We have our first offer, HELP!

amber0389 · November 2011

And I'm not sure what to do with it. Please help.

We put our house on the market on 11/17. We've had 6 showings. And we got out first offer this morning. After having 2 realtors come through they both said to list it for 199,900. Which we did. But we told them that we cant close until after Jan 21, 2012 because we got that 8000$ tax credit and don't want to have to pay that back.

The offer:

195,000 with 4% closing costs ($7800), our realtor fees are 3.2% ($6240 for both buyer and seller realtors), we pay for the septic/well certification (which is fine), but they have a VA loan so our realtor says we also pay for the VA appraisal/inspection. Is this normal? Anyone else have any experience with VA loans and selling? Oh and most important they want a close date of Jan 5th.

Is this an out of line counter offer:

195,000 with 3% closing costs, we'll pay for certifications and close date of Jan 22?

Or what would you do?

How much is the appraisal/inspections usually? like 600$ or less? If so then i wouldn't mind paying for those.....

Just looking for opinions. Thanks.

stephm0188 · November 2011

I want to say that our VA appraisal cost was rolled into our closing costs, but I could be wrong about that. They vary depending on the market, but I don't believe ours were more than $600. I didn't pay attention because our buyers paid our closing costs.

I would ask your agent if she can get more info so you can make a strong counter. In our case, we were happy to pay full asking price but wanted a long escrow and all closing costs paid. If the closing costs are important to them, then countering back at full asking price may make up for that.

GL! Overall, it sounds like a very fair and strong offer, especially considering its near the holidays and you havent been on the market long at all.

car_ramrod · November 2011

amber0389:

195,000 with 4% closing costs ($7800), our realtor fees are 3.2% ($6240 for both buyer and seller realtors), we pay for the septic/well certification (which is fine), but they have a VA loan so our realtor says we also pay for the VA appraisal/inspection. Is this normal? Anyone else have any experience with VA loans and selling? Oh and most important they want a close date of Jan 5th.

Is this an out of line counter offer:

195,000 with 3% closing costs, we'll pay for certifications and close date of Jan 22?

We had a buyer with a VA loan and we did NOT pay for the inspection and appraisal. The appraisal was just part of his regular closing costs and the inspection was out of his pocket. I think your realtor may be misinformed about that. I think your counter is good. You are more than meeting him halfway.

amber0389 · November 2011

OR should we say $199,900 with 4.25% closing costs, close date of Jan 22? I'm just thinking that the pp may be right that closing costs may be more important than price? Any other thoughts?

ETA: Thank you both so much for your help so far!

Madringal · November 2011

amber0389:

OR should we say $199,900 with 4.25% closing costs, close date of Jan 22? I'm just thinking that the pp may be right that closing costs may be more important than price? Any other thoughts?

ETA: Thank you both so much for your help so far!

I would pay the inspection fee in the hopes that the more agreeable you are to their terms then they will be willing to conceed to your closing date. An inspection is probably just a few hundred bucks.

amber0389 · November 2011

Ooops sorry. Yes I meant that we'd still pay the inspection fee, but maybe we should do 4% at 199,900 with the later closing date or should we go with 3% and 195,000? I was thinking that the 4% might be more important than the overall purchase price?

5thOfJuly · November 2011

If you close before Jan 22, would you have to pay back the entire $9000 or just a prorated amount? If it's prorated I wouldn't worry about the close date (and definitely not let it be a "stopped" since it's likely only a hundred dollars or so.)

dapotato · November 2011

what does your realtor suggest? how much are comps in your neighborhood going for? use that expertise to make an informed, fair counteroffer.

amber0389 · November 2011

5thOfJuly:
If you close before Jan 22, would you have to pay back the entire $9000 or just a prorated amount? If it's prorated I wouldn't worry about the close date (and definitely not let it be a "stopped" since it's likely only a hundred dollars or so.)

It is the entire 8000$ amount and not a pro-rated amount. Unfortunately... If it was prorated i wouldn't be concerned about it...

lil_jen051708 · November 2011

amber0389:
5thOfJuly:
If you close before Jan 22, would you have to pay back the entire $9000 or just a prorated amount? If it's prorated I wouldn't worry about the close date (and definitely not let it be a "stopped" since it's likely only a hundred dollars or so.)

