Saturday, August 20, 2011

Counter Offer

I'm not exactly thrilled with my agent. When the short sale lender countered at $375,000, I was expecting my agent to discuss with me viable arguments with which we can counter. But instead, my agent's attitude was, "comps are comps." It was almost as if "comps" were gospel and irrefutable. W T F?? The only advice I got was an unscientific/unproven hypothesis that a short sale lender will likely accept an amount that equals 95% of its counter.

Fine. I decided I'll play them at their own game. I carefully examined the comps. As I previously noted, the "comps" weren't exactly comparable to my unit. When I pointed these out, my agent responded, "Those are all cosmetic. At most, it will get you a $10,000 discount."

Okaaaay. I then looked at the numbers.
  1. Comp #1 (a 1185 sq. ft. unit) closed escrow on 7/15/11 for $410,000.
  2. Comp #2 (a 997 sq. ft. unit) closed escrow on 6/10/11 for $375,000.
  3. Comp #3 (a 997 sq. ft. unit) closed escrow on 3/8/11 for $367,500.
I wrote to my agent:

After careful consideration, please counter with $342,500. My unit does not include upgrades and appliances of the other comps such as newer carpet, paint, hardwood floors, kitchen appliances and washer/dryer. I believe that the upgrade/appliance/repair allowance is valued at $10,000+.

The price per sq ft of one of the comps was $345.99 (i.e., $410k div. 1185 sq ft). Using that price, I've calculated: $345.99 x 1019 sq ft = $352,562 - $10,000 = $342,564.

The short sale lender based its counter on June/July comps, but I think it's worthwhile to point out that the stock market took a significant dive in August, which has reduced the net wealth of many potential buyers, including myself. I imagine that other buyers' purchasing abilities have been similarly affected.

I thought the last argument about the recent market dive could be irrelevant. But according to the WSJ article titled, New Round of Upheaval Reduces Home Buyers' Urgency to Do a Deal (Note: click on top search result to get full article), many buyers are actually reducing their offers because of the market dive. Maybe it wasn't superfluous at all.

My agent verbally conveyed our counter on Thursday to the short sale negotiator (whose fee I agreed to pay if this deal went through). Yesterday, the short sale lender requested that we put our offer in writing.

Will the short sale lender accept? Or will they counter? I'm on pins and needles.