We got an offer on our property

In My Humble Opinion
1

Bear with me: this sounds like it should be in MPSIMS, but it really isn’t. And I seriously want advice if I’m overlooking something.

We got an offer on some property we own.

We still own our house, and the land it is on in a city south of Indy. It abuts the part of town that used to be woods forever, but has had creeping commercial property over the years, and now is commercial just 1.5 miles from our property line.

We were advised not to sell when we moved to Indy, because should the property get zoned commercial, it would shoot up in value.

Well, it has not shot up, but it has gone up, and the tax value finally hit $100,000. That was what we had our eye on. It’s almost four time what I paid for it. We had plans to put it on the market when it hit that, so back in December, we decided to put in on the market as in March, settle for 75-80% of the value for a quick sale, and avoid paying the 2020 taxes.

In the face of the lockdown, we abandoned those plans. It wouldn’t go down in value, and we could sell it next year.

Well, today we got a letter from someone who lives on the street, and wants to buy the property, he says, to tear down the house, and rebuild as a starter home for his son who just got married. It was a very ingenuous, handwritten letter, but it may be a true story-- or it may be that someone on the street is trying to buy up the whole block.

I don’t really care.

He made a low offer, but said he would take care of titling, and any other expenses, and since he was going to tear down, there wouldn’t be the expense of an inspection. So his offer would be what we would get, minus next year’s taxes. And he will pay in one lump sum. He is not getting a bank loan. No balloon payment nonsense or anything.

On the one hand, it is less than we hoped to get. On the other, it is equal to triple what we expect to spend from our savings to get through this lockdown, even if it lasts through August.

On the third hand, I’m not sure how to accomplish the sale totally over the phone and internet. But if we could, we could breath freely. Even if we got something from this guy in writing that committed him to the sale, we could stop worrying, and just spend from our savings, knowing the money would be more than replaced once the lockdown was lifted. Plus a little extra to help the fact that most of our retirement money is in mutual funds.

If the sale can be transacted during the lockdown, we are definitely going to say “Yes.” If we have to wait until it is over, we may give it some thought.

I doubt very much we will get another offer during the lockdown, and I am pretty sure that the guy who made the offer is thinking the same thing in making the offer so low; not to mention, someone who can afford to buy a house NOW probably has serious means. We could try asking for more. But since he wants to raze and build, he has other expenses to plan for.

I have a friend who is a realtor, and I am going to impose on her just to ask if a transaction like this can be done without me leaving the apartment.

Does anyone out there see anything glaring that I am missing?

2

seems like he could deposit the money in an escrow account and all of the paperwork could be mailed to you. might require you to be around a notary once or twice, but it’s not like they’d have to stand right next to you or anything.

3

We’re in the middle of a refi and our broker is handling all mortgages (new and refi) completely electronically. Nothing will change hands face to face or hard copy, including anything notarized. The notarization will happen over FaceTime and electronic signature. They’re even doing the appraisal (today at 4) by photos and FaceTime, and a drive by.

Maybe the broker involved has a system in place like that.

4

Since this is only peripherally related to coronavirus, I think it’s best suited to IMHO.

Colibri
Quarantine Zone Moderator

5

I don’t think he wants to use a broker, and I’d be for not using one if we could meet face to face, but I guess in this situation, we’ll need one.

6

I purchased and am about to sell a property on the other side of the country, entirely remotely. My sister was there in person to actually look at the property and take care of it, but in terms of the transaction it’s been entirely me sitting at home.

The only in-person thing I had to do was go to a notary at some point. But as IvoryTowerDenizen mentioned, they’re even able to do that via camera now.

I’ve done a lot of signing via DocuSign. The eNotary service is through them, too.

We used a normal real estate broker and title company, so I don’t know how this would work without the broker.

7

Essentially, we’re selling the property. The fact that it has a house on it is kind of a footnote. It’s true that it matters that the house has a good well that does not need to have the pipes resunk, and a good electrical line, which the external breaker of which can probably be reused, and it has appliances in the kitchen that have been unused for a long time, but may be usable if they are cleaned. But really, it’s just the property that has any value.