It is the entire 8000$ amount and not a pro-rated amount. Unfortunately... If it was prorated i wouldn't be concerned about it...

you don't have to answer if you don't want but how much did you buy it for an did you make any improvements? If you take a loss (after realtor expenses and closing costs and whatever else you pay for) you don't have to pay it back. You only pay back the gain on the sale. So if you paid $200k and got the $8k credit then your basis (200-8) is $192. So you sell for $199 and I can't remember the realtor/closing few numbers you put above but say $7k and $5k so $12k in expenses. $199 - 12 is $187 which is less than your basis of $192 so you wouldn't have to pay it back. I'm on my phone or I'd link the IRS.gov FAQ that talks about repayment of the credit.

amber0389 · November 2011

dapotato:
what does your realtor suggest? how much are comps in your neighborhood going for? use that expertise to make an informed, fair counteroffer.

Thank you for your input. My realtor isn't really all that familiar with the area. He does this on the side - which is why we are getting 3.2% realtor fees instead of the normal 5-6%. So with that we are kind of not getting that expertise that we would be normally paying for...

amber0389 · November 2011

lil_jen051708:
amber0389:
5thOfJuly:
If you close before Jan 22, would you have to pay back the entire $9000 or just a prorated amount? If it's prorated I wouldn't worry about the close date (and definitely not let it be a "stopped" since it's likely only a hundred dollars or so.)

It is the entire 8000$ amount and not a pro-rated amount. Unfortunately... If it was prorated i wouldn't be concerned about it...
you don't have to answer if you don't want but how much did you buy it for an did you make any improvements? If you take a loss (after realtor expenses and closing costs and whatever else you pay for) you don't have to pay it back. You only pay back the gain on the sale. So if you paid $200k and got the $8k credit then your basis (200-8) is $192. So you sell for $199 and I can't remember the realtor/closing few numbers you put above but say $7k and $5k so $12k in expenses. $199 - 12 is $187 which is less than your basis of $192 so you wouldn't have to pay it back. I'm on my phone or I'd link the IRS.gov FAQ that talks about repayment of the credit.

We would be making a profit because we took that 8000$ and made a whole ton of improvements. So yes we would end up paying the entire thing back - which to me seems so silly since we are sooooo close to that date so I'm just hoping we can push back a couple of weeks.

sjb&apa · November 2011

We bought with a VA loan, and we paid the appraisal and inspection fees (not the seller). It wasn't that expensive, though, and it's probably worth it for you to offer to pay these fees in exchange for getting the closing date you want.

car_ramrod · November 2011

I don't understand how you would even pay for the inspection fees? They are usually paid upfront when the inspection occurs not rolled into closing costs. Since that is the case, I would NOT pay them because what if you pay them and then the buyer walks? You are out that money instead of them being out that. I would really consider countering back only offering closing cost assistance and the certification of the well because you can always reuse that certification for the next buyer if something happens with this sale. Nowadays so many sales fall through and especially when you are dealing with VA loans, they are the hardest loans to close due to inspection and appraisal issues. Just food for thought.

amber0389 · November 2011

car_ramrod:
I don't understand how you would even pay for the inspection fees? They are usually paid upfront when the inspection occurs not rolled into closing costs. Since that is the case, I would NOT pay them because what if you pay them and then the buyer walks? You are out that money instead of them being out that. I would really consider countering back only offering closing cost assistance and the certification of the well because you can always reuse that certification for the next buyer if something happens with this sale. Nowadays so many sales fall through and especially when you are dealing with VA loans, they are the hardest loans to close due to inspection and appraisal issues. Just food for thought.

Thank you. I appreciate that thought!

amber0389 · November 2011

stephm0188:
I want to say that our VA appraisal cost was rolled into our closing costs, but I could be wrong about that. They vary depending on the market, but I don't believe ours were more than $600. I didn't pay attention because our buyers paid our closing costs.
I would ask your agent if she can get more info so you can make a strong counter. In our case, we were happy to pay full asking price but wanted a long escrow and all closing costs paid. If the closing costs are important to them, then countering back at full asking price may make up for that.
GL! Overall, it sounds like a very fair and strong offer, especially considering its near the holidays and you havent been on the market long at all.

