For Sale By Owner Question..Offers
 

My wife and I are selling our home and today was a wild day for us.

I got a call at 9:00 this morning and lady A wants to see the house right away; so I step out of work and show her the house. She likes it a lot and sends her husband over to see it later in the day without her.

He starts talking money and wants to make an offer...After negotiating for a bit we end up a little less than what we were wanting our bottom line to be but I okay'd it. We shook hands and I gave him the papers for the offer to purchase. We were going to meet around lunch time tomorrow to pick up their offer and likely sign it on the spot and be done with this process.

One hour after shaking the gentleman's hand, lady B calls and wants to tour the house and probably make an offer herself. However, she can't come by tomorrow night to view the house.

What is the right thing to do here? The proper thing to do?

My wife and co-worker believe we should let this Lady B view the house and put in an offer and consider both of them at the same time....

We're okay with the original offer we got, we're happy to sell the house and make a good chunk of change on the sale of the home. On the other hand, do we listen to Lady B, find out if she offers above original offer; accept the new one....the thing is though, Lady B may not even make an offer, too... so, this might be a moot point, but what if its not?

To get an idea... we originally had $172,000 on the house, dropped it down to $170. We ended up verbally accepting $162,500 on the house. We still think we could get closer to $170 on the house and to my wife and I it's not making or breaking anything but an extra $5,000 in our pockets... why the heck not?

What are some suggestions from people on what to do here?

My mind has been reeling for the past four hours about this good but bad 'situation'.

I think it would be douchebaggy to turn your back on the guy you made a deal with. However if you want to be a slightly richer douchebag I would use the "done deal" as leverage to maybe squeeze lady B into a good deal. Tell her its urgent that she get her ass over to your house or its gone. If she's really interested in the house she'll get over to your house right away.

take both offers and consider both of them.

I tell ya, that's what I don't want, is to be a douche-bag. My wife and other person are really pushing the other option because that's technically what should be done. Listen to all offers as they come in.

How do I break it to the original people that their offer got beat out....

Yeah think how you'd feel if you made an offer for a house and it got accepted. You're delighted, go back to your family and start planning for your new house. Then some dude calls you back and tells you that you got outbid. I wouldn't be too happy.

I'd take another offer, but give the guy the opportunity to beat it.

Fixed.

My first reaction was that it is kinda d-baggy, but it's a tough time, every bit helps, and there is nothing that says offer A won't walk away from your handshake either.

Personally, I'd never sell a house on a handshake. If it ain't in writing, it didn't happen -- the other party could back out just as easily as you.

That being said I would definitely let someone else see the house if they wanted with the understanding that you may already have a buyer lined up. You never know if the first offer might fall through.

I would be worried about the second offer not coming through and the first one not being there anymore, but, yeah, you have to do whats right for you and your family and 5K isn't anything to sneeze at in the current economy.

Definitely let the viewing happen....gather all offers and consider them all. The contract is what binds, not the handshake.

Ya, if I showed up to sign and the seller told me that he had some other offer out there, and he was giving me the chance to "match it", I would definitely walk out (and possibly tell him to go fuck himself)

And a handshake can be a contract, it's just one that's harder to prove.

Sorry, but it's business. You have a handshake and nothing else. Being a D-bag should be the least of your concerns. When it comes to a house which is the biggest asset most people own, I expect them to be D-Bags.

If you were going through a broker and said they would be putting through papers for an offer and the next day someone else came in and made an offer with papers you wouldn't say well, I told the first guy I'd accept his offer.. no, you'd take the offer that was signed.

Oh, and if the 1st guy signs an offer, I think it would be ok to still take in people for viewing. They can always write up an offer in case something happens to the 1st guy (like finances fall through)

Well I guess I took a different spin on it. You met with the gentleman (Couple A). You negotiated a deal. You agreed on a price. You gave him the papers to sign. You agreed to meet tomorrow to complete the transaction. You shook hands.

Yeah, legally it may not be a deal yet. But karma has a way of biting you in the ass.