8

We recently purchased a property at a distance, and while we looked at it in person and met with our real estate agent in person before the sale, basically everything else was done by phone/internet. All the business with the lender, escrow company, etc. was done by phone and internet.

We had a notary come to our house so we could sign docs. We did so prior to the shutdown, but presumably there’s a low-contact way to handle this now.

Just make sure you do things like independently verify that people you’re contacting are real and represent real businesses, and not scammers trying to fake things over the internet. Like, you’ll want to look up the local number of the escrow company and call them, and look on Google Street View and see that there really is a sign for an escrow company there, etc.

If you don’t have a broker, you’ll want to hire a lawyer to review things.

9

I may go with the lawyer. I know a guy who lives in the area who has a law degree, and practiced business law for many years, but now is a financial advisor. He actually has a JD & an MBA. I tutored his daughter for Bat Mitzvah.

I verified that someone with this guy’s name does in fact live at the return address on the letter I received, which would be down the street from the property, and if it’s the house I’m thinking of, he once built his own separate garage wired for power, and with a water pipe going into it, on his side lawn, over a 3-day weekend. Brought the Ditch Witch in and dug the foundation Friday afternoon, and nailed the last shingle Sunday night. It was very impressive.

So I think he’s probably going to buy stock blueprints, and build the house himself. I mean, it looked like he had some brothers, and maybe and uncle or two out there, and everyone drove a pick-up.

10

My wife and I recently bought a house from the estate of my aunt. Small 2 bedroom that hadn’t been updated in many, many years. Rental property for now, maybe downsize into in the future.

Made an offer to my cousin and offered to cover all the costs including the legal fees. Her siblings balked at the price as too low compared to the “market research” they had done. Pointed out that there would be no realtor’s commision on either of our parts, no closing costs, no waiting for financing as we were paying cash, no inspection, etc… So the $7,000 that was less than the siblings wanted was still less than the $10,000 or more that they would have paid in miscellaneous fees and commissions.

I would say go for the offer under the conditions that they cover ALL the costs of purchasing the property.

11

Realtor here. Yes, it can. Everything can be done by email, snail mail, fax, or other electronic means, including signatures (assuming your state allows it). I suggest you get the buyer to write a formal offer on paper (not just a note, as you imply).

You can greatly benefit from an agent – a *buyer’s *agent, so they will be in your corner, and officially sanctioned forms will cover your ass better than anything. You might consider making a counter-offer, and an agent can help you tie off loose ends and avoid ambiguities that may bite you later. In my state, we even have a new form that handles the newly-unforeseen virus situation.

The agent’s commission can be written in the offer so the seller pays it. That’s all part of negotiation, and you need expert help.

12

I would at least make a counter-offer that isn’t quite so lowball. The worst he can say is he isn’t willing to go that high.

StG

13

I would certainly go with a real estate lawyer, but I would go through with the sale as if there was no lockdown. It might take a bit longer and have some novel interactions-like notarizing via FaceTime- but it should work. And if it doesn’t then no loss compared to waiting a year. Go for it!

14

I think you misread something. The OP is the seller, not the buyer. Or maybe I’m misunderstanding your use of the terms “buyer’s agent” and “seller’s agent”?

15

Psst… OP is the seller
Op: using an agent means the added cost of commission. You should make sure that what you get for that is worth it. A big part of the agent’s value is in marketing the property (listing, showing etc) and finding a buyer. None of this is necessary here.
Unless the offer came with a note that said “final offer, don’t bother countering even a dime higher, as I will not respond” there is nothing saying you cannot ask for more money than the offer. Especially if they don’t know that you were considering selling. Since the potential buyer likes stories, you could go as follows: “when we received your note, we hadn’t really given selling the property much thought. On the other hand, with times as they are, selling makes some sense. In the past, from various conversations, we had always believed the property is worth (offer plus 23%) But it’s not as if we have a buyer ready, and your offer to absorb transaction costs obviously has its own value. So that said, even though we were a bit surprised, would you consider (offer plus 12%)?

16

Sorry, got that detail backwards. In this case, both buyer & seller can benefit with an agent, each looking out for their client’s interests.

