Gun shy seller

[Alex Gaw]

My wife and I are finally looking at and making offers on properties after months of learning, hustling for extra money, and working on credit scores. We're looking at small MFs (mostly duplexes) in Austin, Texas to occupy and rent. It's super exciting!

However, we've encountered something that seems weird to me and I'd like the BP take on it. We offered on a property and the seller's counter included a $2,000 option fee. I wasn't sure if it was a real counter or if he was just trying to show his disgust with our offer (which wasn't unreasonable based on the comps and the income, but was $15k lower than list price). So we countered with our highest price but put the option fee back where it was. Then we got a verbal counter saying that we could finish the deal if we agreed to remove the financing contingency and make our earnest money non-refundable.

Is this common? Our agent (who I believe is an investor herself as well as a BP member) seemed as surprised as we were. The seller's story is that it was under contract before, the buyer's financing fell through and they exercised their right under the financing contingency to back out without losing their earnest money. Now the seller is worried it'll happen again and he wants to protect himself. To us it seems unfair to basically punish us for his previous bad luck, and unreasonable that he wants to protect himself from risk by pushing it all onto us.

[Charlie Fitzgerald]

The bottom line is that it's a completely negotiable issue.  So, as in any contract, if terms bother you and you can't reach conciliation on them with the other party, then don't sign and keep looking.  Sellers want to sell and not waste time off market.  Buyers want to buy and not lose money if conditions beyond their control preclude them from obtaining financing to close.  At the end of the day, both sides can continue to "contract" away all risk to either side, and in doing so, not accomplish the goal of selling and or buying.  As a lender for almost 25 years, I can tell you that more deals day due to seller issues than they do because of buyers issues.  So, as a seller, prepare your asset for a smooth transaction (fix known issues prior to listing...take care of unknown issues that are discovered during inspections quickly etc.). As a buyer, get your approved financing in place PRIOR to signing a contract.  Don't blow up your own lending by doing dumb stuff prior to closing in your transaction etc.  Lastly, both parties need to stop having fast-track expectations on the timelines for a real estate sale transaction.  When you are demanding fast close, short inspection windows, etc. the tendency to miss things in the haste to meet deadlines, are what later turn out to be the deal killers.  Slow down, work collaboratively through any issues that come up to help each other accomplish the goal.  "Lines in the sand" attitudes are killing very easily done deals every day.  Give a little...gain a lot!