agent a flat fee rather than a commission to assist, but at this point I don't think you would need one.  The contracts are standard and once you have an accepted offer/contract the selling agent does very little that you could not do yourself.  You would mostly be dealing with the closing company.

  When we sold our house we offered the buyers agent 2.5% and our agent 2% (these were her suggestions and she was fine with the lower commission as we had purchased the house from her...also she was really good and was making bank so 0.5% didn't mean too much to her).  After we had a buyer things started to go south a little and the buyer requested a price change.  Initially we said no, but our agent negotiated with their agent to reduce the commissions to compensate us for the price drop.  In the end the change for us was almost negligible, the buyers got the house, and both agents still got paid without having to continue to advertise or show houses.