Couple A is at home tonight celebrating because they found their home and shook hands with you. Are you going to look him in the eye tomorrow and say... "Sorry. Couple B came by and offered to buy at full value (as an example). You either agree to meet new price or deal is off." Good luck with that.

Full Disclosure: The house Mrs Tyke & I currently live in we bought 9 years ago. Real Estate was hot back then. We made an offer and the owner accepted. Later we heard that a higher offer came in but the owner stuck to his original agreement with us. We've always been very appreciative. Ultimately, you are only as good as your word. Are you saying yours can be bought for $5,000? I'm just asking...

But the broker wouldn't make such a definitive verbal agreement to sell, I wouldn't think. What happened here was really more than just an offer. It was an agreement. If it was anything but real estate, it would be a perfectly valid and binding oral contract.

But ya, I can still see being a d-bag for that kind of money. I guess. As long as you're not in some kind of local business community where reputation matters.

I sold a house in England recently (finally after 3 years ;) ) ... we had an offer which we accepted, then had another offer slightly higher come in.

After a LOT of soul searching we turned down the higher offer and stuck with the person who made the original offer, yeah the extra cash would have been nice - but I'd agreed a deal and to me the principle was worth more than the cash.

That being said if the legal side of things is the same as in England you'd be within your rights to accept the second offer as nothing has been signed and sealed at that stage, from the sounds of it the chap hasn't even committed to surveys etc. yet so hasn't really spent anything on the purchase which minimises the damage to him somewhat (in our case the couple involved had done surveys etc. and committed some funds to the purchase which did influence my decision somewhat, I'd have felt a cad if I'd left them in the lurch after that) ... at the end of the day only you know your situation fully, talk to your family and make the call you feel is right.

Ah, but you see Marc... richness can occur in many ways, not all of them having to do with cold, hard cash. :thumbsup:

If you wanted more than the original person offered, you should not have accepted his offer or you should have given yourself a window of time (48-hours) to make the decision. You have to make the decision on what is best for you and your family, but that decision was apparently to accept the offer on the spot. Quit trying to sell something that you already sold.

I would probably wait and see if the guy follows through on your plans to meet and sign at lunch. If he flakes out, then go ahead with your viewing with Lady B as scheduled. If he signs as agreed, be honest with Lady B and offer to show her the house w/ the knowledge that you have agreed to sell to someone else. If the guy flakes out later or cannot get financing, and she likes the house, you have someone to call back upon.

I'm curious to know how long the house was on the market. If it has only been on sale for a short while, you probably made an error in agreeing to drop your price so quickly (especially if it wasn't your bottom line price). It has been my experience that realtors get paid way to much for the service that they provide (when you consider how much they make per hour spent), but most do have a wealth of professional expertise that is often worth enough to recoup their cost.

This.

If the guy follows through with the paperwork, he met his obligation. The only question is whether you're willing to meet yours & whether that handshake meant anything to you.

Sorry, integrity over cash. Maybe a handshake means nothing legally; but it sure means a lot in my mind.

I understand where those others are coming from, but money comes and goes; character is with you forever.

a bird in hand, my friend. dont throw away a sale for a maybe.

I think he can show the house to person B and not have his character questioned. Realty deals go south so, I don't see anything wrong with covering his bases and I don't see anything wrong with secondary offers.

To add onto my previous comment, I would not squeeze the first person though as some suggested I know I would react negatively so, for him, the price is the price.

Well, as was mentioned above by others, if the guy doesn't follow through at lunch the next day, then he has reneged on his part of the deal, and that opens things back up from mauboy1's perspective, IMO.

But if I understand it right, Lady B can't even see the place until after that lunch. So there really is no quandary here. If the guy follows through, sorry Lady B, deal is struck. If he doesn't, come on over, Lady B.

Until you have the money, the A people can walk away - you have no idea if they can afford it or not, even. Collect the offer as planned, tell the guy you have to have the papers checked by your lawyer before you sign to accept, and let the B folks make their offer.

Show B the house, but honor the handshake agreement. If A backs out or it falls through, go back to B.

I'm not really a big fan of pre-emptive douchebaggery

This

How is covering yourself pre-emptive douchebaggery?

