Posted by DD on December 13, 1999 at 12:04:02:
You do not need earnest money to make a contract enforceable. The property and the purchase price represent the consideration. Earnest money is simply a means that realtors primarily use to keep the buyer from backing out of the deal. The contract does need to be in writing though.
Reniging on a verbal Agreement. - Posted by annette
Posted by annette on December 13, 1999 at 09:27:11:
I have a piece of property that I have verbally made a deal on with owner. I would like to assign it to another investor or flip it to get a nice profit. The asking price for the sfr was $80,000 with cma’s of $70-100,000. The house needs no work and is in a middle class neighborhood. I verbally offered the owners $70,000 for the house. Unfortunately because I am new to this business I did not realize that you can go to the county clerks office and gather information on the mortgage on properties. I found that the owner only paid $44,000 for this house back in ‘84’ and yes she has done work in the house, but not that much work. I want to offer her 10,000 less than what we discussed prior. She is motivated and the house is vacant and has been onthe market since April of this year. It has had very little movement which I believe is due to the Realator that was suppose to be marketing the house and the $ amount. Should I make another offer or is this unethical and unprofessional. If so, how should I present this to the seller?
In need of WISDOM!
Annette
newbie
Re: Reniging on a verbal Agreement. - Posted by Katie
Posted by Katie on December 15, 1999 at 10:24:24:
There’s a saying “Pigs feed, hogs starve” It means that it’s okay to get a little greedy, but if you’re too greedy then you don’t deserve to eat at all.
Gosh, if she had bought the house in the sixties, she probably would have paid less that 10k for it; then you could lower the bid to what 15k.
Here’s a more realistic number for you. 44k for 15 yrs. at 11% (stock market average) is 90k, that’s what she should be asking.
Re: Reniging on a verbal Agreement. - Posted by B.L.Renfrow
Posted by B.L.Renfrow on December 13, 1999 at 14:18:28:
Annette,
The FMV of the property in question has absolutely nothing to do with what the seller paid for it 15 years ago, nor does it have anything to do with the seller’s asking price.
Your offer should be based on comps - what similar properties in the area have sold for recently - and on what you plan to do with it.
And, as the other posts point out, you are not obligated by a verbal offer. You can always tell the seller you have reassessed the situation and feel your original offer would not allow you the room you need.
In the future, remember that if you start with a LOW offer, you can always increase it. It’s pretty tough to go the other way and retain credibility with the seller.
Brian (NY)
IF you still have some interest in the property… - Posted by SusanL.–FL
Posted by SusanL.–FL on December 13, 1999 at 11:25:41:
…then there are a few things you can do so that you have a better idea of the market value. You can pay for a professional appraisal; have someone do a ‘drive-by’ appraisal; or pull up your own COMPS on similar properties that have sold in the area.
By the way, the sale price on that property in 1984 doesn’t have much to do with the ‘price of eggs’ in today’s market…if you get my meaning.
Do some research and you could still have a deal.
Re: Reniging on a verbal Agreement. - Posted by Mikeb(SC)
Posted by Mikeb(SC) on December 13, 1999 at 10:27:19:
I’m no lawyer, but I wouldn’t worry too much about the verbal agreement. I’m pretty sure there has to be a consideration in the form of earnest money before you are legally bound by any offer you make. Also any contract for real estate must be in writing for it to be enforceable.
If I’m wrong about this, somebody please tell me.
I would probably just say that you’re sorry but you looked at the property again and you just decided you couldn’t pay that much for it, but you would be willing to pay…
Back when the rule of thumb was a 5% appreciation per year… - Posted by SusanL.–FL
Posted by SusanL.–FL on December 17, 1999 at 10:18:03:
I tried calculating the yearly appreciation on the property I was interested in purchasing.
I calculated from the time the seller had purchased it for himself…and guess what! My figure came in pretty much on target of what his ‘asking price’ was! (It was a unique piece and there weren’t any COMPS) This is the house I am living in now. Been here 5
years this past 12/8—I always note it on the calendar as a yearly ‘anniversary’ because it was (and always WILL be) a special day for us. We love our home.
