Watch out for the time-wasters!
When selling your house, you may run into some people who just waste your time. Time is money, as they say, and in a hot market, you don't want your house sitting on the market too long - a hot market may turn cold in an instant. In a traditional market, there may be "selling seasons" such as in the Spring, where traffic is brisk and houses sell quickly. If you miss the season, it may be harder to sell your house.
Sadly, these time-wasters may push you out of selling season and maybe even into the next year. Or they may force you to drop your price lower than you'd like to - or should - and often that is their plan. What sort of time-wasters am I talking about? Well, here's two that I know of:
1. The dreamer: I have heard firsthand of two such individuals, one in New York, and another in Georgia. These are people who have no money or credit, but are delusional and/or crazy. They latch on to a new, inexperienced real estate agent who hasn't heard of them, and get that agent to show them houses. They find one they like and write an offer on it.
Either they write a bad check for the earnest money deposit (which is often held by the agent but never cashed) or write a contract with no earnest money deposit - which would be a red flag to an experienced real estate agent or seller.
Closing day comes along and the agent calls the buyer and reminds them that closing is tomorrow. Turns out, the buyer never lined up financing, most likely because he wouldn't qualify for it. "I decided not to buy the house!" he cheerfully says, after keeping the house off the market for a month or more during prime buying season.
In both instances I've heard of, these "buyers" are well-known to experienced agents and have played this game literally dozens of times - writing offers on homes they know they cannot afford. Is it crazy or crafty? Probably the former, but then again, if another buyer put them up to this, it could be used as leverage to make the seller "desperate" to sell, and thus willing to take a much lower offer after the first buyer defaults. People have done crazier things.
How do you avoid this nutjob? Well, walk away from contracts with no earnest money deposit, or if there is earnest money, make sure the check is deposited to escrow and make sure it clears. If not, then the contract is cancelled. Better still, try to find a buyer who is pre-approved for a mortgage. And don't waste time trying to "fix" a bad deal like this - these fellows are dreamers and wouldn't qualify if they won the lottery. Re-list the property and consider it a lesson well-learned.
If you can learn that lesson from reading this, so much the better. And by the way, an experienced agent should be aware of such folks. At one agency I'm aware of, they have a photo of the person in question, on the wall, with a sign saying, "don't accept contracts from this person!" After a dozen defaults, well, I think it is safe to say he ain't buying!
2. The Nitpicker is more crafty than crazy, and I have had personal experience with this fellow, and have seen similar antics in three States so far. The scam - and it is a scam - goes like this. I was renting out my office building for $3000 a month, and it was vacant a month. In landlording, vacancy kills, as you need to pay taxes, insurance, and the mortgage. A few months' vacancy could cost you $10,000 or more. So you want to rent quickly.
An insurance agent contacts me saying he doesn't want to rent, but buy the building for $680,000. Since I paid $210,000 for it a decade earlier, it seems like a good deal. I tell him, though, that the place is sold "as-is" and disclose every defect in the property (and all properties have defects) that I knew of. The place was in good shape, but the electric heating in the basement floor was dead, and I wasn't about to jackhammer up the floor to fix it - not with the beautiful rose-slate flooring down there. Besides, it never got that cold.
Well, he wants a month to "think about it" - and put more pressure on me, as he knows I have a nut to crack. Once under contract, I can't rent it or sell it to others. I decline and he says "Well how about two weeks?" to which I agree, and he slips in "14 business days" into the contract, which is nearly three weeks. Oh well, I thought, he's showed his hand here - thinks he's a clever fellow!
And sure enough, he has a home inspection on the "as-is" property that I never offered for sale and comes back with a laundry list of "defects" that he says should be fixed. Stuff as stupid as a loose towel bar in the upstairs bath - and of course, the radiant heating in the basement which I disclosed was being sold "as-is". Apparently the term "as-is" was alien to him.
Well, anyway, he drops the other shoe. In view of all these horrific defects, he will begrudgingly buy the place for $400,000 which is at least a hundred grand below market value. That was his plan all along. Insurance agents - too clever by half!
So I rent the building out to two tenants and move on. "But we had a contract!" he cries, threatening to sue. "Yes we did, at $680,000. But you counter-offered at $400,000 which cancels the original offer - that's basic contract law 101. If you want to pay the original agreed-upon price of $680,000 that's fine, but we never agreed to $400,000!"