He has no idea whether or not the A buyer can even afford the house - he could have made the offer in good faith, and will later get turned down for financing. Or he will want $10,000 in improvements done for the home inspection. A LOT of things can go wrong that both do and don't involve buyer A being a douchebag.

Maubuy, don't know if you have ever sold a house before or not, but, your house is not sold until you have a check. Until then, you really need to consider it not sold and act accordingly with potential buyers. Go ahead and tell them you have an offer, but continue to show everyone who wants to see it.

For sure you're right Samdari. But he shouldn't go back to the first buyer and say "well I've got an offer for more money...so meet it or get out of the way."

It's only if something goes wrong with Buyer A that he changes the price.

Nope, too late, you already agreed with A. What you should have done was told A you had other offers, and needed a few days to consider them all.

Got to agree with Celeval here. As long as A holds up his part of the deal, you should too.

Of course the other end of the spectrum is that Lady B flakes out, doesn't show up, makes an offer below the first offer or doesn't make an offer, at all.

That is why I was wondering how long it had been on the market. If he just put it up for sale on Monday or something, he probably shouldn't have accepted an offer for $10K below asking so quickly (especially before the first weekend of showings). If it has been on the market for awhile, taking the offer was probably pretty smart, regardless of what comes along later.

So, question for the people that think it should be A and no one else.

Assuming all the particulars were not discussed. (Closing date, who pays for inspections, contigencies, financing). If they weren't discussed and person A comes back with something on the official paperwork that is not acceptable to Maui (Say they have to be out in 3 days). Do you still believe that this handshake agreement is acceptable and Maui has to live with anything person A puts down because it was his fault he didn't get it in the handshake?

All that comes under the heading of "falling through" for me.

How much earnest money has he put down?

Ya, same here, depending on what else was discussed.

Yup, what molson and Celeval said. It's possible that more than the price alone was discussed in the "handshake agreement" discussion, and if so, Buyer A should abide by that as well or risk the deal being out. Anything not discussed, IMO, comes under a reasonable expectation qualifier. For instance, the "out by three days" example give, that is patently unreasonable. The deal is voidable over something like that. If the little details, though, fit with the normal expectations for such a deal, I would think mauboy should still honor the deal, so long as Buyer A meets his agreed upon obligations.

Given how many lines are in a typical offer I don't think you should agree to anything until it's in writing. Is the buyer going to expect you to pay for some/all of closing, home inspection or warranty, pre-pay taxes, etc. There's a lot more going on than just the final price.

That being said, I'd change my answer to say he should stick with the handshake if his words were really that clear cut. In general, though, the written offer is what's important, not any verbal agreement that doesn't take into consideration all aspects of the final offer.

Yeah...this.

Sorry all of you handshakers out there. An offer doesnt mean jack to me until it is signed by the would-be buyer along with an attachment of proof of funding. The same reason you believe a handshake is some level of "binding" (whether morally or otherwise) is the same reason I'll point out that you probably aren't informed enough to even know if you are able to finance the damn house. Sorry...not going to take chances with a misinformed buyer that can't deliver.

Now...as for even agreeing in the first place. With an offer you are "meh" about...you should have told him you want a signed offer letter, loan approval (not just a pre-qual), and x% earnest money. And you would need 24 hours to consider it. You also should have used "foot traffic" as a subtle negotiating point so you could keep the price a little higher than you ended up with.

But...you are in the situation you are in. So...I would take the deal...and try to close ASAP. If this buyer is a well-spoken flake...you need to force him to deliver quickly so you arent wasting your time. If you are NOT getting any earnest money...then you better just realize you have ZERO leverage in this deal and if it falls through...do NOT make this mistake again.

This would be my choice. Plenty of "A"s fall through.

In a related story, when we bought our current home, we saw it on the first day it was open for showing (this was 5 years ago when the market was hot). This was on a Thursday.

Since we really liked the house, we made an offer right away, just a few thousand under the (reasonable) asking price.

The owner, who seemed to be under a time constraint and also was later proven to be quite a douchebag (we still get letters addressed to him from bill collectors and lawyers, he routed the sump pump outflow into our 90-year-old neighbor's driveway (which we rectified), etc...), agreed readily to our offer and by that evening we had a signed contract on both sides.