Did you or the seller pay the VA funding fee?

stephm0188 · November 2011

amber0389:

Did you or the seller pay the VA funding fee?

Honestly, I do not recall. They paid 100% of our closing costs. We did not bring a penny to closing. My husband dealt with all the VA stuff, so I could ask him later. I want to say no though.

I also want to clarify a misconception about the VA inspection/appraisal. A VA inspection is NOT the same as a home inspection. We paid for our home inspection, which was a lengthy 4 hour inspection that went over everything with a finetooth comb.

Later, the VA sent someone to appraise the home and check out the overall condition. There are certain things they look for,and it's basically just to make sure there are not significant things that would affect the value of the appraisal or compromise safety. The list is pretty identical to what FHA requires. Assuming your house is in good condition, the conditions attached to a VA loan shouldn't be an issue.

sjb&apa · November 2011

amber0389:

Did you or the seller pay the VA funding fee?

In our case, we paid the VA funding fee up front, in cash. You can roll it into your mortgage, but we didn't want to pay interest on it for 30 years when we had the cash on hand.

We never considered asking the seller to cover the funding fee - it's not their fault we chose a financing option that requires a funding fee.

JoaPata · November 2011

I would probably make the purchase price higher and pay for closing costs. Maybe 197K (meeting in the middle) and the closing that they asked for with a later closing date. They will be thrilled with the closing help itself and a lower purchase price. You could probably do 198k too.. Inspection is tricky. It sounds like they might not have a lot of cash money so this is up to you. I would rather they paid but if you got your date of 22 Jan. then I would not be picky on this issue. Fingers crossed! Let us know what happens :-)

Jen&Jeff06 · November 2011

I would not pay for an inspection. That is something the borrowers need to pay for out of pocket on their own, generally after an offer is accepted. I don't know if you are using inspection and appraisal interchangably, but they are not the same. An inspection is not mandatory (but suggested) and an appraisal is. The appraiser will make sure that your home meets VA standards, but it is still an appraisal.

If you are paying some of the closing costs, the appraisal is going to be one of those fees. Your seller concessions can be UP TO 6% but can not exceed the closing costs plus the prepaids, so it might be less than what you are estimating.

That said, I think their offer is a bit low. I would counter with the closing date you stated, maybe $198k, and closing costs. They are asking too low of a purchase price for the closing costs you are estimating. Based on your calculations, you will really only be making about 180k after realtor fees.

breaness · November 2011

amber0389:
Ooops sorry. Yes I meant that we'd still pay the inspection fee, but maybe we should do 4% at 199,900 with the later closing date or should we go with 3% and 195,000? I was thinking that the 4% might be more important than the overall purchase price?

If I was the buyer I would prefer less on closing costs and the lower purchase price. They will be paying interest on that $3k for 30 years.

breaness · November 2011

Jen&Jeff06:
I would not pay for an inspection. That is something the borrowers need to pay for out of pocket on their own, generally after an offer is accepted. I don't know if you are using inspection and appraisal interchangably, but they are not the same. An inspection is not mandatory (but suggested) and an appraisal is. The appraiser will make sure that your home meets VA standards, but it is still an appraisal.

If you are paying some of the closing costs, the appraisal is going to be one of those fees. Your seller concessions can be UP TO 6% but can not exceed the closing costs plus the prepaids, so it might be less than what you are estimating.

That said, I think their offer is a bit low. I would counter with the closing date you stated, maybe $198k, and closing costs. They are asking too low of a purchase price for the closing costs you are estimating. Based on your calculations, you will really only be making about 180k after realtor fees.

Ditto this. Part of the house buying process is getting that house inspected. It's not YOUR duty to get that done, it's theirs. It's for THEIR information, not yours. It's only a couple hundred of dollars, if they can't afford that they shouldn't be buying the house to begin with. We paid for inspections on two houses during the process, and for both houses it was not just the home inspection but also termite, and septic. It was costly especially when the first house didn't work out, but because of that we knew to walk away.

We have our first offer, HELP!

Re: We have our first offer, HELP!

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