Here's the wrap-up on the Arthur REO contest. The 4 br/2 ba, 1,279 sf house was listed for $169,900 on , and there were nine offers. The bank did the usual, and asked each offeree to submit their highest and best offer. Some people feel like they are getting worked over when that happens to them, but it is the fairest way to make sure everyone has an equal shot to buy a house.
The period given to submit offers has closed, and here are the three highest contenders:
1. $202,000, all-cash
2. $209,000 net, FHA ($219,000 with a $10,000 credit for costs) B of A lender
3. $213,000 net, FHA ($220,000 with a $7,000 credit for costs) mortgage bkr
Tomorrow morning the bank will decide which deal to take.
To assist with the decision-making, I called the B of A lender who I've known for years, and discussed the appraisal concerns. The house is in disrepair, and on a FHA deal the appraiser has the ability to require repairs he deems necessary, which then fall on the seller to complete. In our purchase contracts it has a blank to fill in the limit on the amount of repairs to the seller, but neither agent put in an amount.
If you are the asset manager, do you take a chance on a higher sales price, even though the FHA appraisal could set you back? Or do you take the sure bet, the cash deal that doesn't need an appraisal? We don't fear the appraisal not coming in at the right value, the last two sales were $234,000 and $250,000 in the last sixty days for the same floor plan. It is the possible-repair issue that has the potential to turn into a blank check from the seller.
Here are the contest entrants - price, name, and # of offers:
$149,000 - No_Such_Reality, 1
$150,000 - JE, 1
$174,000 - doughboy, 1
$180,000 - Simone, 7
$184,000 - ericabiz, multiple
$184,000 - mybleachhouse, 7
$189,000 - Merc Mont, 5
$190,000 - Chuck Ponzi, 3
$190,100 - First Time Renter, 11
$191,500 - money market, 5
$193,000 - SMC, 5
$195,000 - GLG, 10
$197,500 - Don, 7
$199,900 - CVman, 5
$200,750 - Al in IC, 7
$206,500 - FreedomCM, 7
$210,000 - Mojo, 7
$210,000 - Mr. T, 14
$210,000 - loharp, 20
$212,000 - Neil Diamond, 27
$215,000 - Steph in RB, 5
$219,500 - CVBidder, 10
$224,500 - Rob Dawg, 5
$237,000 - Stephen Watts, 14
$240,000 - Coconuts, 11
It looks like the winner will be either Al in IC, or Neil Diamond, unless B of A gets favored as the company lender - then it'll be Mojo!
The all-cash offer had gone up to $208,000, but the buyer and agent went back to the property this morning and found that the neighbor across the street was sitting in his car, on his lawn, blaring the music at full volume. They lowered their price back to $202,000 - sorry FreedomCM.
This is a bank decision - what would a regular home-seller do? If this were a typical seller, and not a bank, most would go for the higher offer, or want to counter-offer the cash deal at $209,000. I'm not kidding - most sellers would pass on the cash deal, or at least try to get them up higher.