His realtor went ahead with the showing on Sunday anyway (which seems reasonable, after all our financing could always fall through or something).

By Monday they had several other offers, a few of which were more than our offer and more than the asking price.

So this guy calls up his realtor and tells her to tell us we'll "get" to match the highest offer, or the sale is off.

Our realtor, bemused, told me this and asked me how I'd like to respond. I told her to tell him that he was more than welcome to negotiate changes to our signed contract, and if that was indeed his intent he should address any further communication to our lawyer.

Needless to say, he got the point.

You see, all of this falls under the category of "following through". If Buyer A can't pay the deal he has agreed to, the deal is off.

It sounds like the big mistake here was the "handshake deal" part of it. I've only bought two houses in my life, but in both cases we were warned until there is a purchase agreement and money put down, the house is still on the market. I remember on my first house purchase the real estate company came back right before we were to do the purchase agreement and said suddenly another bidder showed up offering more. I played chicken and just said I would walk away. The other bidder suddenly disappeared later that day.

My personal thought is if you already had some handshake agreement that you were happy with, you should follow it through. You can hedge your bets all you want with buyer B by offering to show them the house, but make it clear that there is already an offer in on it to them.

Me, umm, fourth I guess.

Here's what I interpret from what we've been told
-- A made a verbal offer, Maui agreed it was generally acceptable & gave him the formal written paperwork for those terms to fill out and agreed they'd meet at lunch today to get that signed paperwork back.

If it comes back as agreed upon & there are no swerves by Prospect A then ethically you sell him the house, I don't give a fuck what B says when she calls or comes by.

Typically that paperwork has the appropriate language about buyer financing, deadlines, etc, if any of those fail then it's the same as any other situation (i.e. your realtor talked to their realtor, etc., you never looked someone in the eye & said "okay", because what you're saying "okay" to is ultimately what's contained in the document, you made that clear when you handed him the document to sign) the sale doesn't make it through & you're free to find the next lucky buyer.

But if you give the guy the paperwork & agree on an acceptable time/date/place for it to be returned, then you're in serious douchebag territory if he meets those conditions but you've suddenly got seller's remorse.

The deal ain't done until the money is in your hands.

My general policy on such deals is to continue following leads, I wouldn't have done a handshake, but once I put my name behind an offer I stick to it, but make it clear any deviation is grounds to destroy it.

I've had people try to back out of 'more than handshakes' even, the problem is people want to make a deal (usually lack of confidence) and then additional information presents itself that makes them think they have a better option. More than once I've broken off (because I didn't have enough weight behind the commitment to make it stick) and had the other party come by hat in hand wanting to negotiate on my terms again because their 'hot deal' fell through. Almost always I tell them I've moved on.

Best policy in your current situation is give B the review, mention nothing about A's price, but state you have offers you are considering. Proceed with A, if they don't move correctly and quickly enough you tell them its back on the table. If B has progressed to the deal stage by that point, you strike on them... highest committed money always wins.

I've had it go all sorts of ways, not in real estate of course, its rare that the best price comes with the best reliability... you never know if B will be blowing smoke either, so the best strategy is always minimal committment but hold solid ground on your position with each buyer. You can have a different potential deal with each buyer of course, just be consistent within that particular negotiation (its okay to be hardline with B and only accept 170 if you are willing to take the risks involved with such a position, but negotiate A at the lower price point).

In the future, anyone about to hit this situation should be aware that commiting on your end rarely makes the deal any more likely to finalize. The best strategy is to always agree on terms and make the deal dependant on successful completion of the transaction. Let people know once you agree it is in their court to follow through on schedule, but if they fail you are still in the market and its no particular concern to you. There are opportunity costs to commit without insuring the funding is there (I've been burned by not shopping an offer around once I had a sale in place and the person couldn't get funding and I was stuck with redoubling the effort).

Accept both offers, take all the money, and make them sort it out... ;)

So I think most all of us are saying the same thing, just with differing language.

Just sold my house privately 3 weeks ago, so I sympathize with the amount of stress you are probably feeling right about now.