Note: not all state allow this, so YMMV.

For the transaction, but not necessarily for one of the parties.

It has been suggested in this thread to use a lawyer. That’s not bad advice, but agents can handle most transactions cheaper. I recommend lawyers only for complicated ones, like if a will or trust is involved or there are multiple parties on either side. And if you do use a lawyer, be sure to find one with real estate experience, not a general practitioner. I often have to deal with lawyers who I have to educate on real estate law (because that’s not their specialty), although I’m sure they could educate me on general law.

In my experience, lawyers can slow the process down, but agents speed it up. Lawyers benefit from the slowness, agents benefit from speed.

A big part of the agent’s value, besides marketing, is in negotiation and technical details (regulations, zoning, state law, optional provisions, etc.), and that is exactly what you may be needing here.

Pretty good advice, that.

A quick tip for the seller: you can have the property appraised, at your cost (maybe $300-$600), without letting the buyer know. You then have the option of using the appraisal – or not – in negotiation. If the appraisal is high, show it to the buyer. If not, keep it secret. Nothing illegal about that.

17

Actually, he made a basic offer just for the property, as-is, and then said additionally he would take care of any titling costs, and other associated costs; basically, the price he was offering was for the property alone. Any other expenses that came up, he would take care of too. He even said if there were back taxes owed (there are not) he would pay those.

Even though his offer is about 2/3 of what we were hoping to settle (and a little over half of what we were going to initially ask for, which was 10% over the tax appraisal), when you subtract the broker or agent fee we will not pay, the appraiser’s fee we will not pay, the 2020 taxes we will not pay, and the guy who would mow the lawn twice a month next summer, we come up only about $2,000 short of what we were thinking we’d walk away with. (I did the math this morning.)

And that was before the downturn in the economy. We were getting worried that the housing market was going to be so depressed, we were going to end up marketing it as a crack house. Because the fact is, that it needs serious work. It’s one of those “handyman’s specials.” It’s the lot that is valuable. The house is a money pit right now; otherwise, we’d have renters in it.

Basically, the guy who wants to buy it is going to raze it, bobcat it into pick-ups, and haul it to the dump. He’ll probably even redo the foundation, because he will want a new configuration.

Honestly, having it off our minds, having the extra money in the bank right now, not worrying about property taxes anymore, and that the lawn guy would call and say he couldn’t make it that week, and we’d have to find someone else. Or worrying every time there was a bad windstorm or thunderstorm that we would have to drive down and check it again, etc., etc., which is difficult now, well, that’s worth at least $2,000.

18

Actually, we did that last year. When the tax appraisal shot up, and we knew our taxes would shoot up, we got an independent appraisal to make sure there was not a mistake. There was not, albeit, we were warned that you don’t get the tax appraisal when you sell, unless you have several people competing to buy the property, which isn’t going to happen here.

That’s what made us decide to sell ASAP in the first place. Our taxes are going to go from about $700/year to about $1,500/year. Because the new buyer is going to be occupying it full-time, the taxes will be lower for him.

We had to pay the non-occupant taxes if we wanted to also take the state renter’s deduction, and the last time we moved to a better place and our rent went up, it got better for us to pay the higher taxes, and get the renter’s deduction. However, we can’t go back-- short of moving back into the house full-time-- we can’t say, “Hey, we want to forfeit the renter’s deduction, and reduce our taxes.”

19

States vary. In my state, an appraisal is not required by law, so some cash buyers don’t have one. Lenders always require one.

Taxes: Again, states vary, but don’t assume that a buyer will pay the next year tax bill unless you negotiate the offer that way. In my area, taxes are usually pro-rated by day, then a credit or debit is worked into the closing statement to compensate one party or the other. This is important, because the owner of record is 100% responsible for the taxes when they come due the following year. The taxing authority will not pro-rate.

20

Just because the offer is sorta good enough, that’s no reason not to explore getting more. Remember, he doesn’t know you were even thinking about selling. So he wants that property- you don’t have to entice him into wanting it. It is vanishingly rare that when someone opens negotiations, and a counter occurs, that the original offer gets pulled off the table. I’ve never seen it.