Sunday, November 22, 2009

Negotiating the purchase

Once the offer has been made, negotiating with the seller and waiting for your conditions to be satisfied is likely one of the most stressful times in purchasing a house.

As I mentioned in the earlier post, our offer for the house contained one condition; 5 days to arrange appropriate financing on the house. Actually, our mortgage broker had already told us that to try and find financing for both the purchase of the house and the renovations up front would take 6 days. However, our agent advised us that any condition on an offer of longer than 5 days would likely be rejected outright. So, instead we put in a condition of 5 days to find appropriate financing, with the hope that if our offer was accepted that our broker could come through sooner than promised, or that by the time 5 days had elapsed, the seller would be so invested in the sale that asking for an amendment to the offer of an extra day to secure financing would be approved.

Unfortunately, when we made the offer, the seller countered with a new condition of 4 days to secure financing. We accepted this condition, aware that we would probably have to ask for more time to secure financing, but it was a risk we were willing to take. After all, we had nothing to loose by accepting the new condition. If we rejected the counter offer and insisted on 5 days, the seller could have picked the other buyer right there and then.

After 4 days, sure enough, our broker had not secured financing, and we asked for an 1 day extension, which the seller readily agreed to. On the fifth day, our broker had found a bank willing to give us the appropriate financing, and the bank sent an appraiser out to the property. However, the appraiser put the wrong address on his report back to the bank. As a result, the bank would not accept the report. Time ticked by with numerous back and forth phone calls, and by the end of the business day, the bank still had not approved our financing.

So we asked for another one-day extension, which was not so readily accepted. In fact, I felt some pressure from our own agent to remove the condition of appropriate financing from the offer if we wanted to secure the house. However, my common sense told me that would be a dumb idea. We asked our agent to ask for another extension. Initially she was very reluctant and told us that the seller's agent would not accept another extension, so I actually had to order her to ask anyway (this is where I began to wonder if the agent was working with our best interest in mind). I figured we had nothing to loose by asking. If the seller said no, then we would deal with that outcome, but if we didn't ask we would never know. So our agent asked. And the seller's agent came back and said that five days was plenty for arranging financing and we should have it by now. I guess they felt like they were being jerked along a bit. So, we explained the muck up with the bank's appraiser and offered to increase the the downpayment by $5000 to try and show that we were serious about purchasing the house. We would have also been willing to change the closing date, if requested. However, I was not willing to waive the condition that appropriate financing had to be secured. In the end, the seller was not happy about it, but they gave us another day to secure financing, which is all we needed. On the sixth business day, the bank approved our financing and we waived the last condition on the purchase.

Throughout this process, we tried not to become too emotionally attached to the house. We knew what the property was worth to us and we were always prepared to walk away from the deal if our most basic needs could not be met. For us, if the seller had come back and told us that we could not have a sixth day to secure financing, then we would have told them that they would need to find another buyer.

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