So, logic has it when you bring in an offer over the asking price, the owner would be elated!
Well, I just lost two deals defying this very premise.
Let me share the scenario of why sometimes the opposite of logic holds true in the world of real estate transactions.
One of my buyers was purchasing a home with an approved VA loan whereby a deposit is not required, had a full mortgage approval of purchase with a $1,000 deposit of good faith toward the transaction to be included at closing.
Unfortunately, and much to the disappointment of the buyer, their over-the-asking-price offer was rejected since sellers insisted that the house will not over-appraise at the amount of the offer.
Buyer was disappointed, seller took a lower conventional loan offer that was commensurate with the full asking price, and we moved onto looking for other homes.
Another scenario whereby the buyer was so elated to find the house of their dreams, an over-asking-price was offered to beat the other multi-offers. Yet again, the same problem occurred. The sellers and their representatives were concerned the house would not appraise to the level of the over-asking offer and insisted, in order to accept the higher offer, on imposing a condition that buyer includes in the contract that they will commit to the same lower mortgage of the asking price while putting more cash down so the mortgage will be minimized for a more guaranteed approval of value. This would have required a commitment of more cash down at closing to compensate for the 80 percent mortgage parallel to the asking price to achieve the higher offer amount. The buyer was not willing to comply with the condition so we moved on to purchase another home.
Although over-asking for any seller seems to be a blessing, in these two cases there was a downside to the highest offer when choosing the buyers’ multi-offer choices. Surprisingly, the over-the-asking-price offer in these cases became a red flag of denial by the mortgage company, unless a deal is worked out that the 80 percent mortgage of the asking price is maintained with the additional monies that reflect the higher offering price that is needed at closing without putting the onus on the appraised value to match what the owner is willing to pay higher.
So, again, we prove that a house sells for the synergy between the buyer and seller with the proviso that conditions may have to be met to assure the seller confidence that this deal will go through after all.
Certainly, an all-cash deal, whereby the buyer and seller is not dependent on a loan and appraised value since it absolves the seller of taking additional risks and unknowns of higher value and approvals, trumps all contingencies, yet mortgage loans are the standard practice for affordability longer term to purchase a home to meet family housing needs.
Having sold real estate for so many years, I have witnessed a multitude of scenarios. The recent refusal since the offer price was too high was a concern I have now faced that culminates in the same premise that real estate is full of conditions and surprises for the protection of the buyer and seller.
So, there you have it, expectations defying market fluctuations!
Let’s take a look at the monthly indicators as reported by the New Jersey Multiple Listing Service to determine our future planning, whether it be on the buying side or the selling side.
As reported for February 2019, housing markets have proven to be resilient despite predictions of a tougher year for the industry. The good news is that the economic fundamentals remain positive and the results are in as follows:
Single-family closed sales were up 7.2 percent to 597, while townhouse-condo units closed sales were down 3.8 percent to 250. Adult communities closed sales were down 25 percent to six. The median sales price increased 0.6 percent to $400,000, while townhouse-condo median sales price decreased 8.4 percent to $307,000. Adult communities median sales price increased 114.9 percent to $360,000.
It is interesting to note that the National Association of Realtors recently reported that national existing home sales were down slightly during January 2019, but pending sales were up in year-over-year comparisons. After a slow end to the 2018 year activity, buyers have shown an enthusiasm and determination toward achieving their home-ownership goals.
The month of May, which is around the corner, is considered one of the best times to put a home on the market while the purchaser has dived into an intense market of buying competition.
Remember, home is where the heart is. It is always time to buy or sell to meet your housing needs, goals and dreams! Hope this information is helpful in formulating your housing plans.
Good luck, and for now have a wonderful Pesach!
By Ruby Kaplan
Ruby Kaplan is a realtor licensed in both New Jersey and New York. Her passion is to help people meet their housing needs and goals. Having bought, sold and built homes, she has acquired an expertise to represent both sellers and buyers. She is sensitive to her clients’ needs and has a driven commitment to oversee all her transactions with honesty, integrity, knowledge and dedication. Visit www.rubybobbyhomes.com for more information. The Ruby and Bobby Kaplan team/United RE/ will promote your home with the best of social media and create alerts for your criteria of housing needs. Your housing needs are our priority! Ruby can be reached at 201-314-4152 or on her cell at 917-576-4177 or at [email protected]