The first showing I had the guy wanted to verbally negotiate the price and I told him that would be fine but that I needed to confer with my wife (who was out entertaining the kids) before I accepted anything and that it needed to be in writing and reviewed by my lawyer before anything was signed and official. He agreed and we got to a price he was comfortable with and one that I was comfortable with. I gave him the paperwork to start filling out while I called my wife to make sure we agreed that the number was good enough for us so we weren't wasting his time...it was. He said he had to go but would get the paperwork filled out and get it to me the following day. Never heard from him again. Called him at the number he gave me, left a message, but he never called back.

No biggie...had a signed offer and deposit cheque in hand the following evening from another couple. We gave them a week and a half to clear their conditions (financing and inspection) but I still continued to show the house just in case the deal fell through for whatever reason. I was up front with our potential buyers and told them I would be showing the house for the simple fact that I needed to sell it and if they couldn't get their ducks in a row then we weren't going to turn other potential buyers away until the deal was legit. They didn't appear to be offended and nor would I be offended if I were in their position.

Everything is done now but there is nothing stopping them from backing out of the deal before the closing date (a month from now), for whatever reason, except for they would lose their deposit and also incur a whole bunch of legal costs. If that were to happen, you can bet I have a dozen or so potential buyers' contact info who saw the house during that week and half while we waited for conditions to clear just in case it fell through. Hopefully I won't ever have to dig up that list.

Good luck!

The problem is that you likely will not know the buyer won't follow through for weeks.

If the buyer only has a pre-qual, no earnest money deposited, etc. there is no leverage for mauboy to ensure this guy isnt wasting his time....or at least if he is, being compensated for it (i.e. earnest money). As a buyer with no skin to lose, it's very easy to have things "fall through" at the last minute even with the signed contract, proof of funds, etc. Especially if the contract has a clause for "pending inspection" results. Just too many variables & loopholes to "trust" the guy. Especially when there are no realtors involved (as much as I don't trust them either).

You won't know on other buyers either in pretty much the same time frame. What if the first guy is the only guy who ends up having the financing, and you blow him off to accept a better offer from Lady B, and her offer falls through? Or are you suggesting Lady B is coming in with a suitcase full o' cash? :)

No one is saying to not continue to show the house or listen to offers (not that I have seen anyway). And I think most (including myself) would agree that shaking hands on this one was an error; should have waited for the written offer.

But since the handshake agreement was made, there it is. And since it exists, you can't, at least ethically, accept another offer unless Buyer A in some way takes action which violates the deal you two have agreed upon. You can listen to other offers and hopefully you're letting these people know of the already agreed upon deal in place. But until the first deal is violated or voided in some way by Buyer A, you can't in good faith accept another offer (at least not conscience-wise; legal is another matter).

And if mauboy agreed to no earnest money, that's not on Buyer A, that's on mauboy.

Oh I dont disagree with much here. I even said as much in my 1st post as far as being too late to do it again and just continuing on with the offer you DO have. But I think our disagreement is on timing. If he was meeting Buyer A to sign on say, Friday...absolutely I would be entertaining offers on the property.

At this point... if lady B came in (presumably before his meeting with Buyer A as its too late after signing) that he shouldnt feel any guilt or have any issues (ethically, morally, or other) with accepting a better offer from her (if she met a set of standards that I personally would want to see from any buyer). We dont really know what set of standards Buyer A might meet (unsure whether mauboy knows). He might for all we know.

Maybe its the difference in how people from different areas view real estate. Being from Florida...I'm very used to seeing all kinds of scams, con artists, asshat investors, etc. It's just ingrained in me (as I know it is many others I know from Florida) to realize that you cannot trust people when it comes to things like this. So if (in my hypothetical...where Buyer A is signing on Friday instead of today) this lady gave him a better offer, met his set of qualification standards, and his offer was only good for 24 hrs...I'd call the 1st guy back and tell him he can match it and get a signed contract over asap if interested. Maybe I'm an ass for that...but I dont know too many people that wouldnt do that as well.

So is this going to be like that jimmywint thread where we never get any closure?