Apparently, he felt that a "meeting of the minds" in contract law meant only meeting his mind. He wanted heads-I-win-tails-you-lose and I was having none of it. He walked away grumbling.
I later heard about the same effect from several people, both in commercial and residential properties, in New York, Virginia, and recently here in Georgia. Same deal - they agree to pay asking price or a price close to asking, and then drag out the closing and have "inspections" and "discover" that the place is riddled with "defects". I am not talking about termites or shifting foundations or leaking plumbing or anything like that, but trivial bullshit - sometimes made-up bullshit - that a friendly "home inspector" goes along with at the instigation of the crooked buyer.
The house has now been off the market for months - missing the prime selling season - and the seller might get desperate and lower the price. A better approach, I think is to say, "Thanks, sorry you don't like the house" and re-list it. Never try to "fix" a bad deal - walk away!
Of course, the crooked "buyer" has one last card to play - now that they have notified you of these "defects" in the property, you have a duty to disclose them to the next potential buyer or repair them - and they are counting on you wanting to do neither, so they can snag the place at a low price.
How do you avoid this problem? Well, if there are real defects that you know of, repair them, disclose them, or offer an allowance for repair (such as a carpet allowance) to be paid at closing. Or offer the place "as-is" and disclose any problems you are aware of. And again, every house, even brand-new ones (particularly brand-new ones) have issues. Brand-new houses usually have home warranties, though.
But be prepared to walk away from these people. If you lower your price dramatically and sell to them, you are only letting them win - and leaving a lot of money on the table. Don't let their game of pressure get to you. The Insurance agent tried to convince me that I would never sell the property and he was doing me a favor by offering a low-ball price. A lot of people with low-self-esteem go along with that sort of crapola.
What did I do? Like I said, I rented the place out for two more years, and when I finally sold it - for over $680,000 - I had no trouble doing so. I learned a valuable lesson, too!
What got me started on this is a neighbor who went through both time-wasters in a row. Sadly, the real estate agent didn't pick up on the red flags of no earnest money deposit or mortgage pre-approval. The bogus "buyer" was well known in our area, too. Both Mark and I knew of him through the grapevine. The second time-waster - a couple from California - did the nit-picking deal, wanting the sellers to fill in the drainage ditch in front of the property. Easy to do, except that it is on State Park land, and you can't fill in ditches that are part of the State right-of-way! "Please do this impossible thing, and then we will buy your house!"
Apparently, in California, making crazy requests of the seller is the norm, hence the high housing prices there and.. well... California. No wonder people are leaving that State. I really hope these California people don't buy the house, because I am predisposed to despise them as neighbors. Cheer up, residents of the Bay State! Californians are the new "Massholes!" Just ask anyone from Texas, Colorado, Washington State, or Oregon how they feel about California transplants!
I think that people who live in competitive areas, like big cities or expensive States, often become very crafty and think that is what you have to do to "win" in life. Just my theory, anyway. They really don't understand the culture in our area - this ain't silicon valley. Some people just don't get living in a State Park.
(Speaking of local customs, it is odd how in some areas of the country, the washer and dryer convey, while in others, it is traditional to take those with you. In some parts, it is the stove, and others the refrigerator. Beats me how these "traditions" got started, but they are there. Where we live - and in much of Florida - selling a house furnished is the norm in many cases, as these are retiree's homes and the family just assume not deal with the contents. Local customs are weird!)
In this instance, the sellers are also settling an estate, and often that is a prime way for crafty buyers to score a house for cheap. I've seen it before, many a time - the heirs fly down for a week to list the house and take a low-ball offer from an investor "just to get rid of it!" and then they fly back. Houses worth $400,000 with little work sell for $250,000. Again, I've seen this in a number of States. And I guess if you are dividing the proceeds among six family members, there is little incentive to "hold out" for more money, particularly as expenses add up.
You have to wonder, whether two time-wasters in a row is a coincidence, or a scheme to get the seller to lower their price dramatically to "make it go away" and then the buyer will "flip" the place without dong a damn thing to it, other than cosmetics, and walk away with a couple hundred thousand bucks.
Nice work if you can get it. But as a seller, you don't have to be a patsy to someone else's dreams of avarice.
I hope the sellers re-list the place and find a new buyer. I really hope they don't cave-in to these shady buyer's tactics, because it only encourages this sort of thing.
But that sort of thing is out there - be aware